Dredging Corporation of India Vs Commissioner of Central Tax (CESTAT Hyderabad)
Material Facts
The assessee, engaged in providing taxable services including dredging services, imported a Self Propelled Trailer Suction Hopper Dredger on 18.12.2012 and availed CENVAT credit of the countervailing duty (CVD) amounting to ₹33,64,90,592 under the CENVAT Credit Rules, 2004 (CCR). The dredger was capitalised in the books of account, though the CVD component was excluded from the capitalised value since CENVAT credit had been availed. The Department issued a show cause notice alleging that the dredger qualified neither as “capital goods” nor as “inputs” under the CCR. The adjudicating authority disallowed the credit, ordered recovery with interest, but did not impose any penalty. Both the assessee and the Department filed appeals.
Procedural History
The Commissioner disallowed CENVAT credit of ₹33,64,90,592, ordered recovery with interest under Rule 14 of the CCR read with Sections 73 and 75 of the Finance Act, 1994, and dropped penalties under Rules 15(1) and 15A of the CCR. The assessee appealed against the denial of credit, while the Department challenged the non-imposition of penalty.
Legal Issues
The Tribunal considered:
- Whether the imported dredger qualified as an “input” under Rule 2(k) of the CENVAT Credit Rules, 2004 for providing dredging services.
- Whether the dredger should be treated as “capital goods” for the purpose of the exclusion clause under Rule 2(k) despite not falling within the definition of capital goods under Rule 2(a).
- Whether capitalisation of the dredger and claim of depreciation under the Income Tax Act disentitled the assessee from claiming CENVAT credit.
- Whether penalties under Rules 15(1) and 15A of the CCR were leviable.
Relevant Statutory Provisions
