2015 (7) TMI 962 - SC - Central Excise

Valuation - deduction from assessable value - appellant could not produce the evidence to prove the expenditure incurred under certain heads - Held that - The position that was taken by the assessee before the authorities was that these expenditures could be actually ascertained only afterwards and for this reason, even a request was made to the assessing officer for provisional assessment as the actual expenditure could not be communicated at the time of assessment having regard to the nature of such expenses. - vital aspect of the matter is glossed over by the CESTAT 2005 (4) TMI 335 - CESTAT, NEW DELHI . It is also pointed out before us that in the next assessment year, i.e., assessment year 1995-1996, this very contention is accepted by the Commissioner when actual expenses were produced and benefit thereof has been extended to the assessee. - Matter remanded back - Decided in favour of assessee.

Summary

Issues: Dismissal of appeal by CESTAT due to lack of evidence for certain expenditures. Request for provisional assessment. Discrepancy in treatment of expenses in different assessment years.

Dismissal of Appeal by CESTAT:
The Supreme Court reviewed a case where the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the appellant's appeal citing the inability to produce evidence for specific expenditures like rent for duty paid godown, depreciation for bottles, and quantity discount given in kind. The appellant contended that these expenses could only be determined later, requesting provisional assessment due to the nature of such expenses. The Court noted that the CESTAT overlooked this crucial aspect and highlighted that in the subsequent assessment year 1995-1996, the Commissioner accepted the same contention when actual expenses were provided, benefiting the assessee. The Court observed that the Department had appealed against the Commissioner's order, which was pending before CESTAT. Consequently, the Court decided to set aside the CESTAT's order for the assessment year 1994-1995 and remit the case back to CESTAT to consider both the appeals for 1994-1995 and 1995-1996 together.

Request for Provisional Assessment:
The appellant had requested provisional assessment due to the inability to communicate the actual expenditure at the time of assessment for expenses like rent for duty paid godown, depreciation for bottles, and quantity discount given in kind. The appellant argued that these expenses could only be accurately ascertained later, emphasizing the unique nature of such expenditures. The Court acknowledged this argument and noted that in the subsequent assessment year, the Commissioner accepted the same contention when actual expenses were presented, leading to a favorable outcome for the assessee. This highlighted the inconsistency in the treatment of expenses between different assessment years, underscoring the need for a fair and consistent approach in assessing such expenditures.

Discrepancy in Treatment of Expenses in Different Assessment Years:
The judgment shed light on the discrepancy in the treatment of expenses between the assessment years 1994-1995 and 1995-1996. While the appellant faced dismissal by CESTAT in 1994-1995 for the inability to provide evidence for certain expenditures, the Commissioner accepted the same contention in 1995-1996 when actual expenses were furnished. This discrepancy underscored the importance of a uniform and equitable approach in evaluating expenses across different assessment periods to ensure fair treatment for taxpayers. The Court's decision to remit the case back to CESTAT for a comprehensive review of both years' appeals aimed at addressing this inconsistency and promoting consistency in assessing such expenditures.