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TMI Blog2019 (12) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... e suffering losses therefore, even though the depreciation was claimed it does not have any effect under the Income Tax. The objective of non-claiming of depreciation is to avoid double benefit i.e. one is the benefit of Cenvat credit and the other is depreciation in Income Tax which reduce the income tax liability. Since the appellant had no profits in relevant Financial Years, even claiming of depreciation did not lead to double benefit - thus, compliance of Rule 4 (4) of Cenvat Credit Rules, 2004 has been made. Denial also on the ground that appellant have taken 100% credit instead of 50%, we find that the year of receipt of capital goods is 2005-06, whereas the credit was taken in October 2007 - HELD THAT:- As per Rule 4(4), it is clear provision that part of taking 50% credit is applicable only if Cenvat credit is availed in the year of receipt of capital goods. As per proviso to sub-rule, the assessee is entitled for the credit of remaining 50% in the subsequent Financial Years. That means, in the subsequent year of receipt of capital goods, the appellant is entitled for 100% Cenvat credit. Therefore, on this ground, the denial of Cenvat credit is not correct and legal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that depreciation has not been claimed on account of said capital goods procured in the year 2005-06. 2. On the basis of above information received by the department, a show cause notice was issued to the appellant wherein it was proposed to deny Cenvat credit availed on capital goods under Rule 14 of Cenvat Credit Rules, 2004 read with sub-Section (1) of Section 11A of Central Excise Act, 1944. It was also proposed to demand interest and imposition of penalty. The said show cause notice was adjudicated by the jurisdictional Commissioner vide the impugned order. The ground for denial of credit is that once the appellant have availed the depreciation, thereafter even by filing a revised return they are not entitled for the Cenvat credit, in terms of Rule 4 sub-rule (4) of Cenvat Credit Rules, 2004. Out of total credit denied, an amount of ₹ 2,72,769/- was related to building. Even though the appellant made a submission that this relates to credit of service tax on construction of factory building, the Learned Commissioner denied the Cenvat credit on the ground that said credit taken under the capital goods account, the same is not eligible for Cenvat credit. Being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue for the reason that claiming of depreciation will not have any impact on the balance sheet as at the most, it will reduce the loss. But, since no profit accrued, no benefit of depreciation has gone to the appellant. Therefore, on this count also Cenvat credit cannot be denied. In support of his submission, he placed reliance on the following judgments:- (a) Progressive Systems vs. CCE, Bangalore 2010 (251) ELT 536 (Tri. Bang.) (b) CCE, Bangalore vs. Progressive Systems 2011 (267) ELT 473 (Kar.) (c) CST, Ahmedabad vs. Bharati Tele Ventures 2018 (363) ELT 1068 (Tri. Ahmd.) (d) Nidhi Pipes Limited vs. CCE, Chandigarh-II 2016 (343) ELT 1014 (Tri. Chand.) (e) CCE, Tirupati vs. Mangal Precision Products 2017 (346) ELT 312 (Tri. Hyd.) (f) CCE, Surat vs. Nish Fibers 2010 (257) ELT 81 (Guj.) (g) Steelman Rolling Mills 2018 (5) TMI 1407 (Tri. Chand.) 5. Shri Sanjiv Kinker, Learned Superintendent (Authorised Representative) appearing on behalf of Revenue reiterates the findings of the impugned order. He further submits that as per rule 4 (4) of Cenvat Credit Rules, 2004, once the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has, in fact, claimed the depreciation and whether such claim has been allowed by the department. If the claim of depreciation is allowed then in that case the assessee cannot claim Modvat credit under the Central Excise Act. However this very aspect has been factually verified by the Commissioner (Appeals). It is specifically observed that in order to confirm the authenticity of the certificate, the predecessor of the Commissioner (Appeals) wrote a letter to the Commissioner of Income Tax, Surat with the request to confirm the authenticity of the said certificate, and in reply to that letter, the Commissioner of Income Tax has certified the authenticity of the said certificate. He, therefore, observed that the appellant has not availed depreciation on the value representing the amount of duty under the Income Tax Act, and therefore, he has not endorsed the view of the adjudicating authority. He has also observed that the condition for availment of modvat credit on capital goods is complied with by corrective method, even if at a later stage, and hence, the substantial benefit should not be denied. The CESTAT has also taken the same view. 11. So far as the judgment re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Cenvat credit was availed simultaneously but on filing of revised return, withdrawing the depreciation at a later stage, provide the Cenvat credit entitlement. The ratio of above judgment is applicable in the facts of the present case. On the similar issue, CESTAT Chennai in the case of Sathyam Auto Engineering (supra), dealing with the identical facts as in the present case, allowed the Cenvat credit on capital goods. CESTAT Chennai also had occasion to deal with identical issue in the case of Steelman Rolling Mills (supra), wherein the facts of the case is that though the assessee had availed Cenvat credit and claimed depreciation simultaneously, on being pointed out by the Revenue the assessee had foregone the depreciation in question, the Tribunal held that assessee is entitled to avail Cenvat credit. 8. Considering the above judgments, we are of the view that only because the appellant once claimed the depreciation but subsequently returned the said depreciation by filing the revised return, status of non-claiming of depreciation has been maintained. Accordingly, the appellant have complied with the condition of Rule 4(4) of Cenvat Credit Rules, 2004. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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