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2023 (4) TMI 914 - AT - Central ExciseMODVAT Credit - capital goods - appellant have neither claimed depreciation on the value representing the MODAT Credit amount under Section 32 of the Income Tax Act 1961 nor claimed it as revenue expenditure as alleged in the Show Cause Notice - willful suppression of facts - extended period of limitation - HELD THAT - In the Chartered Accountant s Certificate it is clearly mentioned that the Appellant had neither claimed depreciation under Section 32 of the Income Tax Act 1961 nor as revenue expenditure under any other provisions of the Income Tax Act against the capital goods namely Ball Bearings Laminator Dies Timing Belt etc. during the period April 1994 to March 1998. It is also found that the Chartered Accountant s Certificate even though placed before the Adjudicating authority the same has not been considered. Besides the term revenue expenditure has been substituted retrospectively by the Finance Act 2003. The issue is no more res integra and is covered by the decisions of the Tribunal in the cases of HONDA SIEL CARS (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE NOIDA 2003 (9) TMI 596 - CESTAT NEW DELHI and NAIHATI JUTE MILLS COMPANY LTD. VERSUS COMMISSIONER OF C. EX. KOL. III 2015 (1) TMI 1182 - CESTAT KOLKATA . The facts of the present case are squarely covered by the aforesaid decisions of the Tribunal - It was held in Naihati Jute Mills Company that Undisputedly during the relevant period in accordance with sub-rule (5) of Rule 57R and/or sub-rule (8) of Rule 57R the assessee who avails Modvat credit on capital goods and claim the value of such capital goods as revenue expenditure then they were barred from availing the benefits of Modvat credit on the capital goods. I also find that this position has been changed retrospectively by virtue of Section 149 of the Finance Act 2003. In view of the above retrospective amendment I do not find any merit in the impugned order and accordingly the same is set aside. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
Issues involved:
The issues involved in this case are availing MODVAT Credit on capital goods, retrospective amendment of relevant rules, compliance with Income Tax Act provisions, limitation period for demand, and consideration of Chartered Accountant's certificate. Availing MODVAT Credit on capital goods: The Appellant, engaged in manufacturing excisable goods, availed MODVAT Credit on capital goods without claiming depreciation under the Income Tax Act. The Advocate argued that a retrospective amendment to the rules allowed such credit, citing relevant case law to support the claim. Retrospective amendment of relevant rules: The Advocate highlighted the retrospective amendment of Rule 57R(5) and Rule 57(8) which removed the restriction on claiming MODVAT Credit if duty paid on capital goods was booked as revenue expenditure. This change in legal position was emphasized to challenge the demand confirmed in the Order-in-Original. Compliance with Income Tax Act provisions: The Appellant's method of accounting, debiting spare parts/consumables as revenue expenditure, was defended as these items needed frequent replacement. It was argued that eligibility for MODVAT Credit should be based on relevant Act/Rules, and during the period in question, there was no mandate to book capital goods cost as capital expenditure only. Limitation period for demand: The Appellant contended that the demand for a specific period was beyond the 6-month limitation, and there was no willful suppression of facts. The argument was supported by the submission that all relevant details for MODVAT Credit were duly recorded, and the Appellant acted under a bona fide belief. Consideration of Chartered Accountant's certificate: The Chartered Accountant's certificate, indicating non-claiming of depreciation or revenue expenditure against capital goods, was not considered in the Order-in-Original. The Tribunal referred to similar cases where such certificates played a crucial role in determining eligibility for MODVAT Credit, ultimately setting aside the impugned order in favor of the Appellant.
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