Excise duty must be deducted from closing stock value per High Court ruling

The High Court dismissed the tax appeals, citing the precedent set in a previous case, ACIT v. Narmada Chematur Petrochemicals Limited. The court held that excise duty cannot be added to closing stock without a balancing deduction in the Profit & Loss account unless the duty is due and payable. The Tribunal's decision emphasized that excise duty should not be included in the valuation of closing stock unless both manufacturing excisable goods and their removal occur, as per excise duty regulations.

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Issues: The judgment involves the question of whether excise duty can be added to the closing stock without a balancing deduction in the Profit & Loss account.

Summary:
The Tribunal's finding, based on the decision in Narmada Chematur Petrochemicals Limited case, highlighted that excise duty cannot be considered a cost in relation to raw materials or finished goods in the closing stock if the duty is not due and payable. The Tribunal emphasized that excise duty is not includible in the valuation of closing stock unless both the events of manufacturing excisable goods and their removal occur, as per the scheme of excise duty. The judgment of the High Court in Narmada Chematur Petrochemicals case was cited to support this position, leading to the dismissal of the Revenue's appeals.

In conclusion, the High Court dismissed the tax appeals, stating that the controversy was already settled by the earlier judgment in ACIT v. Narmada Chematur Petrochemicals Limited, and therefore, no substantial question of law arose for consideration.

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