TMI Blog2015 (3) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents suppressed the facts before the department on availing simultaneous benefit. The respondent's plea of communication lapse is beyond acceptable. - The deliberate misdeclaration and willful suppression of facts by the respondents was established by the adjudicating authority. The undisputed fact that, but for the Departmental officers detecting the case on 5.3.2002 it would not have come to notice and this fact was completely ignored by the LAA. Therefore, I hold that there is merit, in the revenue appeal and the impugned order waiving interest and penalty under Section 11AC and restoring the Modvat credit to the respondent w.e.f. 30.6.99 is liable to be set aside and the adjudication order dt. 28.9.2004 demanding the credit, confirming interest and imposing penalty under Section 11AC is liable to be restored. - Decided in favour of Revenue. - Appeal No. E/306/2005, E/CO/9/2005 - - - Dated:- 25-3-2015 - Hon ble Shri R. Periasami,J. For the Appellant : Shri M. Rammohan Rao, DC (AR) For the Respondent : Shri C. Saravanan, Advocate ORDER This is an appeal filed by Revenue against Order-in-Appeal No.3/2005 (M-IV) dt. 22.1.2005 passed by Commissioner ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the submissions of both sides, we find that at the time of passing of the final order dt. 12-11-2009 application for rectification of mistake/revising the return filed by assessee was not accepted by the income tax authorities and therefore the order was passed by the Tribunal in a wrong premise. It is an error on the face of record and therefore, it is necessary to rectify the mistake on final order passed by the Tribunal. Accordingly, we recall the final order dt. 12.11.2009 for hearing to rectify the mistake therein. 5. Heard both sides. 6. The Ld. A.R for the Revenue reiterated the grounds of appeal and findings of the original adjudication order. He submits that the Commissioner (Appeals) has erred in restoring the credit from the date of taking credit and setting aside penalty and interest. As per Rule 57R (8), credit on capital goods shall not be allowed in respect of that part of the value of capital goods of which the manufacturer claimed depreciation or as Revenue expenditure under Income Tax Act. In this case, the respondents have filed declaration before the Department as per Rule 57T (2) dt. 27.5.99 and declared that no depreciation claimed under Section 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Headoffice, Delhi. He further submits that they have filed appeal before Commissioner (Appeals) only against the interest and penalty. Revenue has not filed any appeal against the adjudication order against allowing credit from 31.5.2004. There is no suppression or misdeclaration with intention to evade tax. He further submits that the unit was under loss and not utilized the depreciation. They filed application under Section 154 of Income Tax Act for withdrawing the depreciation which was initially rejected by the assessing officer. However, Commissioner of Income Tax (Appeals) has allowed their appeal. Therefore, they are eligible for availing capital goods credit by virtue of the CIT(A) order. He further submits that if at all there is a case, it is for the IT department who should have denied the depreciation. The case law relied by Revenue has not attained finality. He relied on the following case laws :- 1) Terna Shetkari Sahakari Sakhar Karkhana Ltd. Vs CCE Aurangabad 2001 (138) ELT 1225 (Tri.-Mum.) 2) Chandrapur Magnet Wires (P) Ltd. Vs CCE Nagpur 1996 (81) ELT 3 (SC) 3) Alcobex Metals Ltd. Vs CCE Jaipur-II 2003 (161) ELT 350 (Tri.-Del.) 4) K.V. Mills Vs CCE C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised return reversing the depreciation claimed was filed subsequently for the same financial year only. Hence, any alterations, amendments, additions, deletions made in the revised returns and approved by the department dates back to the applicable financial year for which the returns were filed and status quo ante restored vis a vis the original returns. I also find that the Commissioner of Income Tax (Appeals), vide her Order dated 31.5.2004 has interalia held that the intimations submitted under Section 154 of the Act by the Appellant on 28.03.2002 was based on the wrong computations of depreciation to that extent ordered the assessing Officer to rectify the intimation under section 143 (1) of the Act for Assessment year 1999-2000. The aforesaid Order of CIT (Appeals), apart from restoring the status of the credit availment / depreciation claim to the stage before the Income tax returns had been filed by the assessee, will also have the consequential effect of requiring the Appellant to obviously discharge a higher Income tax liability for the Assessment year 1999-2000 than they would have if the plea for withdrawal of their depreciation claim had not been allowed. Vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division and declared that they shall not claim depreciation under Section 32 of the Income Tax Act. Whereas in their Income Tax return filed before the Income Tax authorities on 31.12.99 they duly claimed depreciation on the value of capital goods credit. I find that the said return was duly accepted by the Income Tax department and to that effect an intimation was also issued by the Income Tax Department on 24.7.2000. Therefore, it is admitted fact that during the relevant period, respondents on the one side availed credit of duty paid on the capital goods and also claimed depreciation under Section 32 of the Income Tax Act. 14. It is an admitted fact that only on 26.3.2002 i.e. after the case was detected by the department, they decided to file an application before Income tax authorities under Section 154 of the IT Act. I find that the said declaration filed under Section 154 of the IT Act was initially dismissed by the Asst. Commissioner of Income Tax vide order dt. 9.1.2004, it is relevant to reproduce the findings of the above I.T original order as under :- The assessee's contentions have been considered and are being rejected in view of the following :- (i) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Commissioner (Appeals) in the impugned order has not brought out any valid reasons against findings of OIO and set aside both interest and penalty under Section 11AC and other penalties by referring to CIT (A)'s above order and by citing Tribunal decision. The deliberate misdeclaration and willful suppression of facts by the respondents was established by the adjudicating authority. The undisputed fact that, but for the Departmental officers detecting the case on 5.3.2002 it would not have come to notice and this fact was completely ignored by the LAA. Therefore, I hold that there is merit, in the revenue appeal and the impugned order waiving interest and penalty under Section 11AC and restoring the Modvat credit to the respondent w.e.f. 30.6.99 is liable to be set aside and the adjudication order dt. 28.9.2004 demanding the credit, confirming interest and imposing penalty under Section 11AC is liable to be restored. 17. In addition to the above findings discussed in the preceding paragraphs, I find that the documents available in the appeal file and submissions made by both revenue and respondents reveals the subsequent proceedings against the said Commissioner Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2009 as the depreciation on imported capital goods initially availed by the assessees and subsequently reversed has been disallowed by the Income Tax Appellate Tribunal against which the assessees have filed an appeal before the Hon'ble Delhi High Court and the case is listed for hearing before the High Court in January 2010. This clearly shows that the respondents themselves brought on record before this Tribunal that the respondents had filed appeal before the Delhi High Court. 20. Therefore, taking into account above facts and circumstances of this case, it is evident that respondents have filed T1 and T2 declaration before the Central Excise authorities and declared that they shall not claim any depreciation under Section 32 of the Act, whereas the Hon.Apex Court in their order dt. 6.8.2012 settled the issue of claim of depreciation in respect of that part of the value of capital goods representing specified duty on the said capital goods under Section 32 of the Income Tax Act, 1961. Therefore the respondents have no legal grounds to enjoy both Modvat credit on capital goods under Central Excise Act and depreciation under Income Tax Act. Accordingly, they are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace on record that CIT (A)'s order dt. 31.5.2004 was set aside by ITAT on 20.10.2006 and the Hon'ble Delhi High Court also dismissed their appeal on 29.10.2010 and the SLP was dismissed by the apex court on 6.8.2012. The respondents were fully aware of the fact that they have lost their case before Income Tax Department and any law abiding company ought to have respectfully accepted and paid the demand but the respondents deliberately chose to remain silent and failed to do so. 22. Therefore, by respectfully following the Hon'ble Bombay High Court's order and the Tribunal's Division Bench decision, I have no hesitation in holding that the impugned order of the lower appellate authority is liable to be set aside and the respondents are not entitled to avail of the impugned Modvat credit on the capital goods and liable for recovery of ₹ 24,79,790/- as capital goods credit from the date of taking the credit i.e. 30.06.1999. The respondents are also liable for recovery of interest on the said amount under Section 57U (8) read with Section 11AB of the Central Excise Act and liable for penalty under Section 11AC as per the original adjudication order. ..... 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