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Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Laws/2011-12/1412

Credit on Capital Goods

Case: EEI Capsules Ltd v/s Commissioner of C. Ex, Bhopal

Citation: 2011 (271) ELT 227 (Tri-Del)
 
Issue:- Full credit availed on capital Goods in the year of procurement – only interest liability can be imposed.
 
Issue of claiming depreciation under Income tax on full value – whether excide duty element included to be verified from CA certificate and Balance sheet as well as from Income Tax department.  
 
Brief fact:- Appellant are manufacturers of machinery for the manufacture of Empty Hard Gelatine Capsules. They were operating under Cenvat Credit scheme. The appellant took 100 percent cenvat credit on Capital goods in the year of procurement instead of taking credit at the rate of 50 percent in the first year and remaining 50 percent in the second year as prescribed in CCR, 2002/2004. Another objection raised was that the appellant had availed depreciation under Income Tax on the value of capital goods including the duty element. Proceedings were initiated against the appellant. The Adjudicating Authority confirmed the demand.
 
In appeal, the Commissioner (Appeal) upheld the original order by holding that the CA certificate produced by appellant showing non taking of depreciation by the appellant on the duty amount was issued on the basis of fake documents.
 
Against the impugned order, appellant is in appeal before the Tribunal. Application for waiver of pre-deposit and grant of stay is also filed.
 
Appellant’s Contentions:- Appellant contended that although they have taken full duty on capital goods in one year instead of 50 percent in first year and remaining in next year, the remaining 50 percent was available to them the next year, therefore, the only liability imposed on them can be of interest. No demand of cenvat credit amount and imposition of penalty could be ordered.
 
On the issue of depreciation, appellant submitted CA certificate certifying that depreciation was availed only on value of capital goods excluding the excise duty element. They have also produced the invoices of the relevant period showing break up of duty element and the value of capital goods.   
 
Respondent’s Contentions:-Revenue relied upon the statement of the Executive of appellant in charge of the stores, who stated that depreciation was claimed on full value of capital goods including the duty element. It was stated that this statement was not retracted. It was submitted that the fact of availing depreciation in Income Tax on full value was concealed from the department therefore, the extended period of limitation was invokable and penalty under Section 11AC was imposable.    
 
Reasoning of Judgment:-With regard to availment of cenvat credit, it was held that although by taking full credit in the first year, the appellant had contravened the Rule 4 (4) of Cenvat Credit Rules, 2004; but the fact remains that the remaining 50 percent credit was to be available to them in the subsequent year.Thus, it was held that only interest liability can be fastened on the appellant-assessee.
 
With regard to claim of depreciation at full value, it was held that the certificate issued by Chartered Accountant was produced explaining in detail that value of capital goods in respect of which depreciation was claimed did not include element of central excise duty. It was held that finding of Commissioner (A) that CA certificate was issued on the strength of forged document was not sustainable as the forged documents were not specified. Moreover, if there was any doubt, the Commissioner (Appeal) should have made enquiries from the Income Tax Department on the issue. But this was not done. It was further held that the appellant had produced invoice wise break up of each invoice value into the basic price plus central excise duty and sales tax and had claimed that it is the total of the basic price plus central sales tax during 2003-04 and 2004-05, which in the balance sheet of these years, has been mentioned as the amount on which depreciation had been claimed, but this plea was not considered. Prima facie, case made out for waiver of pre-deposit and for grant of stay.       
 
Decision:- Stay granted.
 

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