LAWS(KAR)-2010-3-268

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX., LARGE TAX PAYER UNIT Vs. SUPRAJIT ENGINEERING LTD., UNIT-II

Decided On March 12, 2010
Commissioner Of Central Excise And Service Tax., Large Tax Payer Unit Appellant
V/S
Suprajit Engineering Ltd., Unit -Ii Respondents

JUDGEMENT

(1.) THIS appeal is by the revenue challenging the order passed by CESTAT, South Zone Bench, Bangalore in Final Order No. 1854 & 1855/2006 dated 8.11.2006, raising the following substantial question of law. Whether the Tribunal was right in arriving at decision that the assessee availed Cenvat Credit during second year as per Rule 4(2)(b) of Cenvat Credit Rules and further the finding of the tribunal that there is no bar under Rule 4(4) of the Rules to claim the depreciation of the balance 50% of the value of the capital goods which represents the duty under Section 32 of the Income Tax Act, without noticing the show cause notice, wherein it is stated that the assessee has availed the second 50% of the value of the capital goods in respect of which Cenvat Credit availed from all the units and the same is contrary to Rule 4 of said Rules?

(2.) FACTS leading to this case are as hereunder: Respondent -assessee is having its factory at Bommasandra Industrial A4rea, engaged in the manufacture of excisable goods falling under heading Nos. 8714, 8483, 8708 and respondent is availing Cenvat Credit of duty paid on inputs/capital goods. During 2000 -01 assessee purchased capital goods and availed 50% of Cenvat credit on capital goods as per the prevailing rules and it had also availed depreciation under Section 32 of IT Act in respect of the remaining 50% of Cenvat Credit which was not availed by it. For the next financial year on the un -availed 50% claimed benefit. Revenue having noticed that the assessee claiming depreciation under the Income Tax Act and also availing Cenvat credit in respect of un -used 50% in the previous year, issued a show cause notice calling upon the respondent -assessee to pay duty and also to pay interest and penalty. A reply was sent by the assessee and thereafter jurisdictional Deputy Commissioner passed an order on 30.7.2004 stating that the assessee had availed credit amounting to Rs. 1,62,926/ - and imposed penalty of Rs. 25,000/ - and demanded interest under Rule 12 of Cenvat Credit Rules R/w Section 11AB of the Central Excise Act. Being aggrieved by the order of the Deputy Commissioner, assessee filed an appeal before the Commissioner of appeals which appeal also came to be dismissed on 31.3.2005. Being aggrieved by the sane, assessee filed an appeal before the tribunal, tribunal by its order dated 8.11.2006 allowed the appeal of the assessee and being aggrieved by the same revenue has come up in this appeal.

(3.) COUNSEL for the revenue contends that when the assesses had availed 50% of the Cenvat Credit for the relevant assessment year and having claimed depreciation under Section 32 of the Income Tax Act for the remaining un -utilized credit, it was not open for the assessee to claim credit again in subsequent assessment year. Therefore, he contends that issuance of show cause notice by the revenue and levy of interest and penalty was justified. According to him, tribunal without considering the relevant provision of law and without giving any finding has allowed the appeal. According to him, order passed by the tribunal is one without application of mind and contrary to Rule 4 of Cenvat Credit Rules. In the circumstances, he requests the court to allow the appeal.