2017 (11) TMI 1397 - AT - Service Tax

CENVAT credit - capital goods - depreciation - Rule 4(4) of the CCR, 2004 - Held that - this case needs to be remanded back to the original authority to verify whether the appellant has actually taken the depreciation under Section 32 of the Income Tax Act or not becuase the appellant has submitted that it is only the irregularity crept in accounting of the credit in the concerned book which was purely unintentional and the appellant has not taken the double benefit - appeal allowed by way of remand.

Summary

Issues:
Appeal against rejection of appeal and upholding Order-in-Original regarding availing depreciation on CENVAT credit in violation of Rule 4(4) of CENVAT Credit Rules, 2004.

Analysis:

Issue 1: Rejection of Appeal and Upholding Order-in-Original
The appeal was directed against the impugned order passed by the Commissioner(Appeals) rejecting the appeal of the appellant and upholding the Order-in-Original. The appellants, engaged in providing various services, were found availing depreciation on the second 50% part of the CENVAT credit availed, violating Rule 4(4) of the CENVAT Credit Rules, 2004. The lower authority confirmed the demand for ineligible credit, interest, and imposed a penalty. The Commissioner(Appeals) dismissed both appeals filed by the appellant and the Department. The appellant contended that the impugned order did not consider the facts and law, emphasizing that the irregularity in accounting the credit was unintentional, and no double benefit was gained. The appellant argued that only 50% of the duty eligible was availed during the relevant period. The learned AR reiterated the findings of the impugned order.

Issue 2: Remand for Verification
After hearing both parties and examining the submissions and records, the Judicial Member found it necessary to remand the case back to the original authority. The remand was deemed essential to verify whether the appellant had actually taken the depreciation under Section 32 of the Income Tax Act. The appellant claimed that the irregularity in accounting was unintentional and that no double benefit was obtained. In light of this, the Judicial Member set aside the impugned order and directed the original authority to investigate the matter regarding the depreciation under the Income Tax Act. The decision to remand the case was made to ensure a thorough examination and to enable the original authority to pass a fresh order in accordance with the law, providing detailed reasons for their decision. Consequently, the appeal was allowed by way of remand.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the decision reached by the Judicial Member to remand the case for further verification and a fresh order based on the findings regarding the depreciation under the Income Tax Act.