Assessee can change its claim of credit either as input or as capital goods at any stage of proceedings

Facts

1.    Assessee took CENVAT Credit on rails and other track materials, namely, sleepers, paints and crossings etc.Department denied credit on ground that same did not fall within definition of inputs, as they did not go in mainstream manufacture.

2.    Subsequently, during the appellate proceedings, assessee claimed credit of such goods as capital goods.The department argued that since ground of goods being 'capital goods' was not raised before lower authorities, same could not be raised for first time before Tribunal.

The high Court held in favour of assesse as under:

a.    There is no bar in changing the claim of admissibility of CENVAT credit either as capital goods or as inputs at any stage of the proceeding. Credit could not be denied merely on the ground that the claimof CENVAT credit had been changed at the Appellate stage from inputs to capital goods and vice versa.

b.    Since the department had accepted and followed the principle that CENVAT credit was admissible on rails and railway track materials under the new CENVAT Credit Rules, 2004, the assessee was also allowed to claim cenvat credit on rails and other track materials. - [2016] 66 taxmann.com 76 (Kolkata - CESTAT) incurred to earn the revenues must belong to the same accounting period.

c)    In the instant case, assessee could credit the profit and loss account with the quantum of subsidy only if the corresponding expenditure was also debited to the profit and loss account maintained by the assessee.

d)    Thus, where an assessee follows the accrual/mercantile system of accounting, income can be recognised only when the matching expenditure is also accounted for irrespective of the cash outflows/inflows during the year.

e)    Therefore, it would not be correct to recognise the subsidies received as income if it had not been spent for specific purposes. [2016] 66 taxmann.com 88 (Delhi)