2018 (5) TMI 1337 - AT - Central Excise

CENVAT credit - capital goods - it was noticed that the appellant had availed simultaneously cenvat credit on capital goods and had also claimed depreciation on gross block value inclusive of excise duty under Section 32 of the Income Tax Act 1961 - Held that - initially the appellants have wrongly availed the cenvat credit as well as depreciation under the Income Tax Act and on being pointed out they have realized their mistake and filed a revise income tax return rectifying the defect. Appellant has also produced the original as well as revised return rectifying the defect pertaining to claiming depreciation on the said plant and machinery. Denial of CENVAT credit not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availing simultaneous cenvat credit and depreciation under the Income Tax Act.
- Rejection of appeal by the Commissioner (Appeals).

Analysis:
1. The appeal was against the order passed by the Commissioner (Appeals) rejecting the appellant's appeal. The appellant, engaged in manufacturing "Hard Rubber Battery Containers," availed cenvat credit on capital goods and claimed depreciation on gross block value inclusive of excise duty, which was deemed a contravention of Cenvat Credit Rules 2004. The appellant availed cenvat credit and utilized it for excise duty payment, leading to a show-cause notice and subsequent confirmation of the demand of ineligible cenvat credit by the adjudicating authority.

2. The appellant contended that the impugned order was unsustainable as it did not consider their submissions and was contrary to decisions by the Tribunal on a similar issue. They clarified that the simultaneous benefit was unintentional and rectified the mistake by filing a revised income tax return, reducing the claimed depreciation by the excise duty amount. The appellant provided detailed explanations and supporting documents to prove the rectification of the error.

3. The appellant relied on specific decisions to support their case, emphasizing that rectifying the mistake through a revised income tax return was a valid approach. The appellant's consultant argued that the impugned order was unsustainable in law, and the denial of cenvat credit was unjustified given the rectification made by filing the revised income tax return.

4. The Assistant Commissioner reiterated the findings of the impugned order, opposing the appellant's arguments.

5. Upon reviewing the submissions and evidence, the Judicial Member found that the appellant rectified the error by filing a revised income tax return, aligning with the decisions cited by the appellant. It was concluded that the impugned order denying the cenvat credit was unsustainable in law. Therefore, the Judicial Member set aside the impugned order and allowed the appeal, emphasizing the importance of rectification through revised income tax returns in such cases.