Assistant Commissioner of Income Tax, Trivandrum V. Travancore Titanium Products Ltd, Trivandrum

ITA 246/COCH/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7458 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 04-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: V DEVARAJAN

Judgement Text

1 ITA NO.246/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T.A. NO. 246/COCH/2009 (ASSESSMENT YEAR 1999-2000) A.C.I.T., CIR.1(1) VS TRAVANCORE TITANIUM PRODUC TS LTD TRIVANDRUM TRIVANDRUM PAN : AAACT8543J (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.R. SENAPATI ASSESSEE BY : SHRI V DEVARAJAN DATE OF HEARING : 22-12-2011 DATE OF PRONOUNCEMENT : 25-01-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME- TAX(A)-I, TRIVANDRUM DATED 26-12-2008 AND PERTAINS TO ASSESSMENT YEAR 1999-2000. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS EXCLU SION OF EXCISE DUTY ON THE FINISHED GOODS FROM THE CLOSING STOCK BY THE COMMISSIONER OF INCOM E-TAX(A). 3. SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER INCLUDED THE EXCISE DUTY PAYABLE TO THE VALUE OF THE CLOSING STOCK ON T HE BASIS OF THE APEX COURT JUDGMENT IN UOI VS BOMBAY TYRE INTERNATIONAL LTD 15 TAXMAN 29. HOWEVE R, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT SINCE THE FINISHED GOODS ARE NOT CLEARED FROM THE FACTORY GODOWN, THE EXCISE DUTY WAS NOT PAYABLE. THEREFORE, THE COMMISSIONER OF IN COME-TAX(A) DELETED THE EXCISE DUTY PAYABLE FROM THE CLOSING STOCK. ACCORDING TO THE L D.DR, THE EXCISE DUTY IS LEVIABLE AT THE POINT OF MANUFACTURE OR PRODUCTION, THEREFORE, THE EXCISE DU TY HAS TO BE NECESSARILY INCLUDED WHILE VALUING THE CLOSING STOCK IN VIEW OF THE JUDGMENT O F THE APEX COURT IN UOI VS BOMBAY TYRE INTERNATIONAL LTD (SUPRA). 2 ITA NO.246/COCH/2009 4. ON THE CONTRARY, SHRI V. DEVARAJAN, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE EXCISE DUTY, NO DOUBT, IS LEVIABLE ON MANUFACTU RE OF GOODS. HOWEVER, THE LIABILITY TO PAY ARISES ONLY AT THE TIME OF CLEARING OF THE GOODS FR OM THE FACTORY GODOWN. THEREFORE, EVEN THOUGH THE LEVY IS ON THE MANUFACTURE / PRODUCTION OF THE GOODS, THE LIABILITY TO PAY IS ONLY AT THE TIME OF CLEARING ONLY. SINCE THE GOODS WERE AD MITTEDLY NOT CLEARED FROM THE FACTORY GODOWN, ACCORDING TO THE LD.REPRESENTATIVE, THERE I S NO LIABILITY TO PAY EXCISE DUTY. ACCORDINGLY, THE SAME CANNOT BE INCLUDED IN THE CLOSING STOCK. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WHETHER THE EXCIS E DUTY PAYABLE ON THE FINISHED GOODS IS TO BE INCLUDED IN THE CLOSING STOCK AT THE TIME OF VALUAT ION. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF APEX COURT IN UOI VS BOMBAY TYRE INTERN ATIONAL LTD (SUPRA). IN THE CASE BEFORE THE APEX COURT, THE ISSUE AROSE FOR CONSIDERATION WAS W ITH REGARD TO METHOD OF DETERMINATION OF VALUE OF ARTICLE FOR EXCISE DUTY. IN OTHER WORDS, THE QUESTION WAS WHETHER THE VALUATION OF THE ARTICLE CAN BE CONFINED TO MANUFACTURING COST AND M ANUFACTURING PROFIT ONLY OR WHETHER POST MANUFACTURING EXPENSES LIKE FREIGHT, INSURANCE AND PACKING, ETC. CAN BE INCLUDED IN THE VALUE OF THE ARTICLE? THEREFORE, THE APEX COURT WAS PRIMARI LY CONCERNED WITH REGARD TO THE VALUE OF THE MANUFACTURED / FINISHED GOODS FOR THE PURPOSE OF LE VY OF EXCISE DUTY. IN THE COURSE OF DISCUSSION, THE APEX COURT FOUND THAT WHILE THE LEV Y OF EXCISE DUTY IS ON THE MANUFACTURE OR PRODUCTION OF GOODS, THE STAGE OF COLLECTION NEED N OT IN POINT OF TIME SYNCHRONIZE WITH COMPLETION OF THE MANUFACTURING PROCESS. WHILE THE LEVY IS A CONSTITUTIONAL CONCEPT THE POINT FOR COLLECTION IS LOCATED WHERE THE STATUTE DECLARE S IT WILL BE. IN THE COURSE OF FURTHER DISCUSSION, THE POINT OF COLLECTION OF EXCISE DUTY IS AT THE TI ME OF REMOVAL OF GOODS FROM THE FACTORY PREMISES. FROM THIS JUDGMENT OF THE APEX COURT IT IS OBVIOUS THAT THOUGH THE LEVY IS ON THE MANUFACTURE OR PRODUCTION OF GOODS, THE COLLECTION OF TAX IS AT THE TIME OF REMOVAL OF GOODS FROM THE PREMISES. THEREFORE, IN OUR OPINION, THIS JUDGMENT OF THE APEX COURT IN THE CASE OF BOMBAY TYRE INDUSTRIES LTD CANNOT BE OF ANY ASSISTA NCE TO THE REVENUE. WE FIND THAT THE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF IN COME-TAX VS LOKNETE BALASAHEB DESAI SSK LTD (2011) 339 ITR 288 (SC) HAD AN OCCASION TO CONS IDER AN IDENTICAL ISSUE. AFTER REFERRING TO THE JUDGMENT OF THE APEX COURT IN COLLECTOR OF CENTRAL EXCISE VS POLYSET CORPORATION (2000) 115 ELT PAGE 41 (SC) HAS HELD THAT THE LIABILITY ON THE UNS OLD ARTICLE LYING IN STOCK TOWARDS CENTRAL EXCISE 3 ITA NO.246/COCH/2009 HAS NOT BEEN INCURRED AND CONSEQUENTLY THERE CANNOT BE ANY ADDITION TOWARDS THE CLOSING STOCK AT THE TIME OF VALUATION. THE BOMBAY HIGH COURT FU RTHER OBSERVED THAT THE DUTIABILITY OF THE EXCISE GOODS IS DETERMINED WITH REFERENCE TO THE DA TE OF MANUFACTURE AND THE RATE OF EXCISE DUTY PAYABLE HAS TO BE DETERMINED WITH REFERENCE TO THE CLEARANCE OF THE GOODS. THEREFORE, THE LIABILITY TO PAY EXCISE DUTY ON THE MANUFACTURED GO ODS ARISES ONLY AT THE TIME OF CLEARANCE OF GOODS FROM THE FACTORY PREMISES. IN VIEW OF THE JU DGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS LOKNETE BALASAHEB DESAI SSK LTD (SUPRA) AND THE JUDGMENT OF THE APEX COURT IN POLYSET CORPORATION (SUPRA), IN O UR OPINION, SO LONG AS THE MANUFACTURE / FINISHED GOODS IS NOT REMOVED OR CLEARED FROM THE F ACTORY PREMISES, THERE IS NO LIABILITY TO PAY EXCISE DUTY. THEREFORE, AT THE TIME OF VALUATION O F CLOSING STOCK, THE LIABILITY TO EXCISE DUTY NEED NOT BE INCLUDED. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED . 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF JANUARY, 2012. SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 25 TH JANUARY, 2012 PK/- COPY TO: 1. ASSIST.COMMISSIONER OF INCOME-TAX, CIR.1, TRIVANDR UM 2. TRAVANCORE TITANIUM PRODUCTS LTD, TRIVANDRUM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH