2009 (7) TMI 995 - AT - Central Excise

Summary

Issues involved: Appeal against disallowance of credit, recovery of interest, and penalty u/s Cenvat Credit Rules based on alleged contravention of provisions.

In the judgment by the Appellate Tribunal CESTAT, MUMBAI, the issue revolved around whether the appellant had claimed depreciation u/s Section 32 of the Income Tax Act, 1961 on the value of goods, specifically dies and moulds, as capital goods, which represented the duty amount. The appellant was issued a show cause notice for denial of credit, proposing penalty and interest, based on the allegation of availing Cenvat credit and depreciation on the impugned goods, leading to a contravention of Cenvat Credit Rules.

The Assistant Commissioner disallowed the credit, ordered interest recovery, and imposed an equivalent penalty, a decision upheld by the Appellate Authority. The appellant contended that they did not claim depreciation on the impugned goods, treating them as revenue expenditure, supported by an order of the Commissioner of Income Tax (Appeals). The appellant presented documents reflecting this treatment in the balance sheet and reports.

During the proceedings, Shri Godbole, Sr. Manager (Excise), representing the appellant, argued that the denial of Cenvat credit was based on the CIT (Appeals) orders granting depreciation on capital goods leased, not including the impugned goods. He asserted that the impugned goods were considered revenue expenditure by the CIT (Appeals), eliminating the possibility of claiming depreciation under IT on their value, including the duty amount paid, in violation of Cenvat Credit Rules.

Upon examination of the records, the Tribunal noted that the CIT (Appeals) allowed depreciation on capital assets, distinct from the impugned goods, which were treated as revenue expenditure. Consequently, the Tribunal concurred with Shri Godbole's argument that since the impugned goods were not classified as capital goods, the question of depreciation did not arise. Therefore, the lower authorities' decision to hold that the appellant availed depreciation on the impugned goods u/s Section 32 of the Income Tax Act was deemed incorrect.

In conclusion, the Tribunal found no merit in the impugned order, setting it aside and allowing the appeal with any consequential relief deemed necessary.