Reversal of disputed Cenvat credit defeats simultaneous benefit bar and preserves credit where depreciation was also claimed.

Where the disputed Cenvat credit had been reversed, there was no subsisting simultaneous availment of that credit and depreciation under Section 32 of the Income-tax Act, 1961 for the amount covered by the notice. On that factual basis, the foundational condition for applying the bar against simultaneous benefit under Rule 4(4) of the Cenvat Credit Rules, 2001 was not established, so the demand with interest was not sustainable. The stated principle is that reversal of the disputed credit prevents a presumption of simultaneous availment for denial of credit.

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Issues: Whether the assessee had simultaneously availed Cenvat credit and depreciation so as to attract the bar under Rule 4(4) of the Cenvat Credit Rules, 2001.

Analysis: The record showed that the second instalment of 50% Cenvat credit had been reversed. On that basis, there was no subsisting simultaneous availment of the disputed credit and depreciation under Section 32 of the Income-tax Act, 1961 in respect of the amount covered by the show-cause notice. Since the foundational requirement for invoking the prohibition against simultaneous benefit was not made out, confirmation of the demand was not sustainable.

Conclusion: The assessee had not contravened Rule 4(4) of the Cenvat Credit Rules, 2001, and the demand with interest was not liable to be sustained.

Ratio Decidendi: Where the disputed Cenvat credit is reversed, simultaneous availment of that credit and depreciation cannot be presumed for the purpose of denying the credit.

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