Mutually exclusive tax benefits on the same asset: reversal of depreciation did not establish Cenvat credit entitlement or waive pre-deposit.

Rule 4(4) of the Cenvat Credit Rules was treated as allowing only one tax benefit in respect of the same capital asset, either depreciation under the Income-tax Act or excise-based Cenvat credit. The note states that reversal of a prior depreciation claim did not, by itself, establish an enforceable right to claim Cenvat credit on capital goods. Because no prima facie case was shown, waiver of pre-deposit was declined and the appellant was required to make the directed deposit before the appeal could be heard.

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Issues: Whether Cenvat credit on capital goods could be claimed after depreciation had been claimed and later reversed under the income-tax law, and whether waiver of pre-deposit was justified.

Analysis: Rule 4(4) of the Cenvat Credit Rules was treated as the governing provision and was read as allowing only one benefit in respect of the same asset, either depreciation under the Income-tax Act or the excise-based credit benefit. On the facts presented, the reversal of the depreciation claim did not, by itself, establish a legal entitlement to Cenvat credit on capital goods. In the absence of a prima facie case in favour of the appellant, waiver of pre-deposit was declined.

Conclusion: The request for waiver of pre-deposit was rejected and a pre-deposit was directed before the appeal could be heard.

Final Conclusion: The interim relief application failed, and the appeal was permitted to proceed only upon compliance with the directed pre-deposit.

Ratio Decidendi: Where the statutory scheme permits only one of two mutually exclusive tax benefits on the same asset, reversal of one benefit does not automatically create an enforceable right to claim the other in the absence of a prima facie legal basis.

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