Cenvat Credit on depreciation claimed capital goods is allowed if the depreciation claim is withdrawn by filing revised return under Income Tax Act.

PJ/Case Laws/2012-13/1297

Case:- MULTICHEM V/s COMMISSIONER OD CENTRAL EXCISE, VADODARA

Citation:- 2012 (282) E.L.T. (Tri. – Ahmd.)

Brief Facts:- During the course of audit of the records of the assessee, it was noticed that the assessee had claimed depreciation in respect of duty element on the capital goods on which Cenvat credit was taken. On pointing of such finding, the assessee filed revised returns under the Income Tax Act regarding their claim of depreciation. Subsequently, show cause notice was issued to the assessee to submit his reply as to why the said cenvat credit should not be disallowed.

Appellant Contentions:- The Appellant submits that he relied on following cases:

·          Prasad Machinery Pvt. Limited

·          Ennar Spinning Mills

·          Nishfibres

As per the above cases, if a revised return was filed, the question of double benefit to the assessee in the form of depredation and Cenvat credit would not be available. Therefore, once the revised return is filed, the demand for Cenvat credit cannot be sustained. In the case of Nish Fibres case, revised return was filed after the show cause notice was issued. Therefore, the claim for Cenvat credit should be allowed and the issue on merits has to be decided in favour of the assessee.

Respondent Contentions:- The respondent reiterated the submissions made to the lower adjudicating authorities. It was contended that the appellant had only produced a certificate from Chartered Accountant about filing of returns but copies of returns and outcome thereof was not produced.

Reasoning of Judgment:- On considering the submissions made, it was found that the fact remains that the appellant had filed revised return which resulted in reduced depreciation to the extent of Rs. 35,000/- which worked out nearly to 10% which corresponds to the depreciation along with the duty element. However, 2 years revised depreciation claim is actually more than which was claimed earlier and therefore, the matter is required to be reconsidered. The matter may be remanded to the original authority so that the appellant submit detailed explanation and copies of the returns so that original adjudicating authority is satisfied that depreciation has not been claimed in respect of the duty element on which Cenvat credit has been availed.

Further, it was held that the decisions cited by the appellant were squarely applicable in the instant case and benefit of these decisions should be extended to the appellant.

In view of the above discussion, impugned order is set aside, matter is remanded to original adjudicating authority, who shall decide whether the revised depreciation claimed before the Income Tax authorities has been accepted or not, and if accepted whether the depreciation on the Cenvat credit element of capital goods has been claimed or not.

Decision: - Appeal Allowed.

Comment:This case draws the analogy that cenvat credit cannot be denied if the depreciation claimed on the duty element of capital goods is withdrawn by filing revised returns under the Income Tax Act.

But we have also come across a query where the assessee has not filed the revised return but adjusted the excess depreciation in next year return. This means he has forgone the benefit. But no case law pertaining to the same is found by us. Now, what is to be done? We seek the suggestion from readers of our website.

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PJ/Case Laws/2012-13/1297

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