Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Unknown on 24 March, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT-II
Appeal No.E/594 & 595/05
Arising out of OIO No.10/BRC-I/MP/2004, dt.30.11.2004
Passed by: Commissioner of Central Excise & Customs, Vadodara
For approval and signature:
Honble Mr. B.S.V. Murthy, Member (Technical)
Honble Mr. Ashok Jindal, Member (Judicial)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant/s M/s. Gujarat Alkalies and Chemicals Ltd.
Shri U.M. Mane
Represented by Shri Prakash Shah (Adv) with
Shri J.C. Patel (Adv)
Vs.
Respondent/s CCE Vadodara
Represented by Shri Avinash Thete (SDR) CORAM:
MR. B.S.V. MURTHY, MEMBER (TECHNICAL) MR. ASHOK JINDAL, MEMBER (JUDICIAL) Date of Hearing:24.03.10 Date of Decision:
ORDER No. /WZB/AHD/2010 Per: B.S.V. Murthy:
The appellant Gujarat Alkalies and Chemicals Ltd. (hereinfter GACL) is engaged inter alia in the manufacture of Hydrogen Peroxide. During May 1995 September 1996 GACL purchased Hydrogen Peroxide Plant. GACL filed the modvat declaration in respect of the said plant on 3rd April 1997. Although GACL had filed the modvat declaration, it initially did not take capital goods credit in respect of the said plant. During the years 1996-97 to 1999-2000, GACL had in the Income Tax Returns claimed depreciation in respect of the said plant.
2. GACL availed 50% of the Modvat Credit in 2000-01 and the balance 50% in 2001-02. GACL did not claim the depreciation in respect of the plant during these two years. Further, the amount of duty of which credit was taken in these years was excluded from the value of the plant in the appellants books so that no depreciation of the amount of such duty would be available in future.
3. The issue was taken up by the Revenue for investigation and after issue of show cause notice and adjudication process, the Modvat Credit availed by the appellants was denied on the following grounds namely GACL had in the Income Tax Returns for the years 1996-97 to 1999-2000 claimed depreciation, there was delay in filing the modvat declaration and credit was taken after four years. In the impugned order Cenvat Credit of duty amounting to Rs.4,62,11,753/- with interest has been demanded and a penalty equal to the amount demanded under Section 11AC has been imposed and personal penalty of Rs.2,00,000/- has also been imposed on the second appellant namely the Deputy Manager of Excise of the appellants company.
4. Shri Prakash Shah, learned advocate, on behalf of the appellants presented detailed arguments. He also made written submissions relevant portions of which are reproduced below for convenience.
3. Submissions:
On claiming of depreciation:
3.1 Rule 57R (5) provided that no credit of the specified duty paid on the capital goods shall be allowed, if the manufacturer claims depreciation under Section 32 of the Income Tax Act, or as Revenue expenditure under any other section of the Income Tax Act in respect of that part of the value of capital goods which represents the amount of specified duty on such capital goods.
3.2 The said Rule 57R (5) has been interpreted by the Tribunal and the High Court in the following decisions as having the object of ensuring that a manufacturer does not get benefit of both the capital goods modvat credit as also of depreciation under the provisions of Income Tax:
(a) 2001 (138) ELT 1225 Terna Shetkari Sahakari Sakhar Karkhana Ltd. Vs. CCE
(b) 2002 (141) ELT 172 - Pasari Spinning Mills Ltd. Vs. CCE
(c) 2003 (159) ELT 777 Terna Shetkari SSK Vs. CCE.
(d) 2008 (224) ELT 391 CCE Vs. Maharashtra Electrosmelt Ltd.
Thus where the benefit of depreciation under Section 32 of the Income Tax Act for calculating the income tax has not been enjoyed, there can be no bar to the claiming of Modvat Credit.
3.3. In the present case for the years 1996-97 to 1999-2000 when GACL had claimed depreciation, it was assessed to tax under the provisions of minimum alternate tax contained in Section 115JA of the Income Tax Act and for calculation of such tax the depreciation claimed under Section 32 has no bearing.
3.4 The Income Tax Assessment Order for the financial year 1996-97 appears at pages 200 to 212 of the appeal. It would be apparent from page 211 that the income which is computed under Chapter IV of the Income Tax Act after deducing depreciation under Section 32, was Rs.7,80,82,400/-. However it will be apparent from page 212 that the assessment is not on this income, but the assessment is on income computed under Section 115JA which is Rs.17,61,57,554/-. Thus in determining the income tax, the benefit of depreciation has not been availed or enjoyed by GACL. Reliance is placed on the decision of the Tribunal in the case of Sri Vishnu Shankar Mill Ltd. Vs. CCE 2007 (208) ELT 194 in which it is held that when in computing the income on which the tax is determined the benefit of depreciation is not considered there is no double benefit and hence credit cannot be denied.
3.5. For the financial years 1997-98, 1998-99, 1999-2000, even going by Section 115JA there was a loss and hence there was no income tax liability and consequently the question of enjoying the benefit of depreciation in calculating the income tax did not arise.
3.6. Without prejudice to the aforesaid submissions, it is submitted that in any event the depreciation was not claimed in the years in which Modvat Credit was claimed. While in the years 1997-98, 1998-99 and 1999-2000 depreciation was claimed (though no benefit enjoyed for computation of income tax), no Modvat Credit was claimed in these years. In fact in these two years when Modvat was claimed, the amount of Modvat was excluded from the value of the plant in the books of account so that no depreciation thereon can be taken in future also. Reliance is placed on the following decisions in support of the submission that when in a given year modvat is not taken, there is no bar in that year to claim depreciation. There is no bar to claiming depreciation in a given year for that portion of the duty of which credit is not taken in that year:
Suprajit Engineering Ltd. Vs. CCE 2007 (212) ELT 394 Roots Cast P. Ltd. Vs. CCE 2007 (216) ELT 448.
On delay in filing the Modvat declaration:
3.7. It is settled law as laid down by the following decisions that substantive benefit of Modvat cannot be denied for delay in filing the modvat declaration:
(a) 2002 (144) ELT 561 J.B.M. Tools Ltd. Vs. CCE
(b) 2006 (204) ELT 230 UOI Vs. Grasim Industries Ltd.
On delay in taking the Modvat Credit:
3.8. The credit was not initially taken since the file containing the duty paying documents had been misplaced. On the same being traced, the credit was taken. It is settled law that there being no time limit prescribed for the taking of credit, the substantive benefit of credit cannot be denied on the ground of delay in taking the credit as is laid down by the following decisions:
(a) Phillips India Ltd. Vs. CCE 2005 (191) ELT 1028
(b) Surya Prabha Mills Ltd. Vs. CCE 2002 (149) ELT 929.
To the same effect is the Board Circular No.199/33/96-CX dated 23.4.96.
On larger period of limitation:
3.9 The appellant bonafide believed that since appellant had not taken the credit in the years in which the depreciation was claimed and vice versa, there was no breach of the relevant provisions of law. Further, it was bonafide believed that since the assessment was done under the provisions of minimum alternative tax under Section 115JA for which benefit of depreciation under Section 30 of the Income Tax is not enjoyed, no double benefit was taken and hence there was no violation of the provisions of law. That such a view was a reasonable one follows from the fact that such a view has not been taken by the Tribunal in the case of Suprajit Engineering Ltd. Vs. CCE 2007 (212) ELT 394 and Roots Cast P. Ltd. Vs. CCE 2007 (216Z) ELT 448. Consequently, it cannot be said there was intention to evade duty and hence larger period is not applicable.
3.10 Further, the appellants records have from time to time been audited by the department and no objection to the taking of credit was raised on the ground of delay in filing the modvat declaration or in taking the credit.
5. Learned DR on the other hand submitted that extended period has been rightly invoked in this case and merely because the audit party has visited and as a result of visit of the audit party, show cause notice was issued would not be sufficient as a defence against the limitation. He relied upon the decision of the Tribunal in the case of Collector of C. Ex., Aurangabad Vs. Tigrania Metal & Steel Industries reported in 2001 (132) ELT 103 (Tri. Del.) and Chemfab Alkalis Ltd. Vs. CCE., Pondicherry reported in 2010 (251) ELT 264 (Tri. Chennai). Further, he also submitted that what is required as per the rule for becoming ineligible for Modvat Credit is the fact that the assessee has claimed depreciation. Whether the depreciation benefit could be utilized or not because of whatever reasons such as company suffering losses or company being assessed under Section 115JA of Income Tax Act is not relevant. Further, he also submitted that it is clear from the records that in the assessment order, deprecation benefit had indeed allowed.
6. During the relevant period Rule 57R provided that no credit of the specified duty paid on the capital goods shall be allowed, if the manufacturer claims depreciation under Section 32 of the Income Tax Act or as Revenue explained under any other Section of the Income Tax Act in respect of that part of the value of the capital goods which represents amount of specified duty of such capital goods.
7. The rule is very clear. Once a manufacturer claims depreciation which treats the expenditure towards specified duty as Revenue explained, he cannot avail the same as Cenvat Credit. However, the learned advocate relied upon several decisions of the Tribunal and submitted that where the benefit of depreciation under Section 32 of the Income Tax Act for calculating the income tax has not been enjoyed, there can be no bar to the claiming of Modvat Credit.
8. In Terna Shetkari Sahakari Sakhar Karkhana Ltd. Vs. CCE reported in 2001 (138) ELT 1225 (Tri. Mum.), the Tribunal as follows:
6. We do not find it possible for us to say that Modvat credit under Rule 57Q should be disallowed in a case simply because the manufacturer claimed depreciation on the value of the capital goods representing that amount of duty. It appears to us that the object behind Rule 57R is to ensure that the manufacturer does not get benefit both of the capital goods Modvat credit and of the depreciation provision of the Income Tax. He has to avail of either one or the other. The amendment made by the Finance Act, 1988 to Section 43(1) of the Income Tax Act to actual cost illustrates this point. By the amendment explanation 9 has been added below Section 43(1) providing that the actual cost of asset acquired on or after 1-3-1994 included the amount of additional duty of customs or Central Excise duty in respect of which claim of credit has been made and allowed under the Central Excise Rules. This provision appears to us to be a mirror image of sub-rule (5) of Rule 57R on the implication that claim for credit should not only have been made but should have been allowed. The position that claim for depreciation should have been permitted, appears to us to implicit in Rule 5 of Rule 57R. We would otherwise be left in a situation where a manufacturer is left with neither benefit. This could for example, happen in a situation where income tax disallowed the claim for depreciation on the capital assets for reason unconnected with the Modvat Credit, in that event the claim for depreciation of the entire cost of the capital assets which will include element of duty would not be available. It would then happen that the manufacturer merely because he had made a claim for depreciation would be debarred from taking Modvat Credit. In addition, the Commissioners view that the filing of a revised return is not permissible ignores the Provision 139(5) of the Income Tax Act, 1961. He ought to have considered this provision of the Act and satisfied himself by looking at the relevant income tax returns and other documents whether the claim merited consideration. We are of the view that he should at least do so. While doing so he may also consider the claim that the accounting practice followed by it, effectively washes out claim for depreciation under the Income Tax Act. The counsel for the appellant says that he will make submissions in these aspects supported by necessary evidence within two months from the receipt of this order. The Commissioner shall pass orders in accordance with law. The learned advocate relied on this paragraph to submit that what is required as per law is that the benefit of depreciation should have been enjoyed by the appellant. He submitted that in the first two years the appellants were assessed to income tax under Section 115JA which provides for minimum alternative tax even though the company had suffered losses. It is his submission that while imposing minimum alternative tax, the depreciation claimed is not taken into account for calculating book profits. According to him this amounts to non availment of depreciation and therefore the decision of the Tribunal above would squarely applied in this case. In this regard, it would be pertinent to reproduce the relevant portion of the assessment order for the assessment year 1997-98 in respect of depreciation.
13. Claim for depreciation:
The Assessee Company had claimed depreciation of Rs.69,18,30,093/- in computation of income filed along with return of income which was based on W.D.V. as per return of income filed for previous year by the assessee.
During the assessment the assessee company has re-submitted the claim of depreciation of Rs.70,47,52,374/- based on opening WDV as on 01.04.1996 and also addition/deduction made during the F.Y. 1996-97. After verification of addition/deduction made during the year and also allowing depreciation of Rs.1,49,02,364/- @ 25% on interest of Rs.5,96,09,456/- paid for Phospharic Acid and deprecition @12.50% of Rs.1,25,87,914/- on interest of Rs.10,07,03,312/- paid for Hydrogen Peroxide, the claim of depreciation is allowed totaling to Rs.73,22,42,652/-.
9. Further, when we go through the assessment order it is seen that there are several cases where the assessing officer has clearly disallowed certain claims. Some of the examples are disallowances under Rule 6(D), disallowance under Section 37(2A) disallowance under Rule 6(B), disallowance of portion of guest house expenses etc. Even though income tax was levied under Section 115JA, the assessment order discussed all the issues in detail and worked out the profit and finally in the last paragraph it was observed as follows:
The Income Assessed u/s. 143(3) of the I.T. Act, is Rs.7,80,82,400/-. The income declared under the provisions of MAT u/s. 115 JA of the I.T. Act is Rs.17,61,57,554/- which is more than income assessed u/s. 143(3) of the I.T. Act. Therefore the total income is assessed at Rs.17,61,57,554/-. Issue demand notice and challan, charged interest as per the provision of the I.T. Act. The last paragraph reproduced above clearly shows that the income was assessed under Section 143(3) of the I.T. Act as well as under Section 115 JA of the I.T. Act.
10. In fact the Commissioner in para 4.2 has reproduced the relevant portions of the assessment orders in respect of assessment years 1996-97, 1998-99 and 1999-2000 which show very clearly that in all the years the claim for depreciation made by the appellants was allowed. Therefore in the case of the appellant in this case, not only the appellants claimed depreciation, but the same was also allowed. Therefore, the decision of the Tribunal in para 6 reproduced above would not help the appellants. The case of Pasari Spinning Mills Ltd. Vs. CCE reported in 2002 (141) ELT 172 (Tri. Bang.) would also not be help since in that case it was held that when revised Income Tax Return is filed the same has to be considered along with statutory returns filed earlier and it has to be examined whether depreciation claimed was in fact availed. It is not the case of the appellant here that a revised return was filed. Even in that case the matter was remanded with a direction to the Commissioner to examine the revised return under Income Tax Act. Similarly, the decision of the Tribunal in the case of Terna Shetkari SSK Vs. CCE reported in 2003 (159) ELT 777 (Tri. Mum.) would also not be of help in view of the fact that in that case the assessee had proved that depreciation was not claimed by showing the returns and the assessment orders. In that case the appellants had also produced evidence to show that in the return filed no depreciation was claimed and no revised return was filed. Similar was the situation in the case of Maharashtra Electrosmelt Ltd. reported in 2008 (224) ELT 391 (Tri. Mum.) where also, the assessee has filed a revised return where depreciation was not claimed. In the case of Sri Vishnu Shankar Mill Ltd. Vs. CCE reported in 2007 (208) ELT 194, the income tax authorities had detected Cenvat Credit value of goods for calculating taxable income and certify assessment order was produced. On this basis the Tribunal held that there was no simultaneous availment. The decision of the Tribunal in Abhishek Synthetic Pvt. Ltd.reported in 2005 (182) ELT 339 (Tri. Bang.) also does not help since in that case also even though appellants took credit simultaneously, the assessee took remedial action on realizing the mistake and filed a revised Income Tax Return. In the case of Ennar Spinning Mills reported in 2009-TIOL-814-CESTAT-MAD also, it was taken note of by the Tribunal that even though initially there was simultaneous availment of Modvat Credit and depreciation, since revised return was filed in the subsequent year, it cannot be said that assessee availed both benefits simultaneously. However, in this case, the learned advocate relied upon the discussion in para 1 wherein the Tribunal had observed as under:
On appeal by the assessee, the Commissioner (Appeals) set aside the denial of credit and imposition of penalty after holding that although credit had been availed and depreciation had been claimed, in the Income Tax Return filed in the subsequent year, they have deducted the duty amounts in question which would mean that the depreciation though initially claimed, had not been availed and hence it is not a case of double benefit to the assessees. It was his submission that this is reproduction of facts and according to this, the assessee in that case had reversed the depreciation claimed in the previous year and it was not a case of revised return. Therefore it was his submission that the decision of the Tribunal in that case would be squarely applicable to the case of the appellants in view of the fact that appellants also reversed the depreciation in the subsequent year. Further, since appellants had not claimed Cenvat Credit earlier at all, it cannot be said that they had availed double benefit. We are not impressed with his argument. What the learned advocate has relied upon is reproduction of facts but not the finding. The findings of the Tribunal contained in para 2 is very clear and the Tribunal had observed that a revised return was filed in the subsequent year. Therefore we do not think this decision would help the appellants.
11. Another submission that was made is that in any event depreciation was not claimed in the years in which Modvat Credit was claimed. According to him depreciation was claimed in the years 1997-98, 1998-99 and 1999-2000 whereas Modvat credit was claimed only in the years 2000-2001 and 2001-2002. In the years when modvat was claimed, the amount of modvat was excluded from the value of the plant in the books of account so that no depreciation can be taken in future also. We are not convinced that this is the correct proportion as per law. The learned advocate relied upon the Tribunal decisions which we will consider. In Suprajit Engineering Ltd. Vs. CCE reported in 2007 (212) ELT 394 (Tri. Bang.), the Tribunal had observed in para 6 and 6.1 as follows:
6. We have gone through the records of the case carefully. We reproduce the relevant provisions of Cenvat Credit Rules below:
Rule 4. Conditions for allowing Cenvat credit:-
4(2)(a): The Cenvat credit in respect of capital goods received in a factory at any point of time in a given financial year shall be taken only for an amount not exceeding fifty percent of the duty paid on such capital goods in the same financial year:
Provided that the Cenvat credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if the said capital goods are cleared as such in the same financial year.
(b) The balance 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 if the capital goods, other than components, spares and accessories [refractories and refractory materials, moulds and dies] and goods falling under heading No.68.02 and subheading No.6801.10 of the First Schedule to the Tariff Act. Are in the possession and use of the manufacturer of final products in such subsequent years.
4(4): The Cenvat credit in respect of capital goods 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 under Section 32 of the Income Tax Act., 1961 (43 of 1961).
6.1 A careful reading of Rule 4 reveals that in respect of Capital Goods received in a factory at any point of time in a given financial year, only 50% of the duty paid can be taken as Cenvat credit. 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 under Section 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. In these circumstances, 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.
12. We do not think that this decision can be applied to the present case. In this case the appellant claimed full depreciation which was allowed by the Income Tax Authorities in the year in which the plant and machinery was purchased/installed. Once full depreciation was claimed, the appellant is barred from availing Modvat credit. The decision in Roots Cast Pvt. Ltd. Vs. CCE reported in 2007 (216) ELT 448 (Tri. Chennai) relied upon the decision of the Tribunal in the case of Suprajit Engineering Ltd. which we have already discussed above. In any case Honble Karnataka High Court on an appeal filed against the decision of the Tribunal in Suprajit Engineering Ltd. case allowed the appeal filed by the Revenue (2010-TIOL-272-HC-KAR-CX in Excise). The Honble High Court observed that the Tribunal committed a serious error in not considering sub-rule (4) of Rule 4 of Cenvat Credit Rules.
13. As regards the observation of the Commissioner in the order that appellant is not eligible for the credit in view of delay in filing the declaration under Rule 57 (T) of Central Excise Act, 1944, the learned advocate submitted that it is settled law that substantive benefit of Modvat credit cannot be denied for delay in filing the Modvat declaration. For this purpose he relied upon the decisions of the Tribunal in the case of J.B.M. Tools Ltd. Vs. CCE reported in 2002 (144) ELT 561 and Grasim Industries Ltd. reported in 2006 (204) ELT 230. We find that both these decisions related to the period subsequent to 09.02.1999 the date on which sub rule(13) was inserted under Rule 57(T) of Central Excise Rules, 1944 and this rule vested powers with the Assistant Commissioner to allow credit where he is satisfied that duty has been paid and capital goods have been actually used. This sub rule was introduced by Notification No.7/99-CE-NT dated 09.02.1999. In J.B.M. Tools case, the department proposed to deny the credit on the ground that the declaration was filed on 31.3.99 in respect of machinery acquired much earlier. In the case of Grasim Industries Ltd., declaration was filed on 12.07.2000 beyond the period of three months. In both these cases, the declarations were filed after 09.02.99 and therefore the department was required to examine and consider the declarations in terms of law as it existed on the date of declaration. Therefore both these decisions are not applicable to the facts of the present case. On the other hand the learned Commissioner in his order has considered this issue and his observations are reproduced below:
Time limit for an action is not a procedural aspect. That as per the wording of the then Rule 57T(1), the declaration shall be filed, before receipt of the capital goods with the jurisdictional AC/DC. Further, as per the then Rule 57T(3), if a manufacturer was not in a position to make the declaration, within one month or in exceptional cases within a further period not exceeding, in any case, more than 2 months, from the date of receipt of the said capital goods, the jurisdictional AC/DC may on sufficient course allow the filing of the declaration. From this rule, it is clear that condonation of only one month and in exceptional cases, condonation of 3 months (maximum) can be allowed by the JAC/DC. In this case, assessee has given the declaration 23 months after the receipt of the capital goods. They have produced no condonation application and suomoto taken benefit of such large amount of Modvat credit. The word shall puts a statutory binding to file declaration before receipt of the capital goods. The filing of declaration is therefore not a procedural requirement, but statutory requirement, which has not been followed by the assessee. This has been upheld by various Courts that filing of declaration within time is a statutory requirement and cannot be waived off. I rely upon the following judgments:
(i) P.G. Conducts V/s. Collector of Central Excise 1996 (81) ELT 336 (T) Rule 57G does not only say that a declaration may be filed but lays down shall file a declaration. The rule also prescribes to obtain a dated acknowledgement of the said declaration. From these two requirements, it may very clearly be stated that the requirement of the rule is not just a technical formality or a procedural requirement, but is substantive.
(ii) Asian Paints Ltd. V/s. CCE 1997 (93) ELT 198 (T) The argument that omission to file declaration under Rule 57G is a mere procedural irregularity cannot be accepted as that would amount to violence to language mentioned in Rule 57G.
These two judgments are equally applicable to Rule 57T as the provisions of Rule 57G for inputs are parallel to that of Rule 57T for capital goods.
14. We find ourselves in agreement with the above observations.
15. Since we have held that the appellant is not eligible for the Cenvat credit, we are not considering the learned advocates submissions regarding availment of credit belatedly.
16. As regards limitation, we find that appellants claim that they had a bonafide belief that since the assessment was done under the provisions of MAT under Section 115 JA for which depreciation allowance is not taken into account, they could avail cenvat credit subsequently. The rule 57R reproduced above is very clear. What is relevant is not the procedure or the process of assessment but the claim made by the assessee. The rule requires the assessee to determine when capital goods are received whether he would like to claim depreciation on the portion of specified duty or avail cenvat credit. He cannot avail both. Therefore once depreciation was claimed and allowed (in this case), the question of availing cenvat credit does not arise. If the appellants were to take precautions of consulting the department and seeking advice before reversing the depreciation claim and availing cenvat credit, question of invocation of extended period would not have arisen. There is no basis for the bonafide belief in this case in view of the fact that a conscious claim had been made for depreciation. The fact that no declaration was filed immediately after receipt of capital goods and the same was filed after 23 months also goes against the appellants since it would show that appellant made a conscious decision to avail depreciation and not cenvat credit when capital goods had been received in the factory. The submission that invoices/Central Excise documents were lost and therefore credit could not be taken also goes against the assessees since it is difficult to believe that when such huge quantum of capital goods are received, any company of the size of the appellant in this case would not ensure that the goods have been received under proper documents. All these factors go to show that appellant made a conscious decision not to avail cenvat credit when goods were received and subsequently changed the opinion but failed to intimate the department or failed to take note of legal consequences. Under these circumstances we find that there was suppression/mis-declaration on the part of the appellants. As regards the visit of the audit party, we find the decisions cited by the learned DR are relevant. In view of the above, we find that the appeal filed by the appellants as regards duty demand and interest thereon has to be rejected and accordingly is rejected. As regards penalty under Section 11AC of Central Excise Act, 1944, we find that Commissioner has not given the option of payment of full duty, interest within thirty days along with penalty to the extent of 25% of duty payable in full settlement as per the provisions of law. Therefore, in line with the decision of the Tribunal in the case of Swathi Chemicals etc, we consider it fit to allow this benefit. If the appellants deposit the full amount of Cenvat credit demanded with interest and 25% of the duty demanded within thirty days from the date of receipt of this order, they would not be required to pay 75% of the duty towards penalty under Section 11AC of Central Excise Act, 1944. It is made clear that if any of the elements namely duty, interest or penalty to the extent of 25% of duty is not paid within thirty days of the receipt of this order, the penalty shall be 100% of the duty demanded.
16. As regards personal penalty of Rs.2,00,000/- imposed on the Deputy Manager of the company, in view of the fact that the manager was acting only as an employee and this is not a case of clandestine removal and also in view of the fact that penalty has been imposed under Section 11AC of Central Excise Act, 1944 on the appellant company, we consider that there would be no need to impose any penalty on Shri U.M. Mane, Deputy Manager. Accordingly, the appeal filed by Shri U.M. Mane against imposition of penalty is allowed.
(Pronounced in Court on _________________)
(Ashok Jindal) (B.S.V. Murthy) Member (Judicial) Member (Technical)
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