Vegetable oils levy treated as excise duty, making the provision disallowable under section 43B.

The levy under the Vegetable Oils Cess Act, 1983 was treated according to its substance, not its label, because the statutory scheme showed it to be a duty of excise on vegetable oils produced in mills in India, with refund and exemption provisions aligned to the Central Excise framework. The fact that the proceeds were first credited to the Consolidated Fund of India also supported its character as a statutory tax-like impost. On that basis, the amount was held to be a duty or tax and was liable to disallowance under section 43B, so the assessee's claim failed.

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Issues: Whether the amount provided towards cess on vegetable oils was a tax or duty so as to attract disallowance under section 43B.

Analysis: The levy under the Vegetable Oils Cess Act, 1983 was described as a cess, but its statutory scheme showed that it was a duty of excise on vegetable oils produced in any mill in India. The levy was in addition to excise duty under the Central Excise and Salt Act, 1944, and the provisions relating to refund and exemption under that Act were made applicable. The proceeds were first credited to the Consolidated Fund of India and only thereafter could be paid to the Board at the discretion of the Central Government. In these circumstances, the nomenclature of cess did not change the essential character of the levy, which was in the nature of excise duty or tax rather than a mere cess.

Conclusion: The amount was correctly treated as a statutory levy in the nature of duty or tax and was liable to disallowance under section 43B; the assessee's claim was rejected.

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