Commissioner Of Central Excise vs Vishnu Paper Products Pvt. Ltd

[Arising out of Order-in-Appeal No.18/20078 (P) dated 31.1.2007 passed by the Commissioner of Central Excise (Appeals), Chennai]

Commissioner of Central Excise Pondicherry Appellant

Versus

Vishnu Paper Products Pvt. Ltd. Respondent

Appearance:

Shri K.P.Muralidharan, AC (AR) For the Appellant None For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :19.3.2015

FINAL ORDER No.40329/2015

Revenue filed appeal against the impugned Order-in-Appeal No.18/2007 (P) dt. 31.1.2007 passed by Commissioner of Central Excise (Appeals), Chennai.

2. None appeared for the respondent despite notice. The case was adjourned on 3.3.2014, 9.5.2014 when none appeared for the respondent. Since the appeal is an old one and the respondents are not serious in pursuing the appeal, I proceed to take up the appeal for hearing and decision on merits.

3. The brief facts of the case are that adjudicating authority confirmed the demand of Rs.16,82,086/- as ineligible cenvat credit with interest and imposed penalty equal to the demand under Rule 13 of Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act. He also imposed penalty of Rs.1 lakh under Rule 13 of CCR 2002. On appeal by the respondent-assessees, the lower appellate authority vide impugned order partly upheld the order to the extent of Rs.1,97,241/- cenvat credit availed on the capital goods and a penalty of Rs.98,620/- in respect of simultaneous availment of cenvat credit and depreciation from Income Tax on the ground that they have produced revised IT returns for the years 2000-01 and 2001-02 and original return for 2002-03. Revenue filed appeal against that portion order of the Commissioner (Appeals) remanding the case to the lower authority on the simultaneous availment of cenvat credit and depreciation.

4. Heard Ld. AR who reiterates the grounds of appeal as well as the findings of the adjudicating authority. He states that Commissioner (Appeals) has erred in holding that respondents have filed revised IT returns whereas this fact has already been discussed by the adjudicating authority vide para 15.4 of his order. He also submits that the adjudicating authority has rightly disallowed as respondents have claimed depreciation from the Income Tax department for the relevant period and also availed modvat credit on the capital goods. He relied on the decision of Hon'ble Karnataka High Court in the case of CCE & ST Bangalore Vs Suprajit Engineering Ltd.  2010 (253) ELT 369 (Kar.) and the Tribunal's decision in Gujarat Alkalies & Chemicals Ltd. Vs CCE Vadodara-I  2010 (262) ELT 753 (Tri.-Ahmd.).

5. Respondent has not filed any written submissions.

6. The short issue arises in this appeal is simultaneous availment of modvat credit as well as claiming depreciation under the Income Tax Act. The lower appellate authority has remanded this aspect to the adjudicating authority for de novo adjudication. Revenue pleaded that there was no requirement of remanding to the lower authority only on the ground that respondent filed revised returns for the years 2000-01, 2001-02 and 2002-03. On perusal of the OIO, it is clear that respondents have not produced any new argument before the Commissioner (Appeals). On perusal of the adjudication order at para 15.4. the adjudicating authority has clearly brought out the facts of filing revised returns for the year 2001-02, 2001-02, 2002-03 & 2003-04. It was clearly brought out that respondent filed declaration under Rule 4 (4) of CCR that they have not claimed any depreciation wherein it has been clearly brought out that respondents have not claimed depreciation in their IT return for the year 2001-02 on that part of the value representing duty on the capital goods. These facts are clearly discussed by the adjudicating authority in his order. Therefore, it is evident that appellate authority remanded the case to the original authority only on the ground that respondents have filed revised returns without any discussion. Hon'ble Karnataka High Court in the case of Suprajit Engineering Ltd. (supra) clearly held that once the assessed claimed depreciation under Income Tax Act, he is not eligible for cenvat credit even if they have filed revised returns. The relevant para-6 of the order is reproduced as under :-

"6.?Having heard the counsel for the parties, we have to consider when the assessee has availed Cenvat credit to an extent of 50% in a particular financial year and claim depreciation under Sec.32 of the Income Tax Act and availed Cenvat credit in respect of unused 50% in subsequent assessment year. According to us, Tribunal has committed a serious error in not considering sub-rule(4) of Rule-4 of Cenvat Credit Rules. Without applying its mind, without coming to the conclusion how the assessee would be entitled to avail benefit of depreciation; under Sec.32 of the Income Tax Act and also claiming benefit of Cenvat credit in the subsequent year has allowed the appeal wrongly. Therefore, we are of the opinion that on account of improper interpretation of sub-rule (4) of Rule-4 of Cenvat Credit Rules, relief has been granted to the assessee by the tribunal which according to us requires to be set aside. In the circumstances, we are of the view that the assessee cannot claim depreciation under Sec.32 of the Income Tax Act in respect of non-utilized Cenvat credit and claiming benefit for the relevant assessment year having claimed depreciation under the Income Tax Act. Accordingly, we answer the question of law in favour of the Revenue and against the assessee. Counsel for the respondent contends that penalty and interest levied by the respondent has to be set aside by this Court since respondent much prior to the receipt of show cause notice has reversed the entries. So far as this point is concerned, appellant has not raised any question of law. On facts, if the entry has been reversed, we are of the view that the Revenue cannot levy penalty or interest."

The Division Bench of the Tribunal in the case of Gujarat Alkalies & Chemicals Ltd. (supra) on an identical issue has held that when an assessee claimed depreciation and also availed modvat credit, he is not eligible to avail credit. By respectfully following the above decision, I hold that Commissioner(Appeals) order to the extent of remanding to adjudicating authority on the issue of simultaneous availment of cenvat credit as well as claim of depreciation relating to the demand of Rs.14,84,845/- is required to be set aside and the OIO is restored.

7. Revenue's Appeal is allowed.

(Dictated and pronounced in open court)

(R. PERIASAMI) TECHNICAL MEMBER

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