DCIT, Circle-3(1), Kolkata, Kolkata V. M/s Digboi Carbon Pvt. Ltd, Kolkata

ITA 1628/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0803 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Section: 80IB; 37

Judgement Text

1 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM ] ITA NO.1628/KOL/2016 ASSESSMENT YEAR : 2012-13 D.C.I.T., CIRCLE-3(1), -VERSUS- M/S DIGBOI CARBON (P)LTD. KOLKATA KOLKATA (PAN:AACCD 2107 L) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.DASGUPTA, ADDL.CIT(DR ) FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 06.12.2017. DATE OF PRONOUNCEMENT : 08.12.2017. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 31.05.2016 OF CIT(A)-1, KOLKATA RELATING TO A.Y.2012-13. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 0L. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.L ,04,27,78 1/- MADE BY THE A.O. ON ACCOUNT THAT GOVERNMENT SUBSIDY IS NOT AN ALLOWABLE DEDUCTION U/S.80IC. 02. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.2,42,73,981 /- MADE BY THE A.O. ON ACCOUNT THAT EXCISE DUTY REFUND IS NOT AN A LLOWABLE DEDUCTION U/S.80IC. 03. THE REVENUE SHALL ALWAYS CRAVE FOR ADDING OR AL TERING ANY GROUND ON OR BEFORE THE DATE OF HEARING. 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUS INESS OF MANUFACTURE OF CLAIMED PETROLEUMCOKE. FOR A.Y.2012-13 THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S 80IC(2)(A)(III) OF THE ACT. SEC.80-IC (1) OF THE ACT PROVIDES THAT WHERE THE GROSS TOTAL 2 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB- SECTION (2) , THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). THE ASSESSEE IS A N UNDERTAKING OR AN ENTERPRISE REFERRED TO SEC.80-IC(2)(III) OF THE ACT VIZ., AN UNDERTAKING WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THI NG, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANU FACTURES OR PRODUCES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APR IL, 2007, IN ANY EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELO PMENT CENTRE OR INDUSTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PA RK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T IN THIS REGARD, IN ANY OF THE NORTH-EASTERN STATES. 4. THERE IS NO DISPUTE WITH REGARD TO THE QUESTION AS TO WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80-IC(2)(III) OF TH E ACT. WHILE ARRIVING AT THE PROFITS ON WHICH THE AFORESAID DEDUCTION WAS CLAIMED BY THE AS SESSEE THE ASSESSEE CONSIDERED GOVERNMENT SUBSIDIES OF RS.1,04,27,781 AND EXCISE D UTY REFUND OF RS.2,42,73,981/- AS PROFITS DERIVED FROM THE BUSINESS OF MANUFACTURE OF ARTICLE OR THING VIZ., CALCINED PETROLEUM COKE WHICH WAS MANUFACTURED IN A NEW CENT RAL UNIT AT ASSAM. 5. THE AO PASSED ORDER OF ASSESSMENT DID NOT ACCEPT THE CLAIM OF DEDUCTION U/S 80IC(2)(A)(III) OF THE ACT. THE CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE CIT(A ) BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING OF THE APPEAL IT WAS BROU GHT TO OUR NOTICE THAT THE HONBLE SUPREME COURT IN CIVIL NO.7622 OF 2014 JUDG MENT DATED 09.03.2016 (SINCE REPORTED IN 383 ITR 158(SC) HAS UPHELD THE ORDER OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD 332 ITR 91 (GAU ) WHEREIN THE QUESTION WHETHER 3 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 DEDUCTION U/S. 80IC(2)(A)(III) OF THE ACT WOULD BE AVAILABLE TO VARIOUS KINDS OF SUBSIDIES LIKE TRANSPORT SUBSIDY, POWER SUBSIDY, IN TEREST SUBSIDY AND SUBSIDY IN THE FORM OF REFUND OF CENTRAL EXCISE DUTY WAS CONSIDERE D AND IT WAS HELD THAT SUCH DEDUCTION ON THE AFORESAID SUBSIDIES SHOULD BE ALLO WED. IT WAS ALSO BROUGHT TO OUR NOTICE THAT CBDT HAS ISSUED CIRCULAR NO.39/2016 DAT ED 29.11.2016 WHEREBY THEY HAVE AFTER TAKING COGNIZANCE OF THE DECISION OF THE HONBLE SUPREME COURT REFERRED TO ABOVE, INSTRUCTED THE OFFICERS OF THE DEPARTMENT TH AT SUBSIDIES OF TRANSPORT, POWER AND INTEREST GIVEN BY THE GOVERNMENT TO THE INDUSTRIAL UNDERTAKINGS ARE RECEIPTS WHICH ARE REIMBURSED FOR COST OF PRODUCTION RELATING TO MANUF ACTURE OR SALE OF THE PRODUCTS AND THEREFORE HAVE A DIRECT NEXUS WITH THE PROFITS AND GAINS OF THE INDUSTRIAL UNDERTAKINGS. THE DEPARTMENT HAS ACCORDINGLY DIRECTED THE OFFICER S IN THE FIELD TO ALLOW DEDUCTION U/S 80IC OF THE ACT ON SUCH RECEIPTS ALSO. THE SAID CIRCULAR ALSO MENTIONS THAT APPEALS FILED BY THE DEPARTMENT ON THE ABOVE ISSUE SHOULD N OT BE PRESSED. 7. WE FIND THAT THIS ISSUE HAS BEEN ELABORATELY DEA LT WITH BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS MEGHALAYA STEELS L TD VIDE ORDER DATED 29.05.2013 WHEREIN THEIR LORDSHIPS HAD CLEARLY DISTINGUISHED T HE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA CASE AND IT IS P ERTINENT TO GO INTO THE OPERATIVE PORTION OF THE HONBLE GAUHATI HIGH COURTS DECISIO N IN RESPECT OF EACH CATEGORY OF SUBSIDY WHICH IS IN DISPUTE BEFORE US:- 1. TRANSPORT SUBSIDY 88. IN THE LIGHT OF WHAT HAVE BEEN DISCUSSED ABOVE , THERE CAN BE ESCAPE FROM THE CONCLUSION THAT TRANSPORT SUBSIDY WAS AIME D AT REDUCING THE COST OF PRODUCTION OF THE INDUSTRIAL UNDERTAKINGS COVERE D BY TRANSPORT SUBSIDY SCHEME. THUS, THERE WAS A FIRST DEGREE NEXUS BETWE EN THE TRANSPORT SUBSIDY, ON THE ONE HAND, AND COST OF PRODUCTION, O N THE OTHER. WHEN COST IS REDUCED, IT NATURALLY HELPS IN EARNING OF PROFIT A ND, AT TIMES, HIGHER PROFITS. SUCH PROFITS AND GAINS OUGHT TO HAVE BEEN TREATED, AND HAS RIGHTLY BEEN TREATED, BY THE LEARNED TRIBUNAL, TO BE PROFITS AND GAINS DERIVED FROM, OR DERIVED BY, THE INDUSTRIAL UNDERTAKING CONCERNED. 89. THE REVENUE, IT HAS BEEN RIGHTLY CONTENDED BY M R.AGARWALLA, LEARNED SENIOR COUNSEL, HAS NOT EVEN ATTEMPTED TO DISTINGUI SH THE DECISION, IN JAI BHAGWAN OIL & FLOUR MILLS CASE (SUPRA), IN ANY MANN ER WHATSOEVER, WHEN THIS DECISION MAKES IT MORE THAN ABUNDANTLY CLEAR T HAT TRANSPORT SUBSIDY 4 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 GOES ON TO REDUCE THE COST OF PRODUCTION OF THE IND USTRIAL UNDERTAKING LEADING TO EARNING OF PROFITS AND MAKING OF GAINS B Y THE INDUSTRIAL UNDERTAKING. 94. PUT SHORTLY, THERE IS AN EXISTENCE OF DIRECT NE XUS BETWEEN TRANSPORT SUBSIDY, ON THE ONE HAND, AND THE MANUFACTURING/PRO DUCTION ACTIVITIES OF INDUSTRIAL UNDERTAKING, ON THE OTHER, STANDS WELL E STABLISHED. UNLESS SHOWN OTHERWISE, THE INDUSTRIAL UNDERTAKINGS, IN THE PRES ENT SET OF APPEALS, WHICH HAVE BEEN GRANTED TRANSPORT SUBSIDY, ARE ENTITLED T O CLAIM DEDUCTIONS IN TERMS OF THE DIRECTIONS OF THE LEARNED TRIBUNAL. 2. POWER SUBSIDY : 105. FROM A COMBINED READING OF THE TWO DECISIONS , RENDERED IN RAJARAM MAIZE PRODUCTS (SUPRA) AND EASTERN ELECTRO CHEMICAL INDUSTRIES CASE (SUPRA), WHAT BECOMES TRANSPARENT IS THAT POWER SUB SIDY IS MEANT TO ENABLE A PERSON MEET A CERTAIN PERCENTAGE OF EXPENDITURE O N POWER AND IS, THEREFORE, REVENUE IN NATURE. HOWEVER, THOUGH REVEN UE IN NATURE, THE FACT REMAINS THAT IT HELPS IN NOT ONLY GROWTH OF THE IND USTRIAL UNDERTAKING, BUT ALSO HELP AN INDUSTRIAL UNDERTAKING TO EARN PROFITS AND MAKE GAINS. SUCH A SUBSIDY, THOUGH REVENUE IN NATURE AND TAXABLE ACCOR DINGLY, IS NONETHELESS COVERED BY THE PROVISIONS EMBODIED IN SECTION 80IB OR 80IC, AS THE CASE MAY BE. 106. SITUATED THUS, THE PRINCIPLE, DEDUCIBLE FROM T HE CASES OF SAHNEY STEEL & PRESS WORKS LTDS . CASE (SUPRA), RAJARAM MAIZE P RODUCTS CASE (SUPRA) AND EASTERN ELECTRO CHEMICAL INDUSTRIES CASE (SUPRA ), IS THAT WHEN A SUBSIDY, GRANTED BY GOVERNMENT, IS OPERATIONAL IN N ATURE, WHICH HELPS IN GENERATION OF PROFITS FOR ANY INDUSTRIAL UNDERTAKIN G, SUCH A PROFIT IS, INDEED, COVERED BY THE PROVISIONS EMBODIED IN SECTI ON 80IB OR 80IC, AS THE CASE MAY BE. 109. WE, NOW, TURN TO THE CASE OF PANCHARATNA CEMEN T (P) LTD. (SUPRA), WHEREIN AMITAVA ROY, J., (AS HIS LORDSHIP, THEN, WA S ), HAS, UPON CONSIDERATION OF THE SUBSIDY INVOLVED, TOOK THE VIE W THAT THE AMOUNT OF SUBSIDY, GIVEN BY WAY OF ASSISTANCE OR GRANTS BY TH E GOVERNMENT, SERVES AS STIMULUS TO THE WILLING INDUSTRIAL ESTABLISHMENTS T O CATER TO THE GROWTH OF THE REGION AND, THUS, REINFORCE THE EVENTUAL INCOME OF THE BUSINESS OF THE UNDERTAKING. THOUGH THE CASE OF PANCHARATNA CEMENT (P.) LTD. (SUPRA) IS, AS RIGHT POINTED OUT BY THE LEARNED ASG, AROSE OUT OF A WRIT PETITION AND NOT AN APPEAL UNDER THE ACT, THE FACT REMAINS THAT THE LAW, LAID DOWN THEREIN, IS 5 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 RELEVANT IN DETERMINING THE CONTROVERSY, WHICH IS R EQUIRED TO BE DEALT WITH IN THIS SET OF APPEALS. THE RELEVANT OBSERVATIONS, APPEARING AT PARA 32, IN PANCHARATNA CEMENT (P.) LTD. (SUPRA), IS, THEREFORE , QUOTED BELOW : ..IT CANNOT BE GAINSAID THAT HAVING REGARD TO TH E LAYOUT OF INVESTMENT AND INCOME DESIGNED FOR ANY COMMERCIA L OR BUSINESS VENTURE, REIMBURSEMENT OF THE EXPENSES INCURRED TO WHATEVER EXTENT, WOULD LOGICALLY CONTRIBUTE TO THE PROFITS AND GAINS DERIVED FROM THE RELATED ENTERPRISE AND THUS WOULD AUGMENT THE OVERA LL INCOME. THE AMOUNTS OF SUBSIDIES AS THE FACTS OF THE CASE REVEA L ARE BY WAY OF GOVERNMENT ASSISTANCE OR GRANTS UNDER THE SCHEMES T O PROVIDE STIMULUS TO THE WILLING INDUSTRIAL ESTABLISHMENTS TO CATER T O THE INDUSTRIAL GROWTH IN THE REGION AND, THEREFORE, THE SAME (SUBSIDY) ARE A IMED NECESSARILY AT NEUTRALIZING THE EXPENSES INCURRED AND THUS REINFOR CE THE EVENTUAL INCOME OF THE BUSINESS UNDERTAKING. (EMPHASIS SUPPLIED) 110. WE RESPECTFULLY AGREE WITH THE ABOVE OBSERVATI ONS, MADE IN PANCHARATNA CEMENT (P)LTD. CASE (SUPRA), AND THE LA W LAID DOWN THEREIN. 3.INTEREST SUBSIDY : 112. THE FACTS ARE, THEREFORE, NOT IN DISPUTE O N THIS ASPECT. THE DISPUTE IS : WHETHER THE INTEREST SUBSIDY IS PAYABLE ON NON -OPERATIONAL OR OPERATIONAL SUBSIDY? IF THE OBJECT OF THE RELEVANT SCHEME IS BORNE IN MIND, IT CLEARLY SHOWS THAT INTEREST SUBSIDY, HAVING AIME D AT REDUCING THE INTEREST PAYABLE ON WORKING CAPITAL BY AN INDUSTRIAL UNDERTA KING, HELPS DIRECTLY IN REDUCING THE COST OF MANUFACTURING OR PRODUCTION AC TIVITIES AND ESTABLISH THEREBY DIRECT AND FIRST DEGREE NEXUS BETWEEN THE I NDUSTRIAL ACTIVITIES OF THE ASSESSEE-RESPONDENTS, ON THE ONE HAND, AND THE INTE REST SUBSIDY, ON THE OTHER, RECEIVED BY THE ASSESSEE-RESPONDENTS AND, IN CONSEQUENCE THEREOF, SINCE INTEREST SUBSIDY RESULTS INTO PROFITS AND GAI NS DERIVED FROM, OR DERIVED BY, AN INDUSTRIAL UNDERTAKING, THERE IS NO REASON A S TO WHY SUCH PROFITS AND GAINS, EARNED BY AN INDUSTRIAL UNDERTAKING ON THE S TRENGTH OF SUCH A SUBSIDY, NAMELY, INTEREST SUBSIDY, BE NOT ALLOWED T O BE DEDUCTED FROM THE TAXABLE INCOME OF THE INDUSTRIAL UNDERTAKING CONCER NED. 8. THE HONBLE GAUHATI HIGH COURT HAD DISTINGUISHED THE DECISION OF THE HONBLE APEX COURT IN LIBERTY INDIA CASE AS FOLLOWS:- 124. LOGICALLY EXTENDED, THIS WOULD MEAN THAT THE RE WAS NO RELATIONSHIP OR NEXUS BETWEEN THE EXPORT INCENTIVE, ON THE ONE H AND, AND MANUFACTURING/PRODUCTION, ON THE OTHER. DEPB ENTITL EMENT WAS BASED ON 6 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 THE ARTIFICE OF DEEMED IMPORT CONTENT OF EXPORT PRO DUCT AND WAS NOT EVEN BASED ON ACTUAL IMPORT CONTENT OF THE EXPORT PRODUC T; WHEREAS, IN THE CASES AT HAND, THE TRANSPORT SUBSIDY WAS MADE AVAILABLE O N THE RAW MATERIAL ACTUALLY CONSUMED IN THE MANUFACTURING PROCESS AND FINISHED GOODS, WHICH WERE ACTUALLY PRODUCED AND TAKEN TO THE EXISTING MA RKET FOR SALE AND, SIMILARLY, POWER SUBSIDY, INTEREST SUBSIDY, AND INS URANCE SUBSIDY ARE, AS ALREADY INDICATED ABOVE, MADE AVAILABLE ON THE ACTU AL AMOUNT OF THE POWER BILL, INTEREST AND INSURANCE PREMIUM PAID BY THE AS SESSEE-RESPONDENTS CONCERNED THE INFERENCE, SO DRAWN, GETS REINFORCED FROM THE FACT THAT DEPB ENTITLEMENT WAS FREELY TRANSFERABLE AND SALEABLE RE SULTING IN PROFIT OR LOSS. 125. THAT THE CASE OF LIBERTY INDIA CASE (SUPRA) I S NOT APPLICABLE TO THE CASES AT HAND IS ALSO EVIDENT FROM THE FACT THAT TH E OBJECT BEHIND DEPB WAS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT DUTY OF THE EXPORT PRODUCT AND, HENCE, THE DEPB SCHEME WAS NOT AIMED AT NEUTRALIZING THE COST OF PRODUCTION; RATHER, AS OBS ERVED BY THE SUPREME COURT, IT WAS AN INCENTIVE FOR EXPORT AND ENTITLEME NT AROSE, WHEN EXPORT WAS MADE AND NOT OTHERWISE. 127. MOST IMPORTANTLY, POINTED OUT THE SUPREME COU RT, IN LIBERTY INDIA CASE (SUPRA), THAT THE RULES DO NOT ENVISAGE A REFU ND OF AN AMOUNT ARITHMETICALLY EQUAL TO EXEMPTION DUTY OR CENTRAL EXCISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER/MANUFACTURER. THIS IS THE STRIKING DIFFERENCE BETWEEN SUBSIDIES ON TRANSPORTATION COST, POWER, IN TEREST AND INSURANCE, IN THE CASES AT HAND, ON THE ONE HAND, AND DUTY DRAWBA CK SCHEME, ON THE OTHER, INASMUCH AS THE SUBSIDIES, SO PROVIDED TO TH E ASSESSES CONCERNED, ARE ARITHMETICALLY EQUIVALENT TO THE COST OF RAW MA TERIALS ACTUALLY USED IN THE MANUFACTURING PROCESS AND THE FINISHED GOODS, W HICH IS ACTUALLY TAKEN TO THE EXISTING MARKET FOR SALE WITHIN AND OUTSIDE THE NORTH-EASTERN REGION AND, SIMILARLY, THE ASSESSEES CONCERNED HAVE THE RI GHT TO RECEIVE POWER SUBSIDY, ARISING OUT OF POWER BILLS PAID, OR INTERE ST SUBSIDY OR INSURANCE SUBSIDY, EQUIVALENT TO THE AMOUNT PAID ON INTEREST AND INSURANCE RESPECTIVELY. THESE ASPECTS OF DEPB AND DUTY DRAWBA CK SCHEME GIVE RISE TO THE INFERENCE THAT THE DECISION, IN LIBERTY INDI A (SUPRA), WAS RENDERED, IN THE LIGHT OF ITS OWN FACTS, AND NOT FOR UNIVERSAL A PPLICATION. THIS INFERENCE GETS STRENGTHENED FROM THE FOLLOWING OBSERVATIONS M ADE IN LIBERTY INDIA CASE (SUPRA) : THE NEXT QUESTION IS WHAT IS DUTY DRAWBACK? SEC TION 75 OF THE CUSTOMS ACT, 1962 AND SECTION 37 OF THE CENTRAL EXC ISE ACT, 1944 EMPOWER GOVERNMENT OF INDIA TO PROVIDE FOR REPAYMEN T OF CUSTOMS 7 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 AND EXCISE DUTY PAID BY AN ASSESSEE. THE REFUND IS OF THE AVERAGE AMOUNT OF DUTY PAID ON MATERIALS OF ANY PARTICULAR CLASS OR DESCRIPTION OF GOODS USED IN THE MANUFACTURE OF EXP ORT GOODS OF SPECIFIED CLASS. THE RULES DO NOT ENVISAGE A REFUN D OF AN AMOUNT ARITHMETICALLY EQUAL TO CUSTOMS DUTY OR CENTRAL EXC ISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER-CUM-MANUFACTURER. SU B-SECTION (2) OF SECTION 75 OF THE CUSTOMS ACT REQUIRES THE AMOUN T OF DRAWBACK TO BE DETERMINED ON A CONSIDERATION OF ALL THE CIRC UMSTANCES PREVALENT IN A PARTICULAR TRADE AND ALSO BASED ON T HE FACTS SITUATION RELEVANT IN RESPECT OF EACH OF VARIOUS CLASSES OF G OODS IMPORTED. BASICALLY, THE SOURCE OF DUTY DRAWBACK RECEIPT LIES IN SECTION 75 OF THE CUSTOMS ACT AND SECTION 37 OF THE CENTRAL EXCIS E ACT (EMPHASIS SUPPLIED) 128. IN SHORT, THUS, THE DEPB AND DUTY DRAWBACK SCH EME WERE NOT, AS ALREADY INDICATED ABOVE, RELATED TO THE BUSINESS OF INDUSTRIAL UNDERTAKING PER SE FOR ITS MANUFACTURING OR PRODUCTION. ENTITLE MENT FOR DEPB OR DUTY DRAWBACK SCHEME AROSE, WHEN THE UNDERTAKING DECIDED TO EXPORT AFTER MANUFACTURING OR PRODUCTION AND THIS INCENTIVE WAS RESTRICTED ONLY TO THE EXPORT OF GOODS OF A SPECIFIED CLASS. CONSEQUENTLY, IF THERE WAS NO EXPORT, THERE WAS NO INCENTIVE FROM DEPB OR DUTY DRAWBACK. THIS APART, DEPB OR DUTY DRAWBACK SCHEME DID NOT PROVIDE REFUND OF E XEMPTION FROM CENTRAL EXCISE DUTY ACTUALLY PAID. 129. THUS, THE RELATIONSHIP UNDER THE DEPB OR DUTY DRAWBACK SCHEME, ON THE ONE HAND, AND THE MANUFACTURING OR PRODUCTION, ON THE OTHER , WAS NOT PROXIMATE AND DIRECT. THE ENTITLEMENT WAS BASED ON THE ARTIFICE OF AVERAGE AMOUNT OF DUTY PAID. IN THE CASE OF TRANSPORT SUBSI DY, POWER SUBSIDY AND INSURANCE SUBSIDY, THE RELATION BETWEEN SUBSIDY REC EIVED, ON THE ONE HAND, AND THE PROFITS EARNED OR THE GAINS MADE, BY AN IND USTRIAL UNDERTAKING, STAND, AS ALREADY OBSERVED AT PARAGRAPH 127, WELL E STABLISHED. 131. LIBERTY INDIA CASE (SUPRA), IT MAY BE NOTED, I S, THUS, AN EXPOSITION OF LAW ON THE SCHEMES OF DEPB AND DUTY DRAWBACK SCHEME , WHICH RELATE TO EXPORT OF GOODS BY AN INDUSTRIAL UNDERTAKING; WHERE AS THE SCHEME OF TRANSPORT SUBSIDY, INTEREST SUBSIDY, POWER SUBSIDY AND INSURANCE SUBSIDY, IS INEXTRICABLY AND DIRECTLY CONNECTED WITH THE REDUCT ION OF COST OF PRODUCTION AND MANUFACTURING OF AN INDUSTRIAL UNDERTAKING ENTI TLING THEREBY THE ELIGIBLE INDUSTRIAL UNDERTAKINGS TO CLAIM DEDUCTION UNDER SECTION 80IB OR 80IC, AS THE CASE MAY BE. 8 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13 132. THE DECISION, IN LIBERTY INDIA CASE (SUPRA), I S, THEREFORE, NOT, IN OUR CONSIDERED VIEW, RELEVANT TO THE SCHEMES OF SUBSIDI ES AT HAND. 9. THE HONBLE SUPREME COURT HAS ALSO CONFIRMED THE AFORESAID VIEW OF THE HONBLE GAUHATI HIGH COURT. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT ON IDENTICAL ISSUE ON THE VERY SAME SUBSIDY AND TAK ING INTO CONSIDERATION ALL THE ABOVE ASPECTS, WE ARE OF THE VIEW THAT THE ORDERS OF CIT( A) WHICH IS IN CONFORMITY WITH THE DECISION OF THE HONBLE SUPREME COURT AND CBDT CIRC ULAR REFERRED TO ABOVE, DOES NOT CALL FOR ANY INTERFERENCE. WE THEREFORE DO NOT FIND ANY MERIT IN THE APPEAL BY THE REVENUE. ACCORDINGLY THE APPEAL OF THE REVENUE IS D ISMISSED. 10. IN THE RESULT THE APPEAL BY THE REVENUE IS DIS MISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 08.12.2017. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.12.2017. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. DIGBOI CARBON PVT. LTD., 37A, BENTICK STREET , R.NO.301, KOLKATA-700069. 2.D.C.I.T., CIRCLE-3(1), KOLKATA.. 3. CIT(A)-1, KOLKATA. 4. CIT-X1 KOL KATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES 9 ITA NO.1628/KOL/2016 M/S. DIGBOI CARBON PVT. LTD. A.Y.2012-13