The Tax Publishers2020 TaxPub(DT) 3220 (Karn-HC) : (2020) 275 TAXMAN 0215

INCOME TAX ACT, 1961

Section 145A

Excise duty payable on goods manufactured but not removed and shown as closing stock of finished goods would not be part of finished goods valuation.

Valuation of closing stock - Excise duty - Excise duty payable on goods manufactured but not removed -

Assessee-company was engaged in business of manufacture of liquor. It filed return of income, wherein value of closing stock of finished goods did not include the excise duty leviable at the time of their removal from the premises of the assessee. Revenue was of the view that the value of excise duty on the finished goods should be included in the value of closing stock of finished goods. Tribunal was of the view that the excise duty payable on goods manufactured but not removed and shown as closing stock of finished goods would not be part of finished goods valuation. Held: Assessee's liability to pay excise duty on the goods manufactured arises only at the time of removal of the same from its premises, and not at any time earlier. Thus, till date of clearance of goods, excise duty payable on such goods did not get crystallized and the assessee could not be said to have incurred the excise duty liability. Therefore, the excise goods not being removed, no liability was accrued and hence, there was no question of payment of excise duty. Accordingly, the value of excise duty on finished goods should not be included in the value of closing stock of the finished goods.

REFERRED : Maruti Suzuki India Ltd. (Earlier Known as Maruti Udyog Ltd.) v. CIT (2020) 3 SCC 718 : 2020 TaxPub(DT) 802 (SC), Collector of Central Excise v. Polyset Corporation (2000) 115 ELT 41 (SC) : 2000 TaxPub(EX) 125 (SC), Wallace Flour Mills Company Ltd. v. Collector of C. Ex (1989) 4 SCC 592 : 1989 TaxPub(EX) 1258 (SC), CIT v. Rajasthan State Ganganagar Sugar Mills Ltd. (2017) 392 ITR 421 (Raj) : 2017 TaxPub(DT) 1047 (Raj-HC), CIT v. Loknete Balasaheb Desai SSK Ltd. (2011) 339 ITR 288 (Bom) : 2011 TaxPub(DT) 1528 (Bom-HC), CIT v. SPR Group Holdings Pvt. Ltd. [I.T.A No. 103/2006, dt. 22-11-2010], Asstt. CIT v. Narmada Chematur Petrochemicals Ltd. (2010) 327 ITR 369 (Guj) : 2010 TaxPub(DT) 1780 (Guj-HC) and Asstt. CIT v. D & H Secheron Electrodes (P.) Ltd. (2008) 173 Taxman 188 (MP) : 2008 TaxPub(DT) 1264 (MP-HC).

FAVOUR : In assessee's favour.

A.Y. : 1999-2000

IN THE KARNATAKA HIGH COURT

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