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The Commissioner C&CE, Tirupati. Versus M/s Mangal Precision Products Ltd.

2016 (11) TMI 1285 - CESTAT HYDERABAD

CENVAT credit - job-work - capital goods - CENVAT credit on depreciation on the duty part of the value of capital goods - Held that: - The provision of Rule 4(4) of Cenvat Credit Rules, 2004 does not bar the assessee form taking cenvat credit on capital goods in the subsequent year after availing benefit of depreciation under IT Act in the year of receipt of capital gods. The respondent has earned credit of ₹ 17,07,038/- in the year of receipt of capital goods. He would be eligible for cre .....

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e for the Respondent. [Order per: Sulekha Beevi, C.S.] 1. The respondents are engaged in the manufacture of fasteners such as MS bolts, HTS bolts, plates and covers made of mild steel, copper inserts etc.,and articles of plastics. During the year 2006-07, the respondent undertook job work for M/s Amara Raja Batteries Ltd. Tirupati following the procedure laid under Notification No.214/86-CE dated 25-03-1986 as amended. The respondents imported certain capital goods during the year 2006-07 and us .....

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74,701/- under Section 32 of the Income Tax Act, 1961. In the subsequent year, they availed the balance credit of ₹ 12,32,337/-. The department entertained a view that in terms of Rule 4(4) of Cenvat Credit Rules, 2004, once depreciation on the duty part of the value is claimed under Income Tax Act, 1961, cenvat credit on same capital goods shall not be allowed. A show cause notice was issued to the respondent raising the above allegation and proposing to recover the cenvat credit of ͅ .....

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iled the benefit of depreciation under the IT Act, 1961, in the year of receipt of the capital goods, ought not to have availed the cenvat credit on capital goods in the subsequent year. He also stressed the point that in the subsequent year, the respondent would be eligible for 50% of the balance amount only and the credit of ₹ 12,32,336/- availed by the respondent is against law. 4. The Ld. Counsel Shri S.Narayana appearing on behalf of the respondent, opened his arguments by adverting t .....

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ded to bar the assessee from availing double benefit by simultaneous availment of benefit of depreciation under IT Act and laso credit under Cenvat Credit Rules, 2004. He submitted that the respondent was eligible for credit on 100% of the duty on capital goods and therefore, the avialement of balance credit of ₹ 12,32,336/- in the subsequent year is fully in order. 5. I have heard both sides. 6. The relevant provision of Rule 4(4) of Cenvat Credit Rules, 2004 is reproduced as under Rule 4 .....

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nancial year if such capital goods are cleared as such in the same financial year. Provided further that the CENVAT credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, in respect of capital goods shall be allowed immediately on receipt of the capital goods in the factory of a manufacturer. Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT .....

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alance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the 1st schedule of the Excise Tariff .....

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