Cenvat Credit available on input services even if depreciation is also claimed on it

By | February 10, 2017
(Last Updated On: February 10, 2017)

CESTAT, MUMBAI BENCH

Shree Pandurang SSK Ltd.

v.

Commissioner of Central Excise, Pune-III

RAMESH NAIR, MEMBER, (J.)
APPEAL NO. E/592 OF 2012

ORDER NO. A/85139/17/SMB

DECEMBER  7, 2016

Sanjay Hasija, Superintendent (AR) for the Respondent.

ORDER

Ramesh Nair, Member (J.) – The issue involved in the present case is that appellant availed Cenvat credit in respect of input service. The input service is related to erection, installation of capital goods. The services on which credit was taken has been capitalized and depreciation was claimed. The contention of the department is that since the value of services including service tax was capitalized, the Cenvat Credit in terms of Rule 4(4) of Cenvat Credit Rules, is not admissible.

2. None appeared on behalf of the appellant however there is an adjournment letter dated 2-12-2016 placed on record by the advocate. After going through the records, I am of the view that matter can be disposed of.

3. Shri. Sanjay Hasija, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that appellant has availed double benefit. One is cenvat credit on the service tax paid on the service and second same amount has been capitalized and depreciation was also claimed therefore Cenvat credit should not be allowed in terms of Rule 4(4) of CCR, 2004.

4. I have carefully considered submissions made by Ld. A.R. and perused the record.

5. I find that Cenvat credit was availed on services related to erection, installation of the capital goods. Revenue sought denial of credit invoking Rule 4(4) of Cenvat Credit Rules, 2004 which reads as under:

Rule 4. Conditions for allowing CENVAT credit.

(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 or provider of output service claims as depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961).

On going through the above rule, it is clear that restriction in availing credit if the depreciation availed, is only in respect of capital goods and not on services. Admittedly the Cenvat credit involved in the present case is of service tax paid on the services even though it is related to erection and installation of capital goods. Since there is no explicit provisions to restrict the Cenvat credit on input services if the assessee claims depreciation, the cenvat credit cannot be denied, therefore the impugned order is set aside. Appeal is allowed.

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