1990 (12) TMI 131 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 17,06,311 made on account of scrap.
2. Valuation of 26 drums of ACSR Conductors.
3. Binding nature of the CEGAT's findings on the ITAT.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 17,06,311 Made on Account of Scrap:
The revenue's primary grievance was the deletion of Rs. 17,06,311 added by the Assessing Officer (AO) on account of scrap sales. The AO had estimated the income based on the market price of ACSR conductors, assuming the assessee sold good conductors under the guise of scrap. The CIT (Appeals) deleted this addition after considering the IAC (Asst.)'s report, which confirmed the clearance of scrap and the certificates from the Central Excise Authority and various purchasers. The CIT (Appeals) found that the assessee had sold the scrap at a lower price due to its deteriorated condition and that the sales were genuine. The Tribunal upheld this view, noting that the scrap generated was within the normal range certified by the Cable & Conductor Manufacturers' Association and that the sales were made with the prior permission of the Central Excise Department.

2. Valuation of 26 Drums of ACSR Conductors:
The AO had added Rs. 4,42,617 to the income of the assessee by revaluing 26 drums of ACSR conductors at the market rate of Rs. 17,000 per MT, instead of the disclosed value of Rs. 8,991 per MT. The CIT (Appeals) deleted this addition, noting that the conductors were sold as scrap with the permission of the Excise Authorities and that the valuation was consistent with the prevailing scrap rates. The Tribunal agreed, emphasizing that the 26 drums were indeed sold as scrap and that the Excise Authorities had permitted their sale, thus supporting the assessee's valuation.

3. Binding Nature of the CEGAT's Findings on the ITAT:
The revenue argued that the findings of the CEGAT, being the highest fact-finding body of the Central Excise and Customs, should be binding on the ITAT. The CEGAT had found that the goods seized were in running length and not short length as claimed by the assessee, and that the markings on the drums appeared to be of new origin. The Tribunal, however, noted that while the CEGAT's findings have persuasive value, they are not conclusive proof under the Evidence Act. The Tribunal emphasized that it is a separate judicial entity and can take a different view if certain facts were not considered by the earlier Tribunal. The Tribunal found that the CEGAT's findings were not binding in this case, especially since the Excise Authorities had permitted the sale of the disputed drums as scrap and the sales were made under their supervision.

Conclusion:
The Tribunal upheld the CIT (Appeals)'s decision to delete the additions made by the AO on account of scrap sales and the revaluation of 26 drums of ACSR conductors. The Tribunal emphasized that the sales were genuine, made with the permission of the Excise Authorities, and that the findings of the CEGAT, while persuasive, were not binding on the ITAT. The Tribunal concluded that the additions were not sustainable in light of the evidence presented by the assessee.