9911796707
TMI Blog2015 (3) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) deleting the addition of Rs. 19,13,583/- on account of excise duty on sale of scrap paid by the assessee without appreciating the fact that sale of such scrap was not declared by the assessee in its P&L account." 2. Brief facts of the case are that the assessee is a partnership firm deriving income from manufacturing and job work of Ball Bearings which are mainly sold to SKF India Ltd. During the course of assessment proceedings, the Assessing Officer observed that though the assessee has claimed excise duty payable qua the scrape generated no corresponding income from sale of scrape was shown by the assessee. Assessee in this behalf replied that the major work is carried out by the assessee through job workers/sub vendors including the associate concern M/s Noble Industries. As per prevalent trade practice the scrape generated at their premises is retained by them and not returned to the assessee. The job work charges are fixed keeping in view the benefit of scrape value availed by such job workers. Since assessee did not sale any scrape in this year no proceeds were shown. Confirmations from job workers were also produced. 2.1 Apropos excise duty paid qua scrape value it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from the job work of M/s Pushp Enterprises. iii) It is unreasonable and not admissible when the assessee himself declared the sale of the scrap in ER-1 and make the payment of excise duty thereon, how a prudent person would give the scrap amounting to Rs. 1,35,56,787/- to the other persons without any benefits. iv) The assessee has also declared receipts from job work amounting to Rs. 2,05,87,743/- and against that job, the assessee has not declared any sales of scrap. In these circumstances, it is clear that the explanation of the assessee is nothing but cooked story which is not admissible therefore, as show cause given to the assessee a sum of Rs. 1,35,56,787/- is added back in the income of the assessee treating the same as concealed sale of the scrap." 2.2 Apropos the other issue in second ground i.e. addition on account of concealed sales, brief facts of the case are that the main customer for purchase of bearings manufactured by the assessee is SKF India Ltd.. The assessee raised bills according to agreed price, on receipt some of the goods are found defective or inferior in quality and are rejected by SKF India Ltd. Which are subjected to negotiations. Qua the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord to suggest that any scrap or wastage was received back by the assessee and was sold by it and the absence of any evidence of either the receipt of scrap or the sale of scrap, the addition cannot be made on assumption by the Assessing Officer. Reliance was placed on the decision in the case of CIT Vs. Shoorji Vallabhdas and Co. 46 ITR 144 and in the case of State Bank of Travancore Vs. CIT 158 ITR 102. The assessee provided complete names and addresses of the job workers/sub-vendors along with their PAN numbers on which the remand report was called. On examination of M/s Noble Industries, it was found that no scrap was returned to the assessee. Consequently, the addition of Rs. 1,33,56,787/- was deleted. 3.1 Apropos the second ground, the learned CIT(A) deleted the addition by following observations:- "I have duly considered the submissions of the appellant. As per excise return ER-1, the assessee had reduced the sales return/rate difference/short receipts and other debit notes which were adjusted against the sales from the total turnover. The assessee filed reconciliation statement for the same but the AO brushed aside the same allegedly on the ground that the amount of rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd paid an amount of Rs. 31,45,428/- against this invoice and therefore there were short receipts to the extent of Rs. 24,62,103/-. The appellant has filed complete details containing description of raw material for rate difference along with copies of invoices. The appellant has also filed copies of invoices for rate difference of Rs. 42,07,979/-, Rs. 3,54,904/- and Rs. 2,86,557/- on account of HSS raw material rate difference. The principal M/s SKF India Ltd. vide their letter dated 19.03.2009 had informed the appellant that the rate difference raised through supplementary invoices No. 1959, 1960 and 1961 was not acceptable to them. The appellant had rightly reduced the same from the total turnover in the ER-1 return filed with the Excise Department. Further the appellant had raised the invoices bearing No. 1523 to 1527 dated 20.09.2008 for Rs. 65,91,015/- however M/s SKF India Ltd had paid an amount of Rs. 36,40,336/-. Thus there were short receipts of Rs. 29,50,682/- which were reduced by the appellant from the total turnover in the ER-1 return. Though the AO had disallowed the rate difference of Rs. 31,26,865/-, yet the amount was inadvertently taken at Rs. 1,35, 56,787 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside the books. Therefore, the addition in this behalf is fully justified. 6.1 Apropos the second ground, it is contended that the difference in the figures value of the goods manufactured and sold by the assessee in excise register ER-1 and books of account is significant and the same has not been properly answered by the assessee. The learned CIT(A) on assumption has held that ER-1 register refers to the excisable value, which is different than the actual value. Similarly, in respect of the difference attributable to the difference of account of assessee and SKF India Ltd., proper reconciliation has not been provided. 6.2 Apropos the third ground, it is contended that when the assessee is not showing any sale of scrap then there is no justification in allowing the excise duty payable by the assessee in this behalf. 7. Learned counsel for the assessee contends that in earlier years and in subsequent years, the assessments have been made on the clear understanding that the job work scrape is retained by the job workers. It has been wrongly held by the Assessing Officer that the assessee did not produce any evidence in this behalf. The assessee adduced the evidence of M/s Noble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce this being so, the amount is eligible, the learned CIT(A) has referred to relevant amendment in Rule 4(6) of Central Excise Rules, 2002 in this behalf, which notionally prescribes percentage of excise duty liability even if the scrap is not received back by the assessee. The liability is created by a statute, the payment thereof is allowable business expenditure. The order of the learned CIT(A) may be confirmed. 8. We have heard the rival contentions of both the parties and perused the material available on the record. Apropos the first ground i.e. the addition on account of alleged sale of scrap, we find no infirmity in the order of the learned CIT(A) inasmuch as nothing has been brought on record by learned Assessing Officer that the assessee's job workers returned any scrap to assessee. Nothing has also been brought on record to demonstrate in any way that assessee indulged in any sale of scrap outside the books of account. This is further indicated by new Cenvat Credit Rules, which holds that the scrap was not required to be returned to the assessee. The same is referred to by the judgment in the case of M/s Rocket Engineering Corporation Vs. CCE (supra). The assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
