9911796707
TMI Blog1983 (4) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to pay excise duty, particularly because" pan masala' was an item of food, which was not subject to excise duty. An affidavit in rejoinder was filed on behalf of the Excise Department in which it was contended that the goods manufactured by the assessee were liable to excise duty. The High Court passed an interim order on 14th Dec., 1981 directing the Excise Department to release the goods seized from the premises of the assessee on the letter's furnishing a bank guarantee. The assessee was also allowed to manufacture pan masala' in future without obtaining license provided it submitted relevant return, etc., required under the Excise Act and the Rules relating thereto. It was also ordered that the pan masala' shall be removed from: the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case under consideration, there is no clear-cut decision by the Central Excise Department that the appellant was statutorily bound to pay excise duty @ 8 per cent valorem and if the position would have been that clear, the Central Excise Department would have straightway sent a notice of demand and not a show cause notice. As would be seen, from the above extract given from show cause notice, the appellant in the month of March, 1981 was only asked to show cause why the excise duty as worked out be not demanded. The very basis of levy of excise duty is open to doubt because the first thing to be decided is whether 'Pan Masala' is food product, and if it is a food product then no excise duty is to be levied on this. As such, it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction or not would depend on the provision of law relating thereto and not on the view which the assessee might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. 7. The question, which arises for our consideration, is whether the assessee was liable to pay excise duty on the goods manufactured by it. If so, it was entitled to the deduction of the excise duty in the computation of its income. The assessee calculated it at Rs. 61,784. The correctness of this amount was not disputed before, us. However, what is necessary to see is whether any such duty was actually payable by the assessee That question remains unsettled in the present case The Excise authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has level. We may further clarify that the claim of the assessee should not be rejected on the ground that it was barred by limitation as the ITO while allowing or disallowing the claim, as the case might be, will be only giving effect to our this order. 8. The assessee had debited expenses of Rs. 56,732 towards advertisement and Rs. 35,295 towards sale promotion. The ITO following the provisions contained in subs s. 3(A) of s. 37 of the Act disallowed Rs. 13,476. It was contended before him that the amount of Rs. 35,295 was in the nature of a trade discount paid to the customers through credit notes and was wrongly debited to Sale Promotion Account. The ITO found that the so called trade discount to the traders was not on account of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defines adjusted expenditure" as the aggregate expenditure incurred by the assessee on advertisement, publicity and sales promotion in India subject to certain adjustments. The question, therefore, is whether the expenditure of Rs. 3,5295 was in the nature of Sales Promotion expenditure. There is no dispute that the expenditure was debited to sales promotion account. There is also no dispute that it was in the nature of incentive given to the traders for increasing the sales upto a certain level. It was also to be paid in the subsequent year provided they continued the dealership of the assessee The word Promotion" has been defined in the 'Chamber's Twentieth Century Dictionary as the act of promoting," 'encouragement' etc. Since the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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