Cenvat credit and depreciation conflict prevents complete waiver of pre-deposit where duty element was claimed twice.

Rule 4(4) of the Cenvat Credit Rules bars credit on the duty element of capital goods where depreciation is also claimed under section 32 of the Income-tax Act, 1961. The record showed that depreciation had been claimed on the duty component while the same amount of Cenvat credit was availed, and the amount was not reversed in the same financial year. As revised income-tax returns were not produced to support the claim, no strong prima facie case for complete waiver of pre-deposit was made out. Complete waiver was declined, and deposit of 50% of the duty amount was directed, with recovery of the balance stayed on compliance.

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Issues: Whether the appellant was entitled to complete waiver of pre-deposit and stay of recovery in a case where Cenvat credit on capital goods was taken along with depreciation on the duty element under the Income-tax Act.

Analysis: Rule 4(4) of the Cenvat Credit Rules disallows credit on the portion of the value of capital goods representing duty where depreciation is claimed under Section 32 of the Income-tax Act, 1961. The record showed that depreciation was claimed on the duty element and Cenvat credit of the same amount was also availed during the relevant period. The amount was not reversed in the same financial year and the appellant could not produce revised income-tax returns to support its case. In these circumstances, the appellant was found not to have made out a strong prima facie case for complete waiver.

Conclusion: Complete waiver of pre-deposit was declined. The appellant was directed to deposit 50% of the duty amount, and recovery of the balance was stayed on compliance.

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