2003 (5) TMI 147 - AT - Central Excise

Summary

Issues:
1. Denial of credit availed by the assessee under Rule 57Q of duty paid on capital goods.
2. Imposition of penalty by the Commissioner of Central Excise.
3. Claim of depreciation and exclusion of duty element for assessment of income tax.
4. Interpretation of provisions regarding Modvat credit and depreciation.
5. Acceptance of documents by the Commissioner as evidence.

Analysis:

1. The Commissioner of Central Excise denied the credit availed by the assessee under Rule 57Q of the duty paid on capital goods, contravening Rule 57T. The Tribunal noted the assessee's contentions regarding the exclusion of duty element for income tax assessment and the retrospective amendment to the definition of "capital cost." The Tribunal clarified that claiming depreciation on duty taken as Modvat credit does not automatically disallow Modvat credit unless depreciation is claimed and allowed for income tax purposes.

2. The Tribunal remanded the matter to the Commissioner to verify if the assessee had been granted depreciation for the relevant capital goods. The Commissioner, after considering the submissions, again denied the credit and imposed a penalty, leading to the appeal against this decision.

3. The appellant presented income tax returns, revised returns, and certificates showing that depreciation was claimed after deducting Modvat claims. The Tribunal found the Commissioner's refusal to accept these documents, citing the absence of a formal assessment order, as erroneous. The Tribunal emphasized that the finality of assessment for one year and the absence of depreciation claims in the returns for other years were crucial factors.

4. The Tribunal concluded that the appellant had adequately demonstrated that no depreciation was claimed for income tax purposes on the Modvat portion of the capital goods. As the appeal succeeded on this main contention, further alternative claims made by the appellant were not addressed.

5. Ultimately, the Tribunal allowed the appeal, setting aside the Commissioner's order, based on the satisfactory demonstration by the appellant regarding the depreciation claim for income tax purposes on the Modvat portion of the capital goods.