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TMI Blog2019 (12) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... de letter number nil dated 09.01.2008, submitted to jurisdictional Range Superintendent of Central Excise informed that they have taken the entire credit during the month of October 2007 and submitted that they have filed revised Income Tax return to the effect that depreciation has not been claimed on account of said capital goods procured in the year 2005-06. 2. On the basis of above information received by the department, a show cause notice was issued to the appellant wherein it was proposed to deny Cenvat credit availed on capital goods under Rule 14 of Cenvat Credit Rules, 2004 read with sub-Section (1) of Section 11A of Central Excise Act, 1944. It was also proposed to demand interest and imposition of penalty. The said show cause notice was adjudicated by the jurisdictional Commissioner vide the impugned order. The ground for denial of credit is that once the appellant have availed the depreciation, thereafter even by filing a revised return they are not entitled for the Cenvat credit, in terms of Rule 4 sub-rule (4) of Cenvat Credit Rules, 2004. Out of total credit denied, an amount of Rs. 2,72,769/- was related to building. Even though the appellant made a submission th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent Financial Years, the appellant was suffering a heavy loss which is more than the Cenvat credit involved. Therefore, even if it is contended that the appellant have claimed the depreciation, the same will not prejudice the Revenue for the reason that claiming of depreciation will not have any impact on the balance sheet as at the most, it will reduce the loss. But, since no profit accrued, no benefit of depreciation has gone to the appellant. Therefore, on this count also Cenvat credit cannot be denied. In support of his submission, he placed reliance on the following judgments:- (a) Progressive Systems vs. CCE, Bangalore - 2010 (251) ELT 536 (Tri. Bang.) (b) CCE, Bangalore vs. Progressive Systems - 2011 (267) ELT 473 (Kar.) (c) CST, Ahmedabad vs. Bharati Tele Ventures - 2018 (363) ELT 1068 (Tri. Ahmd.) (d) Nidhi Pipes Limited vs. CCE, Chandigarh-II - 2016 (343) ELT 1014 (Tri. Chand.) (e) CCE, Tirupati vs. Mangal Precision Products - 2017 (346) ELT 312 (Tri. Hyd.) (f) CCE, Surat vs. Nish Fibers - 2010 (257) ELT 81 (Guj.) (g) Steelman Rolling Mills - 2018 (5) TMI 1407 (Tri. Chand.) 5. Shri Sanjiv Kinker, Learned Superintendent (Authorised Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunals, which are referred to hereinabove. 10. The moot question for our consideration is as to whether the respondent-assessee has, in fact, claimed the depreciation and whether such claim has been allowed by the department. If the claim of depreciation is allowed then in that case the assessee cannot claim Modvat credit under the Central Excise Act. However this very aspect has been factually verified by the Commissioner (Appeals). It is specifically observed that in order to confirm the authenticity of the certificate, the predecessor of the Commissioner (Appeals) wrote a letter to the Commissioner of Income Tax, Surat with the request to confirm the authenticity of the said certificate, and in reply to that letter, the Commissioner of Income Tax has certified the authenticity of the said certificate. He, therefore, observed that the appellant has not availed depreciation on the value representing the amount of duty under the Income Tax Act, and therefore, he has not endorsed the view of the adjudicating authority. He has also observed that the condition for availment of modvat credit on capital goods is complied with by corrective method, even if at a later stage, and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d." 7. In view of the above jurisdictional High Court judgment, even though the depreciation and Cenvat credit was availed simultaneously but on filing of revised return, withdrawing the depreciation at a later stage, provide the Cenvat credit entitlement. The ratio of above judgment is applicable in the facts of the present case. On the similar issue, CESTAT Chennai in the case of Sathyam Auto Engineering (supra), dealing with the identical facts as in the present case, allowed the Cenvat credit on capital goods. CESTAT Chennai also had occasion to deal with identical issue in the case of Steelman Rolling Mills (supra), wherein the facts of the case is that though the assessee had availed Cenvat credit and claimed depreciation simultaneously, on being pointed out by the Revenue the assessee had foregone the depreciation in question, the Tribunal held that assessee is entitled to avail Cenvat credit. 8. Considering the above judgments, we are of the view that only because the appellant once claimed the depreciation but subsequently returned the said depreciation by filing the revised return, status of non-claiming of depreciation has been maintained. Accordingly, the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority denied the Cenvat credit only for the reason that appellant have claimed depreciation on building. We find that the appellant even though claimed the depreciation on the building which was subsequently returned, the credit was taken in respect of service tax paid on construction of factory building, as submitted by the appellant. Cenvat credit in respect of setting-up of factory building is clearly covered in terms of inclusion clause of definition of Input Services as provided in Rule 2(l) of Cenvat Credit Rules, 2004. Merely because the appellant have availed Cenvat credit showing it of building as capital goods, admissibility of Cenvat credit of service tax paid on construction of building does not get extinguished. It was held in plethora of judgments by this Tribunal that merely because the credit was taken under wrong head, the same is not sufficient to deny the credit.
12. As per our above discussion and findings, we are of the view that the appellant have rightly availed the Cenvat credit on capital goods and on construction service. Accordingly, the impugned order is set-aside. Appeal is allowed.
(Pronounced in the open court 20.12.2019) X X X X Extracts X X X X X X X X Extracts X X X X
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