2001 (3) TMI 165 - AT - Central Excise

Summary

Issues:
Eligibility of Turnover Tax (TOT) claimed as abatement under Section 4 of the Central Excise Act, 1944.

Analysis:
The Commissioner (Appeals) accepted the department's appeal, stating that TOT cannot be treated as tax separately under Section 18(3) of the KST Act 1951, as it does not form part of the price as tax and is not permitted to be collected. The Commissioner concluded that TOT should be treated as overhead, not qualifying as tax on goods, and hence not deductible. This decision was based on the ruling in M/s Bata India Ltd. [1996 (84) E.L.T. 164 (S.C.)]. The wholesale price to dealer does not include TOT, leading to the deduction of TOT not arising.

The Tribunal considered the legal embargo on collection of TOT under the State Sales Tax Act, similar to the KST Act, and the Law Ministry's advice based on a Supreme Court order clarifying that TOT should be allowed to be deducted from the sale price to arrive at the assessable value. The Board's instructions and Law Ministry's advice in the Basic Manual for Officers supported the eligibility of TOT deductions, stating that TOT deductions are permissible.

The Tribunal distinguished the decision in M/s Bata India Ltd. [1996 (84) E.L.T. 164 (S.C.)], noting that the issues decided therein were not applicable to deductions of TOT. The Tribunal relied on its own decisions and the Supreme Court's ruling in the case of M/s Bombay Tyres International (P) Ltd., emphasizing that TOT deductions are permissible for interpreting exemption notifications.

In conclusion, the Tribunal found that the Commissioner (Appeals) had relied on a decision that was not applicable, and since deductions of TOT were permissible, the order was set aside, the Assistant Commissioner's order was restored, and the appeal was allowed.