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TMI Blog2012 (11) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Department was of the view that since these capital goods have not been acquired by the appellant from a financing company under a lease or hire purchase or loan agreement, they are not eligible for capital goods cenvat credit in terms of the provisions of Rule 4(3) of Cenvat Credit Rules, 2004. It is on this basis show cause notice dated 30.4.2009 was issued to the appellant for recovery of this allegedly wrongly taken credit along with interest, under Rule 14 of the Cenvat Credit Rules, and also for imposition of penalty on them under the provisions of Rule 15 of Cenvat Credit Rules, 2004. Show cause notice was adjudicated by the Additional Commissioner vide order in original dated 30.9.2010 by which cenvat credit demand was confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order and submitted that the agreement referred to by the learned Counsel for the appellant is neither a lease agreement nor it is in agreement between the appellant and a finance company. Thus, according to learned A.R. for the Revenue, Rule 4(3) of Cenvat Credit Rules, 2004 is not applicable. He also pleaded that the condition of Rule 4(4) of Cenvat Credit Rules is also not satisfied and, thus, the credit has been rightly denied. Thus, he urged for dismissal of the application. 5. We have considered the submissions from both the sides. 6. In order to appreciate the contentions of the parties, it would be useful to have a look on Rule 4(3) and Rule 4 (4) of Cenvat Credit Rules, 2004 which are reproduced thus: &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the agreement between the appellant and the principal manufacturer referred to by the learned counsel for the appellant which reads thus: (i) It has been decided that Mound Trading Co. Pvt. Ltd. would work as job worker for manufacturer of Confectionary for Parle Products Pvt. Ltd, Mumbai. (ii) Parle Products Pvt. Ltd. would arrange to send materials (raw materials and packing materials) through the supplier to Mound Trading Co. Pvt. Ltd. on payment of Central Excise duty. (iii) Mound Trading Co. Pvt. Ltd would avail cenvat credit of central excise duty paid on the raw and packing materials, capital goods. (iv) Mound Trading Co. Pvt. Ltd. would process an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel for the appellant, when asked whether M/s Parle Products Pvt. Ltd. have availed depreciation under Section 23 of the Income Tax Act on full value of the capital goods, in question, he answered in the affirmative. From this, prima facie it appears that the agreement between the appellant has been entered into to circumvent the provisions of Rule 4(4) as while the principal manufacturer has claimed depreciation under Section 32 of the Income Tax Act, 1961, the Appellant have availed capital goods cenvat credit. It may not be out of place to mention that precondition of availability of cenvat credit Rule under 4(3) is that the assessee must have acquired the capital goods on lease or hire purchase or under loan agreement from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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