TMI Blog2008 (10) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt was delivered by BADAR DURREZ AHMED, J - 1. These appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the 'said Act') pertain to the same assessee but to different assessment years. ITA 337/2002 relates to assessment year 1993-94, ITA 1127/06 relates to assessment year 1997-98, ITA 1054/06 relates to assessment year 1998-99 and ITA 289/2007 relates to the assessment year 2000-01. In all these appeals the following substantial question of law has been framed for determination:- "Whether the Tribunal was correct in law in holding that MODVAT credit has not to be included in the total turnover for the purposes of computing the eligible deduction under Section 80HHC of the Income-tax Act, 1961'" 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of computing the deduction under Section 80HHC. The learned counsel for the revenue submitted that the definition of total turnover given in Explanation (ba) at the end of Section 80HHC had not excluded modvat credit from total turnover whereas it had specifically excluded freight and insurance attributable to the transfer of goods from the customs stations. Mrs Bansal, appearing on behalf of the revenue, submitted that only the specific items of freight and insurance as indicated in the said Explanation (ba) could be excluded from total turnover. Since modvat credit was not specifically mentioned as an excluded item, it had to be included in total turnover for the purposes of Section 80HHC. The learned counsel for the Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the revenue that while construing a taxing statute a strict interpretation should be given by the Courts. It was contended that the definition of the words 'total turnover' did not include freight/insurance. On this basis, it was urged that since the legislature had not intended to include freight or insurance it had specifically mentioned so in Explanation (ba) to Section 80HHC. It was contended that since only insurance and freight were to be excluded, it was not open to the Courts to exclude excise duty and sales tax from the concept of 'total turnover' in the formula to be implied under Section 80HHC. This argument was rejected by the Supreme Court in Lakshmi Machine Works (supra). The position is, therefore, clear. Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Ichalkaranji Machine Centre Pvt. Ltd (supra) where, as noted above, the Supreme Court observed that modvat was basically a duty-collecting procedure, which aims at allowing relief to a manufacturer on the duty element borne by him in respect of the inputs used by him and for which he takes credit for the same. This credit is to be adjusted against the duty payable by him on his final products. Thus, the moment the modvat credit taken by the manufacturer is adjusted against the excise duty payable by him in respect of his final product, his liability to pay excise duty to that extent stands discharged. In Eicher Motors Ltd v. Union of India: (1999) 2 SCC 361 and in CCE v. Dai Ichi Karkaria Ltd : (1999) 7 SCC 448 the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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