TaxTMI 
TaxTMI 
2000 (3) TMI 163
X X X X Extracts X X X X
X X X X Extracts X X X X
....applicable to the case of the assessee; disregarding the relevant provisions contained in the Central Excise Act more particularly sub-s. (4) of s. 4 of the Central Excise Act under which the assessee had liability in law to pay the central excise to the central excise department and for this reason, the provisions contained in s. 43B of the Act were fully applicable to the case of the assessee. It may also be mentioned that the interpretation made by the CIT(A) would lead to an absurd situation, where neither the customers/clients nor the assessee would be covered under the provisions contained in the s. 43B of the Act, and thus, the legislative intention in enactment of the s. 43B would get frustrated. (3) The learned CIT(A) has erred on facts and in law in treating that making of the FDR was sufficient to discharge the assessee's liability so far as payment of excise duty is concerned and in such set of circumstances, the CIT(A) has erred on facts and in law to hold that the s. 43B is not applicable in the case of the assessee. The CIT(A) failed to appreciate the purpose and intention enunciated while introducing the provisions of s. 43B of the Act, as spelt out in the speech....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce parties deposited ---------------------------------------------------------- 2040 (1985-86) 16,26,631.04 8,44,948.70 7,81,682.34 2041 (1986-87) 33,51,336.28 3,30,175.58 30,21,160.70 ---------------------------------------------------------- Thus, for asst. yr. 1985-86 the assessee deposited the amount of Rs. 7,81,682 in the fixed deposit account with Bank of Baroda and similarly for asst. yr. 1986-87 an amount of Rs. 30,21,160 have been further deposited in the F.D. account. The total amount deposited in the excise duty FDR account from asst. yrs. 1985-86 to 1989-90 along with the interest thereon amounted to Rs. 89,12,622. These deposits are reflected in the balance sheet of the assessee which appear on pp. 60 to 65 of the paper book filed during the course of hearing before the Bench. Subsequently the Supreme Court passed the final order in the year 1987 reversing the order of the Gujarat High Court and upholding the levy of excise duty on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sy. He would take into consideration the directions given by the Tribunal in the case of M/s Dyeing and Printing Mills so far as those directions axe relevant to the facts of the relevant assessees." 5. The CIT(A), therefore, having considered the facts held that the assessee was not the owner of the cloth received by it for the purpose of processing. Thus, the excise duty collected by him on the value of cloth in his fiduciary capacity was to be paid over to the Government of India through central excise department or in the eventuality of success before the Hon'ble Supreme Court, the amount was to be refunded to the constituents. The CIT(A) held that the provisions of s. 43B were not attracted and accordingly deleted the additions for both the years. Aggrieved with the orders of the CIT(A) the Department is in appeal before us. The case of the Department, as spelt out in the grounds of appeal reproduced above is broadly based on the following points: (1) The provisions of s. 43B are clearly applicable in the case of the assessee since the liability to pay the excise duty on the cloth belonging to the merchant manufacturers is cast on the assessee-firm. (2) Making of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....covered from the merchant-manufacturers by the assessee on the value of cloth processed by the assessee is concerned, we feel that the receipts in view of settled legal position constitutes trading receipts of the assessee. The decisions of Supreme Court in Chowringhee Sales Bureau (P) Ltd vs. CIT 1973 CTR (SC) 44 : (1973) 87 ITR 542 (SC) and Sinclair Murray & Co. (P) Ltd. vs. CIT 1974 CTR (SC) 283 : (1974) 97 ITR 615 (SC), though rendered in the context of Sales-tax Rules, govern the facts of the instant case in the matter of excise duty realisation by the assessee. Further reliance is placed on the decision of Gujarat High Court in the case of Navjeevan Udyog Mandir (P) Ltd. vs. CIT (1994) 117 CTR (Guj) 360 : (1994) 207 ITR 40 (Guj) wherein the Hon'ble High Court has categorically held that the amount of excise duty collected by the assessee from the customers would form part of its trading receipts. Reference may further be made to the recent decisions of the Hon'ble Supreme Court in the cases of Jonballa Narasimharao & Co. & Ors. vs. CIT (1993) 112 CTR (SC) 126 : (1993) 200 ITR 588 (SC) and CIT vs. T. Naggi Reddy (1993) 115 CTR (SC) 418 : (1993) 202 ITR 253 (SC). 9. Now comi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of that the litigation is not guided by ulterior motive of evading or withholding excise duty payments. It is further to be noted that the amounts of excise duty Rs. 7,81,682 for asst. yr. 1985-86 and Rs. 30,21,160 for asst. yr. 1986-87 have not been utilised by the assessee for its business purposes but the amounts as and when fallen due have been deposited in the F.D. account with the Bank of Baroda for the purpose of providing bank guarantee to the excise authorities in compliance with the directions of the Hon'ble Supreme Court. The assessee had thus no control over active user of the money deposited with the bank. The assessee of course got the benefit of interest on these deposits and such interest income has been duly disclosed in the relevant assessment years and brought to tax by the AO. 10. It is in the light of the aforesaid facts of the assessee's case that the applicability of the provisions of s. 43B would have to be considered by us. Sec. 43B makes a departure from the accepted method of accounting adopted by the assessee and such departure is intended by the legislature for curbing the mischief of withholding of tax payments while claiming deduction in respect th....