Excise duty collected as trading receipt and bank guarantees backed by fixed deposits do not satisfy actual payment under section 43B.

Excise duty collected from customers by a processor was treated as part of trading receipts, because the levy attached to manufacture and the collection was only a business mode of recovery; the plea of agency or overriding title was rejected. Section 43B barred deduction until actual payment, so an accrued excise liability could not be claimed merely on the basis of bank guarantees backed by fixed deposits, since that did not amount to immediate discharge to the Government. The assessee's claim failed on both issues and the addition was sustained.

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Issues: Whether excise duty collected from customers by a processor constituted a trading receipt in its hands; whether the amount was deductible without actual payment in view of section 43B; and whether furnishing of bank guarantees against fixed deposits amounted to actual payment for the purpose of deduction.

Analysis: The collection of excise duty was held to be part of the assessee's trading receipts. The nature of excise duty was treated as a levy on manufacture, with collection being a matter of convenience, and the sums collected from customers were not treated as amounts outside the assessee's business receipts. The plea that the assessee was merely an agent or that the customers had an overriding title was rejected. The statutory bar in section 43B applied because the liability had accrued during the year and deduction was available only on actual payment. A bank guarantee backed by fixed deposits was not equated with actual payment, since it did not result in immediate discharge to the Government within the statutory time.

Conclusion: The excise duty collected was taxable as trading receipt and no deduction was allowable on the basis of bank guarantees or fixed deposits; the assessee's claim failed on both counts.

Final Conclusion: The addition made by the Assessing Officer was restored and the revenue's position was upheld.

Ratio Decidendi: Excise duty collected from customers forms part of trading receipts, and deduction under section 43B is allowable only on actual payment to the Government, not on furnishing of a bank guarantee backed by fixed deposits.

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