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TMI Blog1983 (8) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, the assessee had deposited the arrears of excise duty and also had to continue to deposit the same every month after having it duly verified by the District Excise Officer. The Hon'ble High Court vide its order, dated 12-4-1973, ultimately held the said rule 42A to be ultra vires of the Act and ordered that the excise duty deposited by the assessee be refunded (that decision is reported in 1973 ALJ 739). For the assessment year 1978-79, a sum of Rs. 2,58,983.68 was refunded to the assessee which it deposited in its account books on the liability side as the State of U.P. and the Central Government had moved the High Court on 10-7-1973 for the issue of a certificate of fitness for appeal to the Supreme Court. The Hon'ble High Court vide its order dated 10-2-1975 refused to grant the certificate. Thereupon the State of U.P. and the Central Government moved an application before the Supreme Court for special leave which was granted. As ordered by the Supreme Court, the assessee furnished security for the entire amount of excise duty which was refunded to it. The assessee went on collecting excise duty from the customers at the rate of 50 paise per kg. and for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeals) upheld the assessee's claim and deleted the addition of Rs. 98,699 for the assessment year 1978-79. 6. For the assessment year 1979-80, the assessee pointed out before the Commissioner (Appeals) that the Opium Act, 1878 had been amended by the Opium (U.P. Amendment) Act, 1982, retrospectively with effect from 1-7-1969 vide U.P. Gazette Extraordinary dated 4-11-1982. For this additional reason, the Commissioner (Appeals) upheld the assessee's claim and deleted the addition of Rs. 49,014. 7. That is how the revenue is in appeals before us. Although these appeals were beard on two different dates, but the submissions made on behalf of both the parties being similar, they are, for the sake of convenience, being disposed of by one common order. 8. Shri R.K. Upadhyay, the learned departmental representative, placed strong reliance on the orders of the ITO. Firstly, Shri Upadhyay relied upon the decision of the Hon'ble Allahabad High Court in Girwar Lal Shri Chand v. CIT [1967] 63 ITR 248 for the proposition that even under the mercantile system of accounting, no deduction could be made unless an ascertained and enforceable liability exists, not even if the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book), Shri Upadhyay pointed out that it indicated that the demand was raised only on 11-1-1983 and, therefore, such a demand would not be relevant for the assessment years in question. He, therefore, submitted that the orders of the ITO were entitled to be restored. 9. On the other hand, Shri R.K. Gulati, the learned counsel for the assessee, strongly relied upon the orders of the Commissioner (Appeals). Firstly, he submitted that as the assessee was adopting the mercantile system of accounting, the excise duty was referable only to the relevant years in which the statutory obligation in that regard arose. For that proposition he relied upon the decisions of the Hon'ble Supreme Court in Kedarnath Jute Mfg. Co. Ltd.'s case and Chowringhee Sales Bureau's case which had been applied by the Madras High Court in M.S. Balakrishna Chetty v. CIT [1975] 101 ITR 557, by the Hon'ble Calcutta High Court in CIT v. Kumardhubi Engg. Works Ltd. [1978] 115 ITR 58, by the Hon'ble Allahabad High Court in CIT v. Brijmohan Das Laxman Das [1979] 117 ITR 121 and by the Hon'ble Kerala High Court in CIT v. K.A. Karim Sons [1982] 133 ITR 515 (FB). Next, he referred to the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd allowed by the AAC. The High Court had held that excise duty was not payable but still the Excise Department was claiming excise duty and the assessee was debiting the duty in accounts. The judgment of the Hon'ble High Court had been appealed against by way of letters patent appeal. On those facts, after considering the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. and its own decision in CIT v. Poonam Chand Trilok Chand [1976] 105 ITR 618, the Hon'ble Allahabad High Court held that once an appeal has been filed, the appeal destroys the finality of the decision and that since the Excise Department was raising demands against the assessee for excise duty in spite of the decision of the High Court, section 41(1) was not attracted as the liability of the assessee to excise duty could not be said to have ceased. In the present case also, the Excise Department does not appear to have given up its claim to levy and collect duty as is clear from the letter dated 12-10-1981 referred to above. Also, as pointed out on behalf of the assessee before the Commissioner (Appeals), on the first day of each month, it declared in Form No. 9 the quantity of poppy heads s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, namely : (a) On poppy heads exported outside Twenty-five paise Uttar Pradesh per kilogram. (b) On poppy heads other than those mentioned in clause (a) Fifty paise per kilogram." It is also relevant to notice that section 3 of that Amending Act provided as follows : " 3. (1) Notwithstanding any judgment, decree or order of any Court in the contrary, the Uttar Pradesh Poppy Head (Amendment) Rules, 1969, shall be deemed to have been made under the principal Act as amended by this Act and shall be deemed to be as valid had lawful as if the provisions of this Act were in force at all material times. (2) Without prejudice to the generality of the provisions contained in sub-section (1), all duties levied or collected under the rules referred to in that sub-section shall be deemed to have been validly levied and collected and accordingly--- (a) no suit or other proceedings shall be maintained or continued in any Court for the refund of such duty ; and (b) no Court or authority shall enforce a decree or order directing refund of any such duty." It is, therefore, clear that notwithstanding any judgment, decree or order of any Court to the contrary, the amendment ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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