Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Mumbai ... vs Crompton Greaves Ltd on 20 February, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. I
APPEAL NO. E/3789/01 Mum
(Arising out of Order-in-Appeal No. RJB/M.II/163/2001 dated 26.9.2001 passed by the Commissioner of Central Excise (Appeals), Mumbai II).
For approval and signature:
Honble Ms. Jyoti Balasundaram, Vice President
and
Honble K.K. Agarwal, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
Commissioner of Central Excise, Mumbai II
:
Appellant
Versus
Crompton Greaves Ltd.
Respondent
Appearance Shri Ajay Saxena, SDR for Appellant Shri J.F. Pochkhanwalla, Sr. Advocate for Respondents CORAM:
Ms. Jyoti Balasundaram, Vice President Shri. K.K. Agarwal, Member (Technical) Date of Hearing : 20.02.08 Date of Decision : 20.02.08 ORDER NO.
Per : Shri. K.K. Agarwal, Member (Technical) This is an appeal filed by the Revenue.
2. Brief facts of the case are that the respondents M/s. Crompton Greaves Ltd. are engaged in the manufacture of electric fan and parts thereof and were filing declaration under Rule 173C of Central Excise Rules, 1944 in respect of the clearances undertaken by them during the period April 1998 to Feb 1999. Scrutiny of the price list revealed that the respondents have claimed deduction in respect of turnover tax. The Jurisdictional Superintendent enquired from the respondents from time to time as to whether turnover tax has been actually paid to the relevant authorities or not and to provide evidence to that effect but the respondents did not furnish the relevant information. In view of the same they were issued show cause notices seeking to demand duty totally amounting to Rs.33,07,580.67 for the period April 1998 to Feb 99 in respect of the deduction of turnover tax claimed by them from the price for which they could not produce evidence of having paid the same to the relevant authority. The show cause notices were adjudicated by the Deputy Commissioner wherein they stated that they have actually claimed deduction of Rs.1,38,81,004/- as against Rs.2,54,42,922/- alleged to be claimed as deduction in the show cause notice. Further as per their own books of accounts they actually paid Rs.1,20,72,200/- as turnover tax to the State Government and submitted a Chartered Accountants certificate in respect of the same and therefore the excess turnover tax claimed as deduction amounted to only Rs.18,08,804/- on which the excise duty at the applicable rate came to Rs.2,35,145/-. They however claimed that the deductions are always claimed on an average basis and the actual incidence of taxes may vary from what is claimed as deduction. Therefore the question of imposing a ceiling of the actuals would not arise in such a case provided the genuineness of the equalized amount is accepted. They referred to the decision of the Honble Apex Court decision in the case of Baroda Electric Meters Ltd. 1999 (94) ELT 34 (SC) and Geep Industrial Syndicate Ltd. vs. Collector of C. Ex. 1998 (104) ELT 375 (Tri.) in which it is held that turnover taxes and octroi which were made irrecoverable could not have been collected but once these taxes were paid by the assessees to the authorities concerned the deduction of the same cannot be denied. The Deputy Commissioner agreed with the pleas advanced by the respondents and accordingly dropped the proceedings. This order was also upheld by the Commissioner (Appeals) on appeal being filed by the Revenue. It is against this order that the Revenue has come up in appeal.
3. The Revenue in its appeal has contended that tenor of the Supreme Court decision in the case of Baroda Electric Meters Ltd. is to allow marginal variation in deductions claimed but it does not give blanket approval for claiming deduction for taxes payable which is totally out of sorts with the actual taxed paid. Besides, the Supreme Court judgement relates to deductions on account of freight and not to deductions on account of taxes payable to the Government. A person cannot be allowed to make profit under the guise of taxes payable. Reference was invited to the Supreme Court decision in the case of Geep Industrial Syndicate Ltd. relied upon by the Commissioner (Appeals) in which it has been said that the genuineness of the equalized amount has to be acceptable. Since in this case the respondents themselves have admitted that a sum of Rs.18,08,804/- has not been paid to the relevant authority, the question of allowing deduction does not arise. This amount being substantial cannot be ignored. The ld. DR also invited attention to the recent decision of the Supreme Court in the case of Modipon Fibre Company vs. CCE, Meerut 2007 (218) ELT 8 (S.C.) wherein in para 18 while referring to the judgement of Bombay High Court in the case of Central India Spinning, Weaving and Manufacturing Co. Ltd. it was held that the only deduction which was permissible is of the actual duty paid or payable while fixing the assessable value.
4. The ld. Advocate for the respondents however submits that the Supreme Court has in the case of Baroda Electric Meters Ltd. as well as Geep Industrial Syndicate Ltd. clearly held that turnover taxes which are in the nature of irrecoverable taxes can be claimed as deduction on average basis. Since the taxes are dependent on the turn over, they cannot be ascertained at the time of clearances and are therefore claimed as deduction on the basis of average of the past year and such deductions on average basis cannot be disallowed. He referred to the decision of the Tribunal in the case of Peico Electronics and Electricals Ltd. vs. Collector of Central Excise, Pune 1994 (71) ELT 1053 (Tri.) where a similar view has been taken.
5. We have considered the submission. We find that it is an admitted fact that the respondents has not paid Rs.18,08,804/- during the period April 1998 to Feb 99 as turnover tax to the concerned authority. Provisions relating to the deductions of tax from the assessable value are contained in Section 4(4)(d)(ii) which read as under (d) Value in relation to any exercisable goods
(ii) Does not include the amount of the duty of exercise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made the trade discount. The above provision makes it very clear that what can be claimed a deduction is the taxes if any payable on such goods. It is not the respondents contention that though the tax payable was Rs.1,38,81,004.45 they have actually paid Rs.1,20,72,200/- and they are liable to pay the balance amount for that period to relevant authority. On the other hand it has been admitted that this is the amount which was neither paid nor payable for the relevant period. The respondents contention that an average means the deductions are to be claimed on the basis of average tax paid last year is unacceptable as nowhere it has been said so. Infact the meaning of average tax has been explained in para 5 and 6 of Geep Industrial Syndicate Ltd. decision wherein it has been stated that turnover tax and octroi differ from State to State and in order to maintain uniform price the collection of taxes are equalized and can be claimed as deduction. The decisions though says that ceiling on the basis of the actuals cannot be imposed but the same is subject to the condition that the genuineness of the equalized amount is accepted. Here as per the respondents themselves the amount paid is less than what has been claimed by around Rs.18,00,000/-. If quantum of tax is not ascertainable at the time of clearance the same can be claimed as deduction on a provisional basis subject to adjustment at the end of the year. The Apex Courts decision in the case of Modipon Fibre Co. also allows for deduction of actual duty paid. The Tribunals decision in the case of Peico Electronics and Electrical Ltd. referred to by the respondents supports the Revenue rather than the respondents as in para 36 while referring to the Apex Court decision in the case of Bombay Tyres International Ltd. 1984 (17) ELT 329 (SC), the observation of Supreme Court have been reproduced as under:-
Additional sales tax, surcharge on sales tax and turnover tax should be allowed to be deducted from the sale price in order to arrive at the assessable value and also octroi where payable / paid by the manufacturer. These taxes if proved to have been paid should be allowed even if they are paid periodically to the relevant taxing authority in accordance with the relevant provisions of taxing statutes / rules. Therefore this decision read with Apex Court decision in the case of Bombay Tyres International Ltd. makes it very clear that only those taxes which are proved to have been paid are to be allowed deduction and not others. The decision of the Tribunal in the case of Peico Electronics and Electrical Ltd. has been upheld by the Supreme Court as reported in 2000 (116) ELT. A72 (S.C.). The respondents last plea that revenues appeal goes beyond show cause notice has no substance as show cause notice sought to demand duty on deduction of turnover tax claimed by them from price for which no evidence was produced. Since the present appeal is confined to that quantum of turnover tax which admittedly has not been paid as tax to the relevant authority, it cannot be said to going beyond the show cause notice. In view of the above, we set aside the order of Commissioner (Appeals) and allow the Revenues appeal. (Pronounced in Court) (Jyoti Balasundaram) Vice President (K.K. Agarwal) Member (Technical) nsk 6