Cenvat credit and depreciation cannot both be claimed for the same period; limitation runs from the statutory relevant date, not audit detection.

Cenvat credit on capital goods was inadmissible where depreciation under the Income-tax Act had also been claimed for the same period, because eligibility had to be tested with reference to the position during the relevant financial years; later revised income-tax returns did not cure the original breach. The demand was also not time-barred, as limitation under Section 11A of the Central Excise Act, 1944 runs from the statutory relevant date and not from the date of departmental audit or detection. On both merits and limitation, recovery, interest and penalty were sustained.

---

---

Issues: (i) whether Cenvat credit on capital goods was inadmissible where depreciation under the Income-tax Act had also been claimed for the same period; (ii) whether the demand was barred by limitation on the ground that the show cause notice was issued after the departmental audit detected the irregularity.

Issue (i): whether Cenvat credit on capital goods was inadmissible where depreciation under the Income-tax Act had also been claimed for the same period.

Analysis: The appellants had admittedly availed both Cenvat credit on capital goods and depreciation for the relevant financial years, which was contrary to Rule 4(4) of the Cenvat Credit Rules, 2002. Subsequent revised income-tax returns filed later did not cure the earlier contravention, because eligibility had to be tested with reference to the position during the relevant years. The cited precedent was distinguished on facts as it involved revision for the concerned year itself.

Conclusion: The credit was rightly denied and the demand was sustainable.

Issue (ii): whether the demand was barred by limitation on the ground that the show cause notice was issued after the departmental audit detected the irregularity.

Analysis: Section 11A of the Central Excise Act, 1944 governs recovery of wrongly availed credit and fixes the relevant date by reference to the statutory return or the date duty was required to be paid, as applicable. The date of audit or departmental knowledge was held to be irrelevant for computing limitation in the present context. The decisions relied upon by the appellants were treated as fact-specific and not laying down a contrary rule on relevant date.

Conclusion: The demand was not time-barred.

Final Conclusion: The appeal failed on merits as well as on limitation, and the order confirming recovery, interest, and penalty was sustained.

Ratio Decidendi: For wrongly availed Cenvat credit, later reversal or forfeiture of the related income-tax depreciation does not undo the original breach of eligibility conditions, and limitation under Section 11A of the Central Excise Act, 1944 runs from the statutory relevant date, not from the date of audit detection.

---