TaxTMI 
TaxTMI 
2015 (3) TMI 911
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....depreciation under Section 32 of the Income Tax Act, 1961, therefore in terms of sub-rule (8) of Rule 57R of Central Excise Rules, they are not eligible to avail the capital goods credit. Show cause notice dt. 28.5.2004 was issued to the respondent for recovery of ineligible modvat credit under Rule 57U (2) read with Section 11A along with interest and penalties under Rule 57U read with Section 11AC and Rule 173Q of Central Excise Rules. The adjudicating authority vide OIO No.15/2004 dt. 28.9.2004 ordered recovery of credit Rs. 24,79,790/- and also held that they are eligible to avail the said modvat credit after 30.5.2004, i.e from the date of OIA of CIT (A) for acceptance of their application for withdrawal of depreciation by the Income Tax department. He also demanded under interest under Rule 57 (4) read with Section 11AB and imposed equivalent penalty under Rule 57U (6) read with Section 11AC and also imposed penalty of Rs. 5000/- under Rule 173Q. 3. Aggrieved by the said order, respondent preferred appeal and the Commissioner (Appeals) vide impugned order dt. 22.1.2005 set aside the OIO dt. 28.9.2004 and restored the credit w.e.f. 30.6.1999 i.e from the date of availing cr....
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....mposed penalty. 7. The A.R further submits that in the subsequent developments, the Income Tax department reviewed the Commissioner, IT (Appeals) order dt. 31.5.2004 and filed appeal before Income Tax Appellate Tribunal. ITAT had allowed Revenue's appeal vide order dt. 20.10.2006 and set aside the said order of Commissioner, IT (Appeals). Respondents filed writ appeal against the above ITAT's order and the Hon'ble Delhi High Court had dismissed the appeal. The respondent again preferred S.L.P before the Apex Court against the Delhi High Court's order and the Hon'ble Supreme Court has dismissed the SLP on 6.8.2012. He submits that dismissal of respondent's application attained finality and depreciation availed under Income Tax Act stands confirmed. Therefore, the respondents are not eligible for modvat credit on the capital goods and also liable for interest and penalty and he relied on the following case laws:- 1) Gujarat Alkalies & Chemicals Ltd. Vs CCE Vadodara-I 2010 (262) ELT 753 (Tri.- Ahmd.) 2) CCE Chennai-IV Vs Sundaram Fasteners Ltd. 2014 (304) ELT 7 (Mad.) 3) CCE & CC Aurangabad Vs Bageshwari Sahakari Sakhar Karkhana Ltd. 2008 (222) ELT ....
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.... (supra) is not applicable. He submits that only in the order-in-appeal, Commissioner of Central Excise has crystallized the depreciation issue. Therefore, he pleaded for setting aside the impugned order. 10. I have carefully considered the submissions and also perused the documents, the written synopsis, and list of dates and events submitted by the respondents and the case laws. Revenue filed appeal seeking to set aside the impugned order dt. 22.1.2005 of the lower appellate authority wherein the Commissioner (Appeals) has set aside the entire adjudication order dt. 28.9.2004. The issue to be decided in the Revenue appeal is whether the impugned order passed by Commissioner (Appeals) is legal or proper in setting aside the interest and penalty and restoring the credit w.e.f. 30.6.99. The main issue in this case relates to disallowing Modvat credit availed on the capital goods wherein the respondents have also claimed depreciation under Section 32 of Income Tax Act. The period involved in this case relates to June'99. The Commissioner (Appeals) has set aside the entire order only on the ground that respondents have succeeded their appeal before Commissioner of Income Tax (A....
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....ng credit w.e.f 30.6.99. 11. The relevant provisions for availing modvat credit on capital goods during 1999 are governed by the Rules 57Q to 57U of then Central Excise Rules, 1944. Rule 57Q specifies applicability and Rule 57R provides where credit of duty not to be allowed or denied in certain circumstances. The Sub Rule (8) of Rule 57R which is relevant for the present appeal is reproduced as under :- "(8) No credit of the specified duty paid on the capital goods shall be allowed, if the manufacturer, claims depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961), or as revenue expenditure under any other provisions of the said Income-tax Act, in respect of that part of the value of capital goods which represents the amount of specified duty on such capital goods." 12. The above sub-rule provides that no credit shall be allowed, if the manufacturer claims depreciation under Section 32 of the IT Act. Rule 57T stipulates procedure to be followed by the manufacturer who is intending to take credit of the duty paid on the capital goods under rule 57Q. Under this Rule an assessee shall file declarations before receipt of the capital goods before the Assistant ....
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....the offence case was registered against the assessee company by the office of the Commissioner of Central Excise, Chennai-II. By getting its wrong claim rectified, the assessee company wishes to circumvent the provisions of law. This cannot be allowed even though the assessee's claim is in accordance with the provisions of Explanation 9 of Section 43 (1) of the Income Tax Act. In light of the above, the rectification petition u/s 154 of the Income Tax Act, 1961 is hereby rejected." 15. The Income Tax Authority in the above order has clearly brought out the reasons for rejecting their application and held that the application was filed only after offence case was registered by Central Excise authorities only to circumvent the provisions law they resorted this method. No doubt that the respondents succeeded in their appeal before CIT (A), but the fact remains established from the above that respondents suppressed the facts before the department on availing simultaneous benefit. The respondent's plea of communication lapse is beyond acceptable. The CIT (A) order referred above has been taken into consideration by the adjudicating authority in his order and while confirmi....
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.... Department has not accepted the CIT (A) order dt. 31.5.2004 (relied by LAA) and filed appeal before Income Tax Appellate Tribunal (ITA), Delhi. The Hon.ITAT vide order dt.20.10.2006 has allowed the revenue appeal and set aside the said CIT (A) order. It is seen that the respondent has filed an appeal under Section 260A of the Income Tax Act, 1961 before the Hon'ble High Court of Delhi against the above ITAT's order. The Hon'ble High Court of Delhi dismissed their appeal vide order in ITA No.771/2007 dt. 29.10.2010. The respondent again preferred SLP before the Hon'ble Supreme Court against the Hon'ble High Court's order. The Hon'ble Supreme Court vide order dt.6.8.2012 in SLP (C) No.9659/2011 dismissed their S.L.P. Therefore, by virtue of Supreme Court's order dt. 6.8.2012 their rectification application under Section 154 stands dismissed and claiming depreciation under Section 32 of IT Act had attained finality. Though the Commissioner of Central Excise (Appeals) had relied on CIT (A)'s order dt.31.5.2004 during the relevant time, considering the subsequent ITAT decision and the judicial proceedings before Hon'ble Delhi High Court and Hon&#....
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....essee under Rule 57T of the Central Excise Rules, 1944 was to the effect that it will not claim any depreciation under Section 32 of the Income-tax Act, 1961. In fact, such depreciation was claimed. The assessee had claimed such a benefit and tried to defend the same by saying human error or accounting error. We are afraid, having filed a declaration, it was not open for the respondent-assessee to say that it was a human error or accounting error that depreciation as determined was one under Section 32 of the Income-tax Act, 1961. The declaration in such circumstances must be said to be a misstatement aimed at evasion of the duty and penalty was, therefore, imposable. Unfortunately, none of the three adjudicating authorities so far have discussed this angle and hence, in order to ascertain that requirement of Section 11AC is fulfilled, we have considered certain facts in the matter. 5. In the circumstances, the appeal is? allowed. We hold that the respondent-assessee is liable to penalty equivalent to evaded duty i.e. Rs. 1,79,400/-, unless they have already paid the interest under Section 11AB of the Central Excise Act, 1944 within thirty days from the date of the order passed ....