9911796707
TMI Blog1987 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellant stated as under : " During the previous year, relevant to the above Assessment Year, the Company has received a refund of Rs. 32,80,110 from the Excise Department under an Order of the Bombay High Court. Since this matter is in dispute and the Company has given Bank Guarantee for the full amount as per the direction of the Court, the refund so received cannot be reckoned as income of the Company for the year. Pending final outcome of the litigation whatever be, the amount to which the Company will be entitled as may be determined by the Court will be returned as Income in the appropriate year." The assessee claimed that the refund so received could not be treated as income of the company for the year because the matter concerning the levy of excise duty was in dispute. The amount was taken to the Balance Sheet as an outstanding liability and an assurance was given that pending final outcome of the litigation whatever it may be, amount which the company will be entitled as may be determined by the Court, will be returned as income in the appropriate year. 3. Now the circumstances which led to the High Court order resulting in the aforesaid refund may briefly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, 1981 granted a stay. This matter is still pending before the Delhi High Court. In the meantime, the Central Excise and Cold Control Appellate Tribunal in the case of Collector of Central Excise, Madras v. M.M. Rubber Co. Ltd., Madras, were called upon to decide the same issue, namely whether cushion seats for motor vehicles fell, during the period from 1-4-1976 to 31-3-1977, under item No. 16A(1) of the Central Excise Tariff which read as " Latex Foam Sponge " as tentatively held by the Government of India in their impugned show cause notice, or under item 34A of the Tariff, which read as " Parts and Accessories of Motor Vehicles, not otherwise specified ". After considering the arguments on either side, the Tribunal held that the original entry " Latex foam sponge " covered latex foam sponge in all its form and variety and the subject seats too were covered by it. Accordingly, the Tribunal allowed the appeal of the department and restored the order of the Assistant Collector. It further appears that against this order of the Tribunal, M.M. Rubber Co. Ltd. filed a review petition to the Supreme Court, which was dismissed in limine by the Supreme Court on 7-2-1984. The order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhanced excise duty was considered by the Tribunal as a liability which had arisen in the relevant accounting year and was allowable when a provision had been made in the accounts. 5. On these facts, Shri P.A. Nair, C.A., argued that the dispute concerning the payment of excise duty on latex foam seats so far as assessment year 1983-84 was concerned, had not been finally resolved. All indications pointed to the possibility of the assessee having to pay excise duty at a higher rate, particularly in view of the decision of the Special Bench of the Customs Tribunal, which was confirmed by the Supreme Court and the review petition on which dismissed and the decision of the Income-Tax Appellate Tribunal on the allowability of the excise duty on similar item for the immediately preceding year. It was Shri Nair's case that with the receipt of the amount of refund from the Collector of Central Excise consequent to the order of the Bombay High Court there was no final cessation of liability of the assessee towards the payment of excise duty. The assessee had furnished a bank guarantee for the like amount as per the directions of the High Court. No doubt it was pursuing its remedy by filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing a writ in the Delhi High Court. The appellant was thus trying to eat its cake and have it too, as observed by the CIT (Appeals). Although the CIT (Appeals) has referred to section 43B in paragraph 4 of his order, Shri Thomas did not advance, and quite rightly, any arguments with reference to that section. 7. We have considered the submissions made by both sides. From the facts stated at length in the preceding paragraph, it would be clear that the liability to pay excise duty at enhanced rate has not finally crystallised in the assessee's case. The details of the excise duty paid in the past and refunded in terms of the High Court's order were furnished to us on being called upon to do so by the appellant's representative and it appears that the refund now received is in respect of the duty relating to the accounting years 1974-75 to 1978-79 as under : Rs. 1974-75 5,26,191.79 1975-76 1,43,272.92 1976-77 11,17,425.21 1977-78 8,99,302.61 1978-79 5,93,917.77 ----------------------------- 32,80, 110.30 ----------------------------- Now it is seen that it is in respect of these years that there is a dispute between the appellant and the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee in a note given below the statement of income attached to the return of income, which note has been reproduced hereinabove. Further it is seen that the amount received has been taken to the Balance Sheet and shown as a liability. On the other hand, the observation of the Commissioner of Income-tax (Appeals) that the assessee is trying to eat his cake and have it, is not quite borne out by the facts. His reference to section 43B also appears to be irrelevant. When the Board allowed the assessee's appeal in 1980 and directed the issue of refund of excise duty, the Government of India issued a review order. This had the effect of withholding the refund that the assessee felt was due to it as a result of the Board's order. The assessee on the one hand went in writ against the review order of the Government and made all possible efforts to secure the refund by obtaining an order from the Bombay High Court and filing a bank guarantee as required by the Court. All this happened in the year 1981 when the assessee could not have foreseen the outcome of the Customs Tribunal's order in a connected case, which became known much later. Nor could it know that the Tribunal's order ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
