2013 (11) TMI 1144 - AT - Central Excise

Contravention of Rule 4(4) of Cenvat credit rules - Double benefit claimed Benefit of Cenvat credit Depreciation claimed u/s 32 of Income tax Act, 1961 Held that - The appellant has taken the depreciation of duty element and also availed Cenvat credit of the same amount during the relevant period - The amount on which the depreciation was availed by the appellants was not reversed in the same financial year in the ledger accounts of fixed assets but was reversed on 1.4.2009 in the financial year 2009-2010 and the amount has been shown on debt side of ledger account under head plant and machinery on 1.4.2009 - appellant was not able to show to the adjudicating authority the revised income tax return - Prima facie appellant does not have strong prima facie case so as to allow complete waiver appellant directed to deposit 50% of the duty as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
1. Appeal for waiver of pre-deposit and stay of recovery of duty amount and penalties confirmed by Commissioner of Central Excise (Appeals).
2. Contravention of Rule 4(4) of Cenvat Credit Rules regarding availing double benefit by claiming Cenvat credit on capital goods and depreciation benefit under Section 32 of Income Tax Act, 1961.

Analysis:
1. The appellant, M/s. Cadchem Laboratories Ltd., filed a stay petition seeking waiver of pre-deposit and stay of recovery of duty amount and penalties confirmed by the Commissioner of Central Excise (Appeals). The original authority confirmed the demand of Cenvat credit availed on capital goods for the period between 2005-2006 to 2008-2009, alleging that the appellant claimed both Cenvat credit and depreciation benefit under Section 32 of the Income Tax Act, 1961 on the same capital goods, constituting a contravention of Rule 4(4) of Cenvat Credit Rules.

2. The Commissioner of Central Excise (Appeals) allowed the appeal in relation to the financial years 2005-2006 and 2006-2007 but rejected it for the financial year 2008-2009. Consequently, a Central excise duty amounting to Rs. 4,94,446 and an equal amount of penalty were confirmed against the appellant. In the hearing, it was noted that the appellant had taken depreciation on the duty element of Rs. 4,94,446 and also availed Cenvat credit for the same amount during the relevant period. The depreciation amount was reversed in the financial year 2009-2010, and the appellant failed to provide the revised income tax return as evidence. The presiding judge, Sahab Singh, found that the appellant did not have a strong prima facie case to warrant complete waiver of the duty amount. Consequently, the appellant was directed to deposit 50% of the duty amount within six weeks and report compliance by a specified date, with a stay of recovery of the balance dues until the appeal's disposal.