2001 (6) TMI 50

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....ded for the excise/ customs duty on stocks lying in the bonded warehouse on the ground that the duty was payable only on removal of goods from the bonded warehouse. Facts : The petitioner, Hindustan Lever Limited, manufactures and imports raw materials for its manufacturing activities and bonds the same before removal. They pay excise duty and customs duty only at the time when goods are removed from the bonded warehouse. In their accounts for the year ending March 31, 1995, a note was appended stating that the company had not made the provision for excise/customs duty. On November 30, 1995, the company filed its return for the assessment year 1995-96 as well as accounts drawn as on March 31, 1995, and as on December 31, 1994. The com....

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.... date for filing the return. Despite the said reply, the Assessing Officer issued the impugned notice under section 148 of the Income-tax Act, on March 31, 2000, alleging that the company's income for the assessment year 1995-96 had escaped assessment within the meaning of section 147 of the Income-tax Act. Hence, this petition. Arguments : On behalf of the petitioner, it has been urged that customs and excise duty in the present case became payable by the company only at the time of removal of the goods, from the bonded warehouse. Therefore, as on March 31, 1995, when the accounts were prepared, a note was incorporated in the profit and loss account to the effect that the company has not made any provision for excise and customs duty....

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.... as per the said reasons, there is nothing to indicate escapement of income from assessment once the company effected payment of duty before the due date, i.e., November 30, 1995. In reply, Mr. Desai, learned senior counsel appearing for the Department, contended that the company had not made a provision for duty on the stock lying at the year end in the bonded warehouse, estimated at Rs. 11.25 crores and, accordingly, the said amount has not been included in the closing stock. He contended that by virtue of non-inclusion of the said amount, the cost of the goods sold by the company is overestimated and by virtue of overestimation of the said cost, the profits are understated. He contended that the duty became payable when the goods were....