1992 (9) TMI 187 - AT - Central Excise

Summary

Issues:
- Appeal against order-in-appeal regarding abatement of turnover tax under Section 4 of the Central Excises and Salt Act, 1944.
- Request for stay of recovery of differential duty amounting to Rs. 33,07,742.
- Interpretation of provisions of Sec. 6(b) of the Karnataka Sales Tax Act.
- Disallowance of deductions on account of turnover tax.
- Applicability of Supreme Court decisions on turnover tax deductions.
- Tribunal's rulings on turnover tax deductions from assessable value.

Analysis:
The appellants filed an appeal challenging the order-in-appeal regarding the abatement of turnover tax under Section 4 of the Central Excises and Salt Act, 1944. The appellants sought a stay of the recovery of an amount of Rs. 33,07,742 demanded in terms of the appealed order. The main contention was the rejection of the appellants' claim for abatement of turnover tax by the lower authority, despite settled law based on Supreme Court decisions. The appellants argued that turnover tax should be deductible under Section 4, even if not included in the wholesale price, as per relevant statutes (para 1).

The Revenue opposed the appellants' prayer for unconditional stay but agreed to simultaneous disposal of the stay application and the appeal. The Collector (Appeals) disallowed deductions on account of turnover tax, citing provisions of the Karnataka Sales Tax Act, which prohibited dealers from collecting turnover tax from customers. The Collector upheld the disallowance, stating that turnover tax could not be included in the normal price of goods (para 3).

The Tribunal, considering the case law cited by the appellants, granted the stay of recovery of the entire amount demanded. The Tribunal referred to the decision in Associated Pigments Ltd. v. Collector of Central Excise, emphasizing that taxes like turnover tax deductible under Section 4 cannot be disallowed, even if paid periodically to taxing authorities. The Tribunal also cited the case of Mysore Acetate and Chemicals Co. Ltd. v. Collector of Central Excise, where turnover tax was allowed as a deduction from the assessable value. The Tribunal remanded the matter for readjudication in line with Supreme Court decisions and Tribunal rulings on turnover tax deductions (para 4-8).