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TMI Blog2015 (10) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... re and sale of M.S. Bars and M.S. Rolls. Assessment was completed under section 143(3) of the Income-tax Act, 1961 (hereinafter called in short "the Act") at a loss of Rs. 35,70,924/-. Subsequently, the audit party raised an objection on 9.8.2000 to the effect that the assessee has not included excise duty in the valuation of closing stock of finished goods i.e. M.S. Bars and thus directed the Assessing Officer to consider the impugned issue and take necessary action. Thus the Assessing Officer has issued a notice under section 154 of the Act on 19.8.2002 requiring the assessee to show cause as to why excise duty at Rs. 17,14,390/- leviable on closing stock of finished goods (M.s. Bards) be not included in the value of closing stock under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" shall be (a) in accordance with the method of accounting regularly employed regularly employed by the assessee; and (b) further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. Explanation: For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a" consequence to such payment. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be determinable till the point of time of removal of the excisable goods from the factory premises and, hence, the scheme itself indicates that so far as an assessee is concerned, it incurs liability to pay excise duty only upon both the events taking place, viz. manufacture of excisable goods and removal of excisable goods. This position has to be necessarily adopted considering that the duty of central excise is levied and collected on an ad-valorem basis. In other words, unless and until the value is known, the levy and collection would not be correct and valid. Further during the preceding years and also during relevant period the appellant was adopting method of valuation in accordance with the method of accounting regularly emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o determine as to whether the liability had been incurred or not would be as to whether a corresponding right is available with the excise authority to enforce such a liability. Mere production or manufacture by itself would not be sufficient. The ld. counsel for the assessee has further contended that assessee has been following similar method of accounting for the last so many years and no addition was ever made in any of the year under the said provision. He has also placed reliance upon various judicial pronouncements in support of his contention that duty of central excise is levied on the goods manufactured. It is not a cost of goods purchased and also it is not a part of manufacturing cost. Therefore, unless and until it is entered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring cost. It can be termed as post manufacturing cost. Therefore, unless and until it is entered on one side of an item of cost, it cannot be taken as a component of the value of the closing stock on the other side. It is also held that levy of excise duty is incomplete inasmuch as assessee under the Excise Act is not required to discharge the liability to pay duty levied upon the manufacture of excisable goods, till such goods are removed from factory premises or from the warehouse. The test to determine as to whether the liability had been incurred or not would be as to whether a corresponding right is available with the excise authority to enforce such a liability. Mere production or manufacture by itself would not be sufficient. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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