2017 (4) TMI 22 - AT - Central Excise

CENVAT credit - denial on the ground that the appellant had availed the benefit of depreciation u/s 32 of the Income Tax Act, 1961 on the capital goods and also availed CENVAT credit on the same capital goods - violation of Rule 4(4) of the CCR, 2004 - Held that - the Revised Return for the Assessment Year 2010-11 has been accepted resulting into surrendering of the depreciation benefit claimed earlier u/s 32 of the Income Tax, 1961 on the capital goods on which CENVAT credit was also availed - these documents were not placed before the adjudicating authority at the time of adjudication, hence could not be scrutinized. To ascertain the fact whether the appellant had surrendered the benefit of depreciation under Income Tax Act,1961 on the same capital goods on which CENVAT credit availed, during the relevant period, the matter is remitted to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Availing depreciation under Section 32 of the Income Tax Act, 1961 and CENVAT credit on the same capital goods.
2. Alleged violation of Rule 4(4) of the CENVAT Credit Rules, 2004.
3. Confirmation of demand notice with interest and penalty.
4. Rejection of appeal by the ld. Commissioner (Appeals).
5. Submission of revised Income Tax return and acceptance for the Assessment Year 2010-11.
6. Lack of scrutiny of documents regarding surrender of depreciation benefit.
7. Remittance of the matter to the adjudicating authority for verification.

Analysis:
The appeals before the Appellate Tribunal CESTAT AHMEDABAD were filed against the Order-in-Appeal passed by the Commissioner (Appeals), Central Excise, Customs, Vapi, regarding the availing of depreciation under Section 32 of the Income Tax Act, 1961, and CENVAT credit on the same capital goods. The appellant had allegedly violated Rule 4(4) of the CENVAT Credit Rules, 2004, leading to a demand notice for recovery of CENVAT credit amounting to ?27,84,028. The demand was confirmed with interest and penalty imposed, which was challenged in the appeal. The appellant submitted that they had filed revised Income Tax returns for the relevant assessment years, surrendering the depreciation benefit claimed earlier. However, the documents supporting this claim were not presented during the adjudication, prompting the Tribunal to remit the matter to the adjudicating authority for thorough verification of the evidence. The Tribunal allowed the appeals by way of remand, keeping all issues open for further examination.

The crux of the matter revolved around the appellant's availing of depreciation under the Income Tax Act, 1961, and CENVAT credit on the same capital goods, leading to an alleged violation of the CENVAT Credit Rules. The appellant's argument regarding the surrender of depreciation benefit through revised Income Tax returns was pivotal in the Tribunal's decision to remit the case for detailed scrutiny. The lack of scrutiny of pertinent documents during the initial adjudication process necessitated a fresh examination by the adjudicating authority to ascertain the veracity of the appellant's claims. By allowing the appeals by way of remand, the Tribunal ensured a comprehensive review of all evidence and issues involved in the case, maintaining transparency and fairness in the legal proceedings.