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2013 (1) TMI 968

Mehul R.Shah, AR ORDER PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER : This is an appeal filed by the Revenue arising from the order of Ld.CIT(A)-IV, Surat dated 22.02.2010 passed for A.Y. 2006-07 and the ground raised is as follows:- 1. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-IV, Surat has erred in allowing the excise duty written-off of ₹ 65,24,121/-, disallowed by the AO treating the same as wrong claim. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) r.w.s. 147 dated 22.12.2009 were that the assesseecompany is following the Mercantile system of accounting. It was noted by the Assessing Officer that for the year under consideration an amount of ₹ 65,24,1 .....

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on the finished goods is allowable revenue expenditure since, the cost of the inputs i.e. the raw materials has been debited in the P & L account net off the Cenvat claim. Further, CENVAT credit / Excise duty on inputs has been written off in the year under consideration, is not capital in nature or a personal expenditure but is in respect of the raw materials and thus, the claim of the appellant is undoubtedly wholly and exclusively for the purpose of its business pertaining to the year under consideration and hence, fully satisfies the conditions as laid down in section 37 of the IT Act. The argument of the AO that the impugned deduction is allowable against the future expenses has no force since the assessee has already surrendered .....

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in respect of the deduction claimed on account of CENVAT amounting to ₹ 35,94,577. The assessee was engaged in the business of manufacturing and trading of yarn and fibre. The yarn manufactured by the assessee was an excisable item. The assessee was paying excise duty on the raw material purchased i.e. acrylic yarn/fibre and polyester yarn/fibre. In turn, assessee was liable to pay duty on its manufactured items. The rate of excise duty payable on the raw material was higher and the assessee was depositing the excise duty in PLA account which in turn was adjustable against the excise duty payable on the finished products. The excise duty payable on the finished products was on the lower side and consequently over the period of years t .....

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write off of CENVAT credit by the assessee in its books of account is thus allowable as business expenditure under the provisions of section 37(1) of the Act relatable to the year, in which the manufacturing activities are closed down by the assessee. Accordingly, we direct the Assessing Officer to allow the claim of the assessee in respect of write off of CENVAT credit of ₹ 35,94,577/-. Ground No.1 raised by the assessee is thus allowed. 4.1. We have also noted that Respected Coordinate Bench A Ahmedabad in the case of Girdhar Fibres Pvt.Ltd. (supra) has also opined as under:- 9. We heard both the sides. Before us, Form E.R.1, i.e. Return of Excisable goods and availment of CENVAT credit has been placed. The explanation of the asses .....

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