CENVAT credit adjustment before return due date qualifies as payment for deduction under section 43B

Additional evidence objection under Rule 46A failed because the RG-23 register copies had already been filed before the Assessing Officer and were not produced for the first time at appellate stage. Excise duty liability adjusted through CENVAT credit before the due date of filing the return was treated as payment for section 43B purposes, supported by the register entries and tax audit report. On that basis, deduction was allowable and no disallowance was warranted. The assessee's relief was sustained on both procedural and substantive grounds.

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Issues: (i) Whether the first appellate authority erred in admitting additional evidence in violation of Rule 46A of the Income-tax Rules, 1962; (ii) Whether excise duty liability adjusted through CENVAT credit before the due date of filing the return constituted payment so as to allow deduction under section 43B of the Income-tax Act, 1961.

Issue (i): Whether the first appellate authority erred in admitting additional evidence in violation of Rule 46A of the Income-tax Rules, 1962.

Analysis: The same RG-23 register copies relied upon in appeal had already been filed before the Assessing Officer along with the assessee's letter, and the appellate authority referred to those very documents. Since the material was not new evidence introduced for the first time at the appellate stage, the procedural objection under Rule 46A did not survive.

Conclusion: There was no violation of Rule 46A, and the objection was rightly rejected.

Issue (ii): Whether excise duty liability adjusted through CENVAT credit before the due date of filing the return constituted payment so as to allow deduction under section 43B of the Income-tax Act, 1961.

Analysis: The liability was supported by the RG-23 register and the tax audit report, which showed adjustment through the CENVAT mechanism before the due date. The appellate authority treated adjustment against MODVAT/CENVAT credit as a recognised mode of payment under excise law and relied on precedent holding that such adjustment amounts to actual payment for section 43B purposes.

Conclusion: The excise duty adjusted through CENVAT credit was treated as payment, and the deduction under section 43B was allowable.

Final Conclusion: The revenue's challenge failed on both procedural and substantive grounds, and the relief granted to the assessee was sustained.

Ratio Decidendi: Where the relevant register entries and audit report show that excise duty liability was adjusted through CENVAT or MODVAT credit before the return due date, such adjustment constitutes payment for the purposes of section 43B, and no disallowance is warranted.

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