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2016 (5) TMI 273 - MADRAS HIGH COURT

2016 (5) TMI 273 - MADRAS HIGH COURT - 2016 (337) E.L.T. 368 (Mad.) - Recovery of Modvat Credit together with interest and penalty - Benefit unlawfully claimed by way of depreciation even on the component of duty on which Modvat Credit had been taken - Appellant contended that while restoring the Order in Original, the Tribunal did not take note of that portion of the Order in Original which entitles the appellant to take Modvat Credit from 30.4.2005 - Held that:- appellant, though entitled to o .....

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e Act failed up to the Supreme Court. - The assessee started up with a claim for two benefits and ended up with losing both the benefits. Therefore, the question is as to whether at least after the appellant realised his mistake and had foregone one of the benefits the appellant should still be penalized? The answer to this question would be an emphatic no. It is true that only after detection by the Preventive Unit, the appellant attempted to withdraw one of the two benefits. But the mistak .....

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only be punitive. This cannot be the object of the grant of Modvat Credit. - At least in the Order in Original, the Original Authority declared the entitlement of the appellant to Modvat Credit from 30.4.2005. Now while restoring the Order in Original, the CESTAT has modified that portion also, without there being an appeal by the Department to the Appellate Commissioner as against the Order in Original. Therefore, the appellant is entitled to succeed. The Original Authority shall workout th .....

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This appeal is filed by the Assessee under Section 35G of the Central Excise Act, 1944, challenging the Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai. 2. We have heard Mr.C.Saravanan, learned counsel for the appellant/assessee and Mr.A.P.Srinivas, learned Senior Standing Counsel for the Department. 3. The Appellant was incorporated in August, 1997 and has its registered office at New Delhi. Its factory is located in Irunkatukottai, Sriperumbudur Taluk, Ka .....

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nes. 6. Unfortunately, in the Income Tax Returns for the Financial years 1998-1999, 1999-2000 and 2000-2001, the appellant claimed depreciation for the whole of the machinery, including the duty component, on which Modvat Credit has already been availed. This was detected by the Office of the Headquarters Preventive Unit on 5.3.2002. 7. Immediately, the appellant filed application under Section 154 of the Income Tax Act, 1961 for the rectification of mistake. By this time, the Returns filed by t .....

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only Revised Return ought to have been filed. 10. As a consequence, the Assessment Order was made on 29.3.2004 for the Assessment Year 2000-2001 and a show cause notice was issued on 28.5.2004. 11. In the meantime, the Commissioner (Appeals) allowed the application for rectification of mistakes, by his order dated 31.5.2004 and set aside the order of refusal dated 9.1.2004 passed by the Assessing Officer. This order of the Commissioner (Appeals) was set aside by the Tribunal which order was conf .....

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a show cause notice dated 28.5.2004 was issued by the Additional Commissioner of Central Excise, calling upon the appellant to show cause as to why the Modvat Credit taken by them should not be withdrawn. This show cause notice resulted in an Order in Original dated 28.9.2004, directing the recovery of the Modvat Credit together with interest and penalty for an equivalent amount. However, the Additional Commissioner observed in his Order in Original that the appellant would be eligible for Modv .....

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was necessitated on account of the fact that even while allowing the appellant to take Modvat Credit after 30.4.2005, there was an order for recovery. 15. By an order dated 25.03.2005, the Tribunal allowed the appeal filed by the Department and restored the Order in Original. Unfortunately, even while restoring the Order in Original, the Tribunal did not take note of that portion of the Order in Original which entitles the appellant to take Modvat Credit from 30.4.2005. Therefore, the assessee i .....

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ed returns for the subsequent year? 2. Whether the Hon'ble CESTAT was justified in concluding willful mis-declaration when indeed even on the date of investigation in Feb-March 2002, the depreciation claimed had remained un-utilized which in any event was given up in the subsequent IT Returns? 3. Whether the Hon'ble CESTAT was justified in upholding the demand when indeed the appellant has given up the depreciation which remained unabsorbed in the Income Tax Return in revised Income Tax .....

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in respect of the Assessment years 1999-2000 and 2000-2001. They were accepted. In so far as the Assessment year 1998-99 is concerned, the time limit for filing a revised return had already expired and the attempt of the appellant to file application for rectification under Section 154 of the Act failed up to the Supreme Court. 18. In simple terms the assessee started up with a claim for two benefits and ended up with losing both the benefits. Therefore, the question is as to whether at least a .....

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