Tribunal allows appeal, dismisses Commissioner's findings, grants Modvat credit. No double benefit.

The appeal was allowed by the Tribunal, which dismissed the Commissioner's findings and allowed the appellant to avail Modvat credit. The Tribunal emphasized that the appellant did not take double benefit, as the depreciation amount was reversed within the Income Tax time limit. The Tribunal relied on a judgment from the Hon'ble Gujarat High Court and distinguished other cited cases. As the Cenvat Credit amount was adjusted in the depreciation account, no additional recovery was ordered, leading to the dismissal of the appeal and no imposition of interest or penalty.

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Issues:
Demand of interest and imposition of penalty on availing Cenvat credit and depreciation simultaneously.

Analysis:
The appeal was filed against an order-in-appeal dated 28.02.2012 by the Commissioner of Central Excise & Customs, Mumbai-II. The issue revolved around availing Cenvat credit of Rs. 1,70,820 on capital goods and simultaneously claiming depreciation of the duty portion under Section 32 of the Income Tax Act, 1961 during the financial year 2007-08. The appellant contended that they did not take double benefit and reversed the depreciation amount within the Income Tax time limit, citing a judgment of the Hon'ble Gujarat High Court. On the other hand, the Assistant Commissioner (AR) supported the Commissioner's findings and highlighted the delay in filing the revised Income Tax return, referencing a case law from NARAYAN KRISHNA SPINNERS LTD. Vs. C.C., COIMBATORE 2005(192)E.L.T.490(Tri. Chennai).

The Tribunal examined the records and found that the original authority did not order recovery as the depreciation amount had been adjusted in the books within the Income Tax time limit. The revised Income Tax return for FY 2007-08 was filed without claiming depreciation, and it was within the prescribed time frame. The Tribunal relied on the judgment of the Hon'ble Gujarat High Court in the case of CCE Surat-II Vs. Nish Fibres, emphasizing that an assessee cannot claim Modvat credit if depreciation is allowed under the Income Tax Act. The Tribunal also distinguished the facts of other cases cited by the parties, ultimately dismissing the appeal and allowing the Modvat credit to the appellant.

Furthermore, the adjudicating authority noted that since the assessee adjusted the Cenvat Credit amount in their depreciation account, there was no need to demand the same amount again. Consequently, there was no basis for imposing interest or penalty equivalent to the demanded amount. The appeal filed by the appellant was allowed, and the decision was pronounced in court on 30.9.2016.

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