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2006 (11) TMI 493 - AT - Central ExciseCenvat/Modvat - Capital goods purchased - contravened Rule 4(4) of Cenvat Credit Rules - HELD THAT:- In the present cases, the appellants had taken only 50% of the duty paid on Capital Goods in the first year. On this point, there is no dispute. That means, in respect of the balance 50% of the duty on capital goods, as per rule, the appellant had not taken Cenvat credit in the first financial year. There is nothing in the rules, which debars the appellant from availing depreciation on the balance 50% of the duty, which is not availed as Cenvat credit. As regards the second year, as per Rule 4(2)(b), the appellants availed the Cenvat credit. Cenvat Rule 4(4) makes it clear that Cenvat credit shall not be allowed in respect of that part of the value of Capital goods which represents the amount of duty on such capital goods which the manufacturer claims as depreciation u/s 32 of the Income Tax Act. Even though it appears that in the first year, the appellants had violated the rule, actually they have not violated the rules for the simple reason that they had availed depreciation only in respect of that portion of duty on which they had not taken Cenvat credit. Thus, we are of the view that there is no violation of the provisions of Cenvat Credit Rules. Hence, the impugned orders are not sustainable. We allow the appeals with consequential relief, after setting aside the impugned Orders-in-Appeal.
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