TMI Blog2012 (6) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... stock – Revenue contested that the assessee while claiming modvat benefit against its actual liability for excise duty has valued its closing stock without including the duty component paid by it at the time of purchase of raw material - Held that:- Guided by the decision of the Apex Court CIT v. INDO NIPPON CHEMICALS CO. LTD[2003 (1) TMI 8 (SC)] the assessee was liable to pay excise duty on the goods manufactured by them and got MODAVT credit for the excise duty paid on the purchase of raw materials and the proportionate part of the modvat credit was set off against their excise duty liability on the sale of manufactured goods - the assessee being adopting the net method - on the sole ground that the modvat credit was an irreversible cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure on gift articles as deduction as per rule 6B? 3. Whether in the facts and circumstances of the case, the Tribunal was right in excluding the value of the customs duty from the closing stock?" 2. As far as the first question of law is concerned, viz., exemption on the sale proceeds of the exim scrips under Section 10B, learned counsel for the assessee as well as learned Standing Counsel for the Revenue submitted that the issue is covered against the assessee by reason of the Apex Court decision reported in [2009] 317 ITR 218 - LIBERTY INDIA v. CIT as well as by the decision of this Court reported in [2003] 259 ITR 403 - C.I.T. v. MENON IMPEX P. LTD. Consequently, the order of the Tribunal to that extent stand set aside. The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that though it is difficult to draw a line with precision demarcating business from personal relationships, nevertheless, it has to be drawn some where and the marriages within the family of business associates, friends and relatives cannot be regarded as occasions requiring an assessee carrying on business to make gifts as a matter of commercial expediency and claim the same as business expenditure. This Court further pointed out that the gifts made by an assessee carrying on business, on such occasion would be similar to that of any other person, who makes a gift on such occasion to his friends or relatives or official superiors or colleagues, such gifts being made out of taxed income. 5. The decision of the Karntaka High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning stock as well as on the closing stock. A perusal of the order of the Assessing Authority shows that the assessee had claimed that it had paid the excise duty at the time of purchase of raw material. For making use of the modvat facility granted by the Government, for the first time, the assessee chose to claim modvat benefit against its actual liability for excise duty arising on manufacture of goods. In that process, the assessee valued its closing stock without including the duty component paid by it at the time of purchase of raw material. The Assessing Authority, however, rejected the plea of the assessee since such method of not allocating cost of duty paid at the time of purchase would adversely affect the value of closing stock. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be included as part of the closing stock of raw materials that remained unutilised in the year, the Tribunal upheld the claim of the assessee. The Tribunal applying the decision of the Apex Court reported in CIT v. INDO NIPPON CHEMICALS CO. LTD [2003] 261 ITR 275, rejected the Revenue's plea. Aggrieved by this, the Revenue is on appeals before this Court. 10. As far as the inclusion of excise and customs duty as part of the value of the closing stock is concerned, learned standing counsel for the Revenue placed reliance on the decisions of this Court reported in [2010] 320 ITR 257 - CIT v. INDIA PISTONS LTD and [2003] 259 ITR 631 - SOUTHERN ASBESTOS CEMENT LTD v. CIT to contend that the excise duty element and the customs duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existed in [2010] 320 ITR 257 - CIT v. INDIA PISTONS LTD was concerned, the decision reported in [2003] 259 ITR 631 - SOUTHERN ASBESTOS CEMENT LTD v. CIT would have no relevance, since the imported goods therein were yet to be cleared from the customs and remained in the bonded warehouse and the manufactured goods were also very much available within the assessee's factory and they were not cleared by payment of excise duty. In view of the different fact situation, this Court held that the excise duty could not be included in the value of closing stock. 13. As far as the decision of the Apex Court reported in CIT v. INDO NIPPON CHEMICALS CO. LTD [2003] 261 ITR 275 , is concerned, the Apex Court pointed out that the assessee therein w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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