1. The only effective ground raised in this appeal by the Revenue reads as under: The learned CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 11,20,567 for 1985-86 being the amount of excise duty collected but not paid to the Central Excise Department.
2. The assessee a partnership firm derives income from dyeing of art silk cloth on job basis as well as on its own account. The Excise Authorities, on the basis of certain notifications and the relevant provisions of Excise Laws interpreted the relevant provisions in such a way that according to them excise duty was leviable not only on the job work carried on by the assessee on the cloth entrusted by various customers but also on the value of the said cloth belonging to the various customers regardless of the fact that the assessee was not the owner of the said cloth. The assessee as well as various other processors filed Writ Petitions in the Gujarat High Court and the Hon'ble High Court decided the point in favour of the assessee and other processors. In further appeal, the Hon'ble Supreme Court had granted stay in relation to the recovery of the disputed part of the excise duty which was attributable to the value of cloth belonging to the customers. The assessee was duly paying to the Government the excise duty relatable to the job work. As far as excise duty relatable to the value of cloth was concerned that amount, after being collected from the customers, was being separately accounted for. The assessee also obtained certain fixed deposits with the banks in lieu of which the bank had given a bank guarantee in favour of the Excise Department in compliance with the terms of grant of stay by the Hon'ble Supreme Court.
2.1 The Hon'ble Supreme Court ultimately gave the judgment in favour of the Excise Department vide its order dated 4-1 l-1988.The main judgment was delivered in the case of Ujagar Prints v. Union of India [1989] 179 ITR 317/42 Taxman 151 (SC). The said order was made applicable in the case of other process houses also including the assessee. On the delivery of the judgment, the Excise Authorities recovered all the disputed sums by payment or by enforcing bank guarantee.
2.2 The Assessing Officer made the following additions in respect of such amount appearing in the Central Excise Liability Account in the books of the assessee: The aforesaid additions were made by the Assessing Officer by holding that the excise duty charged/collected by the assessee from its customers was a trading receipt in view of the judgments of the Supreme Court in the cases of Chowringhee Sales Bureau (P.) Ltd v. CIT [1973] 87 ITR 542 and Sinclair Murray & Co. (P.) Ltd. v. CIT [1974] 97 ITR 615. The said additions were made in view of the provisions of Section 43B of the Act.
2.3 In the assessment years 1985-86 and 1986-87 Shri B.D. Roy the then CIT(A) cancelled the said additions. However, in assessment years 1987-88 and 1988-89 Shri G.J. Arora, the then CIT(A) confirmed the said additions.
2.4 For the assessment years 1985-86 and 1986-87 the Revenue appealed before the I.T.A.T. while for the assessment year 1987-88 the assessee came up in appeal before the I.T.A.T. The Tribunal Ahmedabad Bench "A" in ITA Nos. 1974 and 4845/Ahd./1989 relating to assesment years 1985-86 and 1986-87 filed by the Revenue and in I.T.A. No. 947/Ahd./1991 relating to assessment year 1987-88 filed by the assessee, set aside the orders of the CIT(A). The Tribunal while setting aside the orders of the CIT(A) gave the following directions to the CIT(A): (a) Whether the excise duty collected can be treated as a trading receipt; (d) Whether there was any over-riding title over the excise duty collected in favour of the excise department ; (e) Whether there was any over-riding title in favour of the customers over the amount of excise duty collected in the event of judgment of the Honourable Supreme Court in their favour; (f) Whether non-filing of any writ petition in the case of the appellant or customers (merchant manufacturers) claiming for the refund of excise duty collected ; (g) To examine the effect of treatment given by the customers in their books of accounts in relation to excise duty payments made to the processing units and whether the customers had an overriding title over the loan amount; (h) Whether the facts of the present case in relation to payments made in FDs with the Banks for arranging bank guarantee in favour of the Excise Department can be treated as almost similar to the facts of the case of Newchem Plastics Ltd. v. Dy. CIT 44 TTJ (Delhi) 261.
In this regard the I.T.A.T. further directed to examine the matter- (i) To examine whether any agreement has been executed by the appellant for furnishing the bank guarantee; whether the bank has agreed to discharge the liability of the appellant after receiving the payment in the form of FDs or what were the other consideration on account of which the banker had agreed to furnish the guarantee in faVour of the excise department in terms of stay order granted by the Honourable Supreme Court; (ii) Whether as per the terms of the bank guarantee, the excise department in the event of their success before the Honourable Supreme Court could directly recover the money from the bank against the said guarantee ; (iii) To examine whether the bank guarantee given was after the full satsifaction of the Excise Department ; (iv) Whether the interim stay order passed by the Honourable Supreme Court permitted the clearance of the goods on furnishing of a bank guarantee within 4 weeks of each of the clearance of demands; the date of clearance of the goods and the date of furnishing of the respective bank guarantee is also required to be verified; (v) Whether the appellant has made payments in fixed deposits with the bank in fulfilment of the condition imposed by the bank for giving the bank guarantee; whether the respective FDs have been pledged or secured in favour of the bank ; 3. The CIT(A) after taking into consideration the directions of the I.T.A.T. and after giving an opportunity of being heard to the assessee, deleted the impugned additions on the following grounds : (i) From the facts narrated by the learned counsel for the assessee and the provisions of Excise Act, it is seen that the excise duty collected by the assessee from the merchant manufacturers who had been exempted to take licence for manufacturing under Rule 174A of the Excise Rules and notification dated 5-11-1977 on the basis of authorisations given by them to the assessee and confirmed by the Excise Department, cannot be considered as a trading receipt in the assessee's hands as the assessee has merely acted as an agent of the merchant manufacturers for the purpose of collection and payment of excise duty to the Excise Department. More so because the excise duty collected was not in any way the liability of the assessee but that of the merchant manufacturers who had taken the ultimate responsibility for paying the correct excise duty in case any incorrect particulars are furnished with regard to the Selling price or any other particulars in the authorisation given by them to the assessee as is evident from Clauses 6 and 7 of the authorisation form.
(ii) The ratio laid down by the Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. (supra) and Sinclair Murray & Co.
(P.) Ltd. (supra) is not applicable to the facts of the case of the assessee.
(iii) The case of the assessee is squarely covered by the Tribunal's decision in the case of Happy Trust v. ITO [IT Appeal No. 165 (Ahd.) of 1986] and ITAT Bombay decision in the case of Sunil Silk Mills Ltd v. Dy. Commissioner [1993] 46 ITD 4.
(iv) Even if the excise duty collected is treated as a trading receipt, the assessee has discharged its liabilities, the moment the amount of excise duty collected was put into fixed deposit against which bank guarantee was issued to the Excise Department. The assessee had therefore made constructive payments of the excise duty as collected by putting the amount so collected in the fixed deposits and furnishing bank guarantee against these fixed deposits.
In support of this proposition, the CIT(A) relied upon the decision of the Delhi Bench of the Tribunal in the case of Nuchem Plastic Ltd. v. Dy. Commissioner [1992] 44 TTJ (Delhi) 261.
4. Shri R.B. Shah, Advocate appeared on behalf of the assessee. His arguments are four-fold: (a) Firstly, the disputed excise amount which was the subject to the stay of the Supreme Court is not a trading receipt. As per law of Excise, the merchant manufacturers are primarily liable to obtain licence for payment of duty. Under Rule 174A, the merchant manufacturers have been conditionally exempted to obtain registration for direct payment of excise. The excise duty collected from the customers is not payment receivable by him in the course of trading and the same is received purely in fiscal transaction.
There is over-riding title over such collection in favour of Excise Department by virtue of relevant provisions/Rules and notifications.
The assessee's role is like an agent between "customers" and the "Excise Department". The excise duty is leviable on the assessable value of the grey cloth and job charges. The excise duty relating to job charges has been duly collected and paid. The excise amount relating to the value of grey cloth was not paid although collected in view of the stay order of the Supreme Court and furnishing bank guarantee. The value of grey cloth does not form part of the sale proceeds of the assessee and so the excise duty relating thereto cannot form part of the total income. In support of his contentions the learned counsel for the assessee relied upon the judgment of the Supreme Court in the case of CIT v. Hindustan Housing & Land Development Trust Ltd. [1986] 161 ITR 524/27 Taxman 450A and also distinguished the decisions in the cases of Chowringhee Sales Bureau (P.) Ltd. (supra) and Sinclair Murray & Co. (P.) Ltd. (supra) relied upon by the Assessing Officer. He also relied upon the decision of the Ahmedabad Bench of the Tribunal in the case of Happy Trust (supra).
(b) Secondly, even if the said receipts are treated as trading receipts, the assessee is entitled to the deduction of the said amount on the basis of "Mercantile Method of Accounting" as Section 43B cannot be invoked as the excise amount cannot be termed as duty and/or the assessee had not claimed deduction of the same in Profit & Loss Account but credited the same to Excise Liabilities Account by debiting the separate account of Customers (Excise).
(c) Thirdly, even if Section 43B is invoked on the basis that the excise collection can be termed as duty, Explanation 2 appended to Section 43B cannot be applied to the assessee on the facts of the case and so the main provision of Section 43B cannot be applicable.
(d) Fourthly, even if Section 43B can be invoked and applied, the assessee is entitled to deduction as per first proviso to Section 43B as furnishing of bank guarantee should be treated as actual payment in view of the decision of the Delhi Bench of the Tribunal in the case of Nuchem Plastic Ltd. (supra) and the Bombay Bench of the Tribunal in the case of Sunil Silk Mills Ltd. (supra).
4.1 The learned counsel for the assessee submitted that the Tribunal while remitting the matter to the file of the CIT(A) for fresh decision vide their order dated 6th April, 1993 passed in the case of the assessee for the assessment years 1985-86 to 1987-88 made certain observations and gave guidelines at para 10 of the order and all points and issues raised by the Bench had been replied in the detailed submissions filed before the CIT(A) (pages 315 to 319 of the paper book). According to the learned counsel for the assessee the CIT(A) deleted the additions by following the directions and after fully considering the observations of the Bench. He, therefore, submitted that the order of the CIT(A) deserves to be upheld.5. Shri M.P. Lohia, the learned D.R. submitted that the order passed by the CIT(A) was erroneous inasmuch as it was not based on the correct appreciation of legal position. According to him, in the Scheme of Taxation by the Government, the excise duty falls under the category of "Indirect Tax". So is the case with Sales-tax which is also "Indirect Tax". The Hon'ble Supreme Court had examined the nature of the sales tax collected by a seller from the customers in the case of Chowringhee Sales Bureau (P.) Ltd. (supra) and Sinclair Murray & Co. (P.) Ltd. (supra) and held that the sales tax constituted a trading receipt in the hands of the seller who collects it from the customers and pays to the Government. However, trader shall be entitled to claim deduction in respect of such realisation or any part thereof as and when it pays to the Government or to the Purchaser. The principles discerned in relation to sales tax collections have identical application also in the case of other impost such as excise duty, etc. In support of this proposition he placed reliance on the decision of the Calcutta High Court in the case of CIT v. Partabmull Rameshwar [1977] 107 ITR 526 and the decision of the Allahabad High Court in the case of CIT v. Bijli Cotton Mills (P.) Ltd. [1970] 76 ITR 625. He further relied upon the judgment of the Supreme Court in the case of McDowell & Co. Ltd v. CTO [1985] 154 ITR 148/22 Taxman 11 where it has been held by the Supreme Court that excise duty collections made by the assessee are part of trading receipts. The learned D.R. further relied upon the judgment of the Gujarat High Court in the case of Navjivan Udyog Mandir (P.) Ltd. v. CIT [1994] 207 ITR 40 wherein the Hon'ble High Court has categorically held that the amount of excise duty collected by the assessee from the customers would form part of its trading receipts.
The learned D.R. submitted that the assessee's reliance on the judgment of the Supreme Court in the case of Hindustan Housing & Land Development Trust Ltd. (supra) is misplaced as the facts in the two cases are distinguishable. In this regard he drew our attention to the Head Notes of the said cases. The learned D.R. further relied upon the recent judgments of the Hon'ble Supreme Court in the cases of Jonnalla Narashimharao & Co. v. CIT [1993] 200 ITR 588/68 Taxman 340 and CIT v.T. Naggi Reddy [1993] 202 ITR 253 and submitted that the relevance of the principles laid down by the Hon'ble Supreme Court in the cases of Chowringhee Sales Bureau (P.) Ltd. (supra) and Sinclair Murray & Co.
(P.) Ltd (supra) have been accepted by the Supreme Court in these two recent judgements. The learned D.R. further submitted that the decision in the case of Happy Trust (supra) relied upon by the assessee's counsel relates to assessment year 1983-84 when the provisions of Section 43B were not on the statute book. Moreover, this decision has lost all relevance in view of the judgment of the Gujarat High Court in the case of Navjivan Udyog Mandir (P.) Ltd. (supra). He further submitted that the ratio laid down by the Bombay Bench of the Tribunal in the case of Sunil Silk Mills Ltd (supra) is also not applicable in view of the true nature of the excise duty as held by the Hon'ble Supreme Court in the two recent judgments in the cases of Jonnalla Narashimharao & Co. (supra) and T. Naggi Reddy (supra).
5.1 As regards the second arguments of the learned counsel for the assessee the learned DR submitted that the argument of the assessee that disputed excise duty cannot be termed as "duty" is wrong.
According to him, merely for the reason that the assessee disputed the amount of excise duty payable, the nature of duty does not get changed.
In support of this argument, he relied upon the decision of the Calcutta Bench of the Tribunal in the case of Dunlop India Ltd v.Asstt. CIT [1992] 41 ITD 582. The learned DR further submitted that once the excise duty collections are treated as part of trading receipts, the assessee's contention that no deduction was claimed, and, therefore, Section 43B is not applicable, would not survive.
5.2 With regard to the third argument of the learned counsel for the assessee that Section 43B read with Explanation 2 was not applicable, the learned DR submitted that it was not acceptable. According to him, the provisions of Clause (a) of Section 43B are applicable in respect of "any sum payable" by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force and further Explanation 2, which though has been inserted by the Finance Act, 1989 has been made effective retrospectively w.e.f 1-4-1984.
Drawing our attention to the said Explanation 2 the learned D.R.submitted that on a combined reading of the two it will be appreciable that the term "payable" in Section 43B has been used in specified sense of a sum payable for which the assessee has incurred liability in the previous year and there is no doubt in the present case that the excise duty in question was collected by the assessee in the year under consideration and has incurred liability to that extent in that previous year. He asserted that bringing Explanation 2 to Section 43B by retrospective amendment is within Legislative Competence and cannot be challenged. Without prejudice to the above, the learned DR further submitted that there is no force in the assessee's contention that because of stay of Supreme Court the disputed excise duty was not payable and hence Section 43B was not attracted. In this connection he again relied upon the decision of the Calcutta Bench of the Tribunal in the case of Dunlop India Ltd. (supra) and further submitted that it was significant to note that the Supreme Court stay was not absolute but conditional i.e., subject to furnishing of bank guarantees which the assessee by its contention wanted to treat as equivalent to paid. If the duty was not "payable" as contended by the assessee, then how is it so that he made a payment of the same (by bank guarantees), the learned D.R. argued. He relied upon the extract from the decision in the case of Ujagar Prints (supra) to bring out the fallacy in the arguments of the learned counsel for assessee.
5.3 As regards the fourth contention of the assessee's counsel, that even if Section 43B can be invoked and applied, the assessee is entitled to deduction as per first proviso to Section 43B as furnishing of bank guarantee should be treated as actual payment, the learned DR submitted that the same is not tenable. He submitted that in Nuchem Plastic Ltd.'s case (supra) the Appellate Tribunal has not interpreted the provisions of Section 43B in right perspective; because if the interpretation given by the I.T.A.T. that bank guarantee should be treated as actual payment is backed by fixed deposits is accepted in all cases as actual payment to the Exchequer, it will defeat the very objective for which the provisions of Section 43B were brought on statute book. He further submitted that it is settled canon of interpretation that any statute has to be so interpreted as to advance the object and the purpose behind the statutory provisions and not in such a way as to defeat the very object for which the provisions are brought on the statute book. In support of this proposition, he relied upon the following decisions: (2) Addl CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1/[1979] 2 Taxman 501 (SC) (4) Petron Engg. Construction (P.) Ltd v. CBDT [1989] 175 ITR 523/[1988] 41 Taxman 294 (SC)Tinsukhia Electric Supply Co. Ltd. v. State of Assam [1989] 45 Taxman 29 (SC) (6) CIT v. Federation of Indian Chambers of Commerce & Industry [1981] 130 ITR 186/6 Taxman 7 (SC), and 5.4 The learned D.R. drew our attention to the following observations of the Hon'ble Andhra Pradesh High Court in the case of Srikakollu Subba Rao & Co. v.Union of India [1988] 173 ITR 708 On the objects of Section 43B: While on the one hand, businessmen had freely collected sales tax, excise and customs duties, etc. from the public to whom goods were supplied, they refused to part with these funds in favour of the public exchequer raising a plethora of contentions. In view of the existing disputes, either the authorities or courts intervened to stay the disputed taxes till the disposal of the appeals with the result that these taxes and duties remain unpaid for a number of years and, in the meantime, the businessmen made best use of the public funds remaining in their hands. That is not all. The taxes and duties collected but remaining unpaid to the Government on account of order of stay, etc., were claimed as a deduction for income-tax purposes setting up a plea that the accounts were made upon the mercantile system and, consequently the disputed taxes and duties constituted legitimate deductions as the liability to pay the same was incurred in the accounting years concerned. Thus, on the one hand, the businessmen had free use of the funds collected from the public by way of taxes for the ostensible purpose of making them over to the public exchequer and at the same time secured tax reliefs without paying the same. The provisions of law, as they stood at the relevant time, could not remedy the situation and the result was 'taxes and duties' aggregating to thousands of crores of rupees lay in the hands of the taxpayers while the Government was reeling under the pressure of finding moneys to discharge commitments. That was the alarming situation when the Legislature felt concerned to find a remedy to the problem. The result was that Section 43B was inserted in the Act which has the effect of compelling the assessees to pay the disputed taxes which they had otherwise collected from the consuming public, if they wanted such amounts to be deducted by way of expenses. The Legislature did not act unreasonably in making a wholesome change that all expenses incurred by an assessee maintaining accounts under the mercantile system would not be deducted unless the expenditure was actually paid out.
Relying upon the above observations, the learned D.R. submitted that the interpretation made by the I.T.A.T. in the case of Nuchem Plastic Ltd (supra) ignores the very objective of Section 43B when it equates the furnishing of bank guarantees as actual payment. The learned D.R.submitted that the Governments are not to run on mere bank guarantees and in support of this proposition he relied upon the judgment of the Supreme Court in the case of Asstt. Collector of Central Excise v.Dunlop India Ltd. [1985] 154 ITR 172. The learned DR further drew our attention to an earlier decision of the Tribunal in the case of Purolalor India Ltd. v. IAC [1990] 34 ITD 286 (Delhi) wherein the Tribunal held that furnishing of guarantee Bond could not be treated as payment within the meaning of Section 43B. He further distinguished the facts of the case from those in the case of Nuchem Plastic Lid. (supra) inasmuch as the assessee himself in written submissions had stated that it had not to keep the full amount in fixed deposit as margin money with the bank for obtaining bank guarantees i.e., the assessee has categorically admitted that bank allowed 50% margin for fixed deposit in case of certain bank guarantees. He drew our attention to a specimen copy of the bank guarantee as submitted by the assessee in its paper book which shows that in case of default only by the assessee the bank will pay to the excise department and the guarantor has thus undertaken to make good to the Excise Department only in the event of default by the assessee. Therefore, according to the learned DR, the logic explained in Purolator India Ltd.'s case (supra) squarely applies to the facts of the present case whereby the provision of guarantee cannot be treated as synonymous with the actual payment.
5.5 The learned DR, without prejudice to the above arguments, further submitted that the I.T.A.T. while deciding the appeal in the above case vide their order dated 6th April, 1993 restored the matter to the CIT(A) for passing fresh decision after taking into consideration various points and guidelines issued by the Tribunal (para-9 at page 12 of the Tribunal's order). In restoring the matter the Tribunal made it obligatory upon the CIT(A) to investigate and ascertain certain relevant facts as mentioned in para 10.1 of their order before passing the order. For example, as per the directions of the Tribunal, the CIT(A) had to ascertain :- The agreement executed by the assessee if any, for furnishing the bank guarantee in favour of the Excise Department will have to be examined to find out whether the bank had agreed to discharge the liability of the assessee after receiving the payment in the form of F.Ds. or what were the other considerations on account of which the banker had agreed to furnish the guarantee in favour of the Excise Department in terms of the stay order granted by the Hon'ble Supreme Court.
Thus, there were various specific directions which the CIT(A) had to comply with in deciding the matter afresh. However, the learned D.R.submitted, with due regards that the impugned order of the CIT(A) had not considered many of these aspects and had given no findings with reference to those specific directions and therefore to this extent the order of the CIT(A) is bad and erroneous and deserved to be set aside.
6. As a rejoinder, to the arguments of the learned DR, Shri R.B. Shah, Advocate for the assessee submitted that the judgment of the Supreme Court in the cases of Jonnalla Narashimharao & Co. (supra) and T. Naggi Reddy (supra) were distinguishable on facts. So far as the first judgment is concerned, the facts have not come out in detail in that judgement but the relevant High Court judgment dealt with by the Supreme Court is P.Krishna Rao v. CIT [1978] 112 ITR 26 (AP).That was the case for assessment year 1968-69 when sales tax in the guise of "Rusumme" was collected when no sales tax was liable at the relevant time. The High Court held it to be illegal collection as is clear from the Head Note and such case would obviously fall under the ratio laid down by the Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. (supra). The Sales-tax Act in Andhra Pradesh was amended in 1970 with retrospective effect from 1963 making those amounts taxable but at the relevant time it was not so. The Supreme Court judgment in the case of T. Naggi Reddy (supra) is only a four lines judgment merely following the earlier judgment in the case of Jonnalla Narashimharao & Co. (supra). According to the learned counsel for the assessee, unfortunately the judgment of the Supreme Court in the case of Hindustan Housing & Land Development Trust Ltd. (supra) was not brought to the notice of the Supreme Court in either of the aforesaid two judgments and the Supreme Court had no opportunity to consider it. The learned counsel further submitted that the reliance placed by the learned DR on Gujarat High Court decision in the case of Navjivan Udyog Mandir (P.) Ltd. (supra) is of no assistance to the Revenue as the facts are different and the case is distinguishable.
That was not a case on duty and the Excise Department had conceded that no excise duty was leviable. There was no stay; no dispute; no guarantee given, no deposits with the bank. In fact, the issue was whether excise duty refunded by the department "wrongly collected and paid" was to be treated as income. That is not the case here. The learned counsel further relied upon recent judgment of the Tribunal in the case of Mehta Spices Co. v. Dy. Commissioner [1995] 54 ITD 311 (Coch.) where, according to him, the decisions of Supreme Court in the cases of Jonnalla Narasim-hurao & Co. (supra) and Chowringhee Sales Bureau (P.) Ltd. (supra) were distinguished. The learned counsel reiterated that the assessee had given bank guarantee to the Excise Department and as such the decision of the Delhi Bench of the Tribunal in the case of Nuchem Plastic Ltd. (supra) applies to the facts of the case. He submitted that the assessee has put margin money in the fixed deposits for obtaining bank guarantees. Of course, in first two years, the bank allowed 50% margin for fixed deposits in the case of certain bank guarantees but this was made good in the year of realisation i.e., in assessment year 1989-90. In the assessment year 1985-86 against bank guarantee of Rs. 9,50,000 the assessee put amount of fixed deposits of Rs. 7,85,000 leaving shortfall of Rs. 1,65,000. As against bank guarantee of Rs. 25,65,000 for assessment year 1986-87 the assessee put amount of fixed deposits of Rs. 19,04,500 leaving shortfall of Rs. 6,60,500. The total short fall of Rs. 8.26 lakhs was made good in the year of realisation of bank guarantees in assessment year" 1989-90. In the assessment years 1987-88 and 1988-89 fixed deposits amounts were put with 100% margin. Even otherwise it is the bank guarantee which raised actionable claim in favour of the Excise Department and should be treated as actual payment and not investments in fixed deposits.
Without prejudice to the above, the learned counsel submitted that the deduction equivalent to the investments in Fixed Deposits should be allowed in respective assessment years and balance of short fall should Be allowed in assesment year 1989-90 in which year the bank guarantees were enforced.
7. We have considered the rival submissions and perused the facts on record. In the Scheme of Taxation by the Government, Excise Duty falls under the category of "Indirect Taxes". So is the case with sales-tax which is also an "Indirect Tax". The Hon'ble Supreme Court had examined the nature of sales tax collected by a seller from the customers in the cases of Chowringhee Sales Bureau (P.) Ltd. (supra) and Sinclair Murray & Co. (P.) Ltd (supra) and held that the sales-tax constituted a trading receipt in the hands of the seller who collects it from the customers and pays to the Government. However, the trader shall be entitled to claim deduction in respect of such realisation or any part thereof as and when he pays it to the Government or to the purchaser.
The principles discerned in relation to sales-tax collections have identical application also in case of other imposts such as the excise duty, etc. in view of the case laws - Partabmull Rameshwar (supra) and Bijli Cotton Mills (P.) Ltd. (supra) relied upon by the learned D.R. In the case of McDowell & Co. Ltd. (supra) the Hon'ble Supreme Court has held that excise duty collections made by the assessee are part of trading receipts. Excise duty in McDowell & Co. Ltd.'s case (supra) was directly paid by the Customers. The question for consideration in that case was whether such payment of excise duty directly made by the customers can be regarded as a part of turnover in the hands of the seller for the purpose of levy of sales-tax. The Supreme Court held that it will be regarded as part of turnover. This thinking of the Apex Court goes to prove that recovery of excise duty constituted a trading receipt in the hands of the assessee.
7.1 The contentions of the assessee that merchant manufacturers are primarily liable for payment of duty and the assessee's role is like an agent between Customer and the Excise Department for collection of excise duty are misconceived and are of no avail. It is settled law that liability to pay excise duty arises as soon as excisable goods are manufactured or produced. The true nature of excise duty has been examined in a number of judicial decisions, notably by the Supreme Court in the case of Union of India v. Bombay Tyre International Ltd. [1983] 15 Taxman 29 and McDowell & Co. Ltd. (supra). In the case of Bombay Tyre International Ltd. (supra) the Supreme Court observed :- While the nature of an excise is indicated by the fact that it is imposed in respect of the manufacture or production, of an article, the point of time at which it is collected is not determined by the point of time when its manufacture is completed but will rest on considerations of administrative convenience.
...While the levy is on the manufacture or production of goods, the stage of collection need not, in point of time, synchronise with the completion of the manufacturing process.
In McDowell & Co. Ltd.'s case (supra) the Hon'ble Supreme Court still further observed that: 'the position has been put beyond doubt by a series of decisions' and on the basis of a number of decisions examined by it that 'the incidence of excise duty is directly relatable to manufacture, but its collection can be deferred to a later stage as a measure of convenience or expediency'.
Therefore, in view of the above being the true nature of excise duty it cannot be said that the prime liability for payment of excise duty was not that of the assessee but that of merchants. In fact, bearing excise duty burden by the merchants was a part of the assessee's pricing policy for the job carried out by him. This is what in sales management is called as pricing theory of "Cost Plus". In fact for that very reason the assessee has to get itself registered with the Excise Department and obtain a licence. The assessee in this case has admittedly got the licence number. Even otherwise, if for the sake of argument it is accepted that the liability for payment of excise duty was that of merchants, even then by virtue of undertakings given by the merchants to the Excise Department in Rule 174A of the Central Excise Rules, 1994 the liability shifts to the Process House i.e., the assessee. Therefore, in any case excise duty remains a statutory duty payable by the assessee.
In fact, in the assessee's case and similar other cases of Process Houses the dispute with reference to excise duty was due to the contention that job work processing operations do not amount to "Manufacture" and the imposition of excise duty on the processor on the basis of the full value of the processed material (inclusive of value of grey fabrics, processing charges and selling profits) is unfair. The contention of the processing houses that "processing" does not amount to "manufacture" was taken care of by retrospective amendment to the definition of "Manufacture" in the Central Excises and Salt Act, 1944 by the Legislature. The Hon'ble Supreme Court in all these cases (inclusive of the case of the assessee) and in Ujagar Prints' case (supra) (and other writ petitions, Civil Appeals and transferred cases) has already upheld the constitutional validity of imposition of excise duty in such cases of Process Houses. It will be pertinent to quote here from the judgment of the Hon'ble Supreme Court in this case which clearly brings out the fallacy in assessee's arguments and sets the matter right: Duties of excise are imposed on the production or manufacture of goods and are levied upon the manufacturer or the producer in respect of the commodity taxed. The question whether the producer or the manufacturer is not the owner of the goods is not determinative of the liability. The essential and conceptual nature of the tax has to be kept clearly distinguished from both the extent of the power to impose and the stage at which the tax is imposed. Though the levy is on the manufacture or production of goods the imposition of the duty could be at stage which the law considers most convenient to impose as long as a rational relationship with the nature of the tax is maintained.
The nature of the excise duty is not to be confused with, or tested with reference to, the measure by which the tax is assessed. The standard adopted as the measure of assessment may throw light upon the nature of levy but is not determinative of it. When a statutory measure for assessment of the tax is contemplated, it need not contour along the lines which spell out the levy itself and a broader based standard of reference may be adopted for the purposes of determining the measure of levy.
In view of the above discussions, there is no gainsaying in the assessee's argument that the collections of excise duty in the assessee's case did not constitute "trading receipts.
7.2 The issue whether recovery of excise duty constitutes a trading receipt or not has been decided by the Hon'ble Supreme Court in the recent two judgments in the cases of Jonnalla Narashimharao & Co.
(supra) and T. Naggi Reddy (supra). The ratio laid by the Supreme Court squarely applies to the facts of the case before us. In Jonnalla Narashimbharao & Co's case (supra) the appellant a commission agent carrying on business collected during the accounting period relevant to the assessment year 1968-69 certain amounts by way of sales tax under the name "rusum" inasmuch as its liability to sales tax was disputed by it and was questioned in various proceedings. (In assessee's case also excise duty has been collected even though it was disputed by him). In 1970, there was a retrospective amendment of the Sales tax Law as a result of which the appellant's liability was upheld by the Courts. (In assessee's case also there was a retrospective amendment of Excises and Salt Act, 1944 which included "Processing" within the meaning of the term "Manufacture" so as to attract levy of excise duty on processing of cloth beyond doubt). Though the appellant had not remitted the tax during the assessment year 1968-69, it paid the tax later (In assessee's case also though the excise was recovered from the merchants in respective years, it was paid later after the Supreme Court's Judgment in Ujagar Prints 'case (supra). The question in Jonnalla Narashimharao & Co.'s case (supra) was whether the amounts collected by the appellant in the name of "rusum" were the assessee's income and whether the sales tax paid later was allowable as a deduction in the assessment year 1968-69. On reference the Andhra Pradesh High Court held that the amounts were income but were not deductible in the assessment year 1968-69. On appeal, the Supreme Court affirmed the decision of the High Court that the amounts collected in the name of "rusum" constituted business receipts of the appellant. However, on the point of allowability of deduction the Hon'ble Supreme Court reversed the judgment of the Andhra Pradesh High Court and held it to be allowable in assesment year 1968-69 as the assessee was maintaining in accounts on mercantile basis and Section 43B was not on the statute book in that year. But here in the present case since Section 43B is very much on the statute book for the assessment year under consideration, the allowability will definitely be hit by provisions of Section 43B. In any case the issue whether the disputed amount of excise duty constituted trading receipt or not is decided in the affirmative beyond any doubt. The jurisdictional High Court i.e.
Gujarat High Court in the case of Navjivan Udyog Mandir (P.) Ltd. (supra) following the aforesaid judgment of the Supreme Court in the case of Jonnalla Narashimharao & Co. (supra) has categorically held at page 47 as under: The amounts of excise duty collected by the assessee from the customers would form part of its trading receipts.
The above three judgments were not before the I.T.A.T. which restored the issue to the file of the CIT(A) and the same were also not brought to the notice of the CIT(A) who held that the ratio laid down by the Supreme Court in the cases of Chowringhee Sales Bureau (P.) Ltd (supra) and Sinclair Murray & Co. (P.) Ltd (supra) was not applicable to the facts of the present case. The position has now undergone a sea-change after the pronouncement of the abovenoted three judgments and in view of the ratio laid down in the aforesaid judgments it can be said without any shadow of doubt that the excise duty collected by the assessee during the year under appeal constituted trading receipt and is accordingly liable to be assessed in the year under appeal as such.
The assessee's reliance on the judgment of the Supreme Court in the case of Hindustan Housing & Land Development Trust (supra) is of no assistance to the assessee because the aforesaid decision is not applicable in the present case. The Head Notes of the said case are reproduced below: Business - Dealing in land - Compulsory acquisition of land - Additional Compensation fixed by arbitrator - Appeal by Government against award - Amount deposited in Court - Assessee permitted to withdraw only on furnishing security - Additional Compensation does not accrue and not taxable a profit at that stage.
Income - Accrual - Compulsory acquisition of land - Right to enhanced Compensation is an inchoate right - Additional Compensation does not accrue when amount awarded is disputed by Government by filing appeal.
Thus, from the reading of the above Head Notes itself it is clear that the case does not have any bearing to the facts of the present case. In fact, the Hon'ble Supreme Court in the said judgment itself took pains to make it clear that: There is clear distinction between cases such as the present one, where the right to receive payment is in dispute and it is not a question of merely quantifying the amount to be received and cases where the right to receive payment is admitted and the quantification only of the amount payable is left to be determined in accordance with settled or accepted principles. (page 530) In so far as the assessee in question is concerned, there is no doubt that his case falls in the latter category i.e. where the right to receive payment is admitted because as per the terms of agreement between the assessee (Process House) and the merchants, the merchants have given an undertaking to make good any amount of excise duty payable by the assessee on processing of goods.
7.3 The reliance placed by the learned counsel for the assessee on the decision of the I.T.A.T. Ahmedabad in the case of Happy Trust (supra) is misplaced. The said decision relates to assessment year 1983-84 when the provisions of Section 43B were not on the statute book. This situation has undergone a sea-change after the insertion of Section 43B by the Finance Act, 1983 with effect from 1-4-1984.
7.4 As regards the order of the I.T.A.T. Cochin Bench in the case of Mehta Spices Co. (supra) relied upon by the assessee's counsel, it is noted that the Bench has taken note of the judgments of the Supreme Court in the cases of Chowringhee Sales Bureau (P.) Ltd. (supra) and Jonnalla Narashimharao & Co. (supra) but have held that the facts of the case before them were different from the facts of the cases before the Apex Court in very important aspects. Firstly, in the case decided by the Apex Court there was no understanding with the purchasers to refund the "Rusum" collected. The assessee in that case had just collected tax in the guise of "Rusum" and did not make it over to the Government. However, in the case before the Hon'ble Members of the ITAT Cochin Bench, the collections were not from the purchasers. Secondly, in the former case, there was retrospective amendment validating levy of tax on the commission agent but in the case before the Hon'ble Members of the Cochin Bench, there was no such validating Act. As pointed out by us earlier the facts in the case before us are on all fours with those of Jonnalla Narashimharao & Co.'s case (supra) i.e.
there was a validating Act i.e. there was a retrospective amendment of Excises and Salt Act, 1944 which included "Processing" within the meaning of term "manufacture" so as to attract levy of excise duty on process of cloth beyond doubt. Accordingly we hold that the reliance placed by the assessee's counsel on the decision of the ITAT Cochin Bench in the case of Mehta Spices Co. (supra) is of no assistance to the assessee.
7.5 The second contention of the assessee's counsel that even if said receipts are treated as trading receipts, the assessee is entitled to the deduction of the said amount on the basis of Mercantile Method of accounting as Section 43B cannot be invoked as the disputed excise amount cannot be termed as duty and/or the assessee has not claimed deduction of the same in Profit and Loss A/c. but credited the same to the Excise Liability A/c. by debiting the separate account of Customer (Excise), is also not acceptable. Once the excise duty collected are treated as part of trading receipts, the assessee's contention that no deduction was claimed and therefore Section 43B is not applicable, would not survive. The effect of treating the said collections as trading receipts would mean that the trading account if recast would include the excise duty collection as a part of the turnover on the credit/income side and the net income shown would necessarily imply that the amount of excise duty has been claimed as a deduction on the basis of Mercantile System of Accounting which is now not permissible after introduction of Section 43B of the Act. The Hon'ble Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. (supra) itself had clarified that crediting sales tax separately in its account books under the head "Sales-tax collection Account" did not make any difference. According to the Apex Court it is the true nature and quality of the receipt and not the head under which it is entered in the account books that would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the Assessing Officer from treating it as trading receipts.
7.6 The third contention pi the assessee's counsel that even if Section 43B is invoked and applied on the basis that the excise collection can be termed as duty, Explanation 2 appended to Section 43B cannot be applied to the assessee on the facts of the case and so the main provision of Section 43B cannot be applicable, is also not tenable. The provisions of Clause (a) of Section 43B are applicable in respect of- (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or Further Explanation 2, which though has been inserted by the Finance Act, 1989 has been made effective retrospectively with effect from 1 -4-1984 which says that- Explanation 2 - For the purposes of Clause (a), as in force at all material times, 'any sum payable' means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law.
Thus, on a combined reading of the two, it will be appreciated that the term "payable" in Section 43B has been used in specific sense of a sum payable for which the assessee has incurred liability in the previous year. There is no doubt in the present case that the excise duty in question was collected by the assessee in the year under consideration and has incurred liability to that extent in that previous year.
Bringing Explanation 2 to Section 43B by retrospective amendment is within Legislative Competence and cannot be challenged. In fact, as the wording of Explanation 2 themselves states it is mere clarificatory explanation of the Government's intention all along.
7.7 Further we do not find any force in the assessee's contention that because of stay of Supreme Court the disputed excise duty was not payable and hence Section 43B was not attracted. The ITAT Calcutta Bench 'D' had examined the similar contention made by the assessee in Dunlop India Ltd.'s case (supra) when the High Court had stayed the excise duty levy and the assessee contended that the excise duty ceased to be "payable" as far as application of Section 43B was concerned.
However, after analysing the whole scheme, the Hon'ble Tribunal there did not find the contention of the assessee as acceptable.
7.8 Further, it is significant to note in the case of the assessee and other process houses, the Supreme Court's stay was not absolute but conditional i.e. subject to furnishing of bank guarantee which the assessee by its contention wanted to treat as equivalent to paid. If the excise duty was not "payable" as contended by the assessee, then how is it so that he made a payment of the same (by bank guarantees).
In fact, the fallacy in assessee's argument is apparent from the final decision of the Hon'ble Supreme Court in this matter. The extracts from the decision in Ujagar Prints 'case (supra) are quoted below: In the result, the appeals preferred by the Union of India are allowed and the judgment of the Gujarat High Court under appeal is set aside. The appeals preferred by the processors against the judgment of the Bombay High Court and the writ petitions filed by the processors directly in this court are dismissed. There will however be no orders as to costs in the appeals and the writ petitions.
The Union of India and the authorities shall be entitled to recover the amounts due by way of arrears of excise duty and shall be entitled to take necessary steps to seek the enforcement of the bank guarantee, if any, for the recovery of the arrears.
From the reading of the abovementioned extracts from the judgment it becomes clear that the contention of the assessee that the excise duty in question was not payable, is mis-conceived. The Hon'ble Supreme Court has asked to recover the arrears of excise duty. The usage of the word "arrears" is very significant in this regard. It will not be out of place to mention here that what the Courts have observed about the meaning of the word "arrear": The word 'arrears' is not a term of art; it is commonly used to describe sums overdue and payable in respect of periods of time; it means something which is behind in payment or which remains unpaid, implying a duty and a default; it signifies money unpaid at the due time.
(Basant Ram Ralla Ram v. Gurcharan Singh AIR 1959 Punj. & Har. 578 at 580).
Arrears of any kind means arrears of every kind, that is to say amounts which a person is liable to pay or under a duty t6 pay it has defaulted in payment thereof even after the time thereof had arrived and expired whatever may be the source of the liability or duty.
Therefore, in view of the above, this contention of the assessee is rejected.
7.9 This leaves us with the last and fourth argument of the assessee's counsel that even if Section 43B can be invoked and applied, the assessee is entitled to the deduction as per first proviso to Section 43B as furnishing of bank guarantee should be treated as actual payment. We do not find any force in this argument in view of the ratio laid down by the Supreme Court in the case of Dunlop India Ltd. (supra). In this case, Dunlop India Ltd. was a manufacturer of tyres, tubes and various other rubber products. By a notification dated 6-4-1984, issued by the Government of India, Ministry of Finance (Department of Revenue), in exercise of powers conferred by Rule 8(1) of the Central Excise Rules, 1944, tyres falling under Item No. 16 of the First Schedule to the Central Excises and Salt Act, 1944, were exempt from a certain percentage of excise duty to the extent that the manufacturers had not availed themselves of the exemptions granted under certain other earlier notifications. The Department was of the view that the company was not entitled to exemption as it had cleared the goods earlier without paying central excise duty, but on furnishing bank guarantees under various interim orders of Courts. The company claimed the benefit of the exemption to the tune of Rs. 6.05 crores and filed a writ petition in the Calcutta High Court and sought an interim order restraining the Central Excise authorities from the levy and collection of excise duty. The learned Single Judge took the view that a prima facie case had been made out in favour of the company and by an interim order allowed the benefit of the exemption to the tune of rupees two crores ninety-three lakhs and eighty-five thousand for which amount the company was directed to furnish a bank guarantee, that is to say, the goods were directed to be released on the bank guarantee being furnished. An appeal was preferred by the Assistant Collector of Central Excise under Clause 10 of the Letters Patent and a Division Bench of the Calcutta High Court confirmed the order of the learned Single Judge, but made a slight modification, in that the Collector of Central Excise was given the liberty to encash 30% of the bank guarantee. The Assistant Collector of Central Excise preferred appeal before the Hon'ble Supreme Court by Special Leave. By their interim order dated 15-11-1984, the Supreme Court vacated the orders granted by the learned Single Judge as well as by the Division Bench. Ultimately, the Hon'ble Supreme Court allowed the appeal filed by the Assistant Collector of Central Excise by observing as under: Governments are not to run on mere bank guarantees. We notice that very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No Governmental business or for that matter no business of any kind can be run on mere bank guarantees.
Liquid cash is necessary for the running of a Government as indeed any other enterprise.
Further, in the case of Purolator India Ltd. (supra) the ITAT Delhi Bench "E" has held that furnishing of Guarantee Bond could not be treated as payment within the meaning of Section 43B. It will be worthwhile to quote from the said judgment: The Section 43B provides that deduction, would be allowed of duty, taxes etc., if the same is paid during the year. The word 'paid' means 'satisfied'. The guarantee gives the right to the payee to enforce payment from the author while the payment satisfies the payee, i.e. the former is the beginning while the latter is the end of the transaction. The claim of the assessee that provision of guarantee bond should be treated as payment could be accepted if and only if the two are synonymous but unfortunately the former is a step prior to actual payment and, therefore, could not be termed as payment.
Later on, by a subsequent decision, the ITAT Delhi Bench in Nuchem Plastic Ltd.'s case (supra) held that furnishing of bank guarantee for the entire amount should be treated as actual payment and on this decision the learned counsel for the assessee has heavily relied upon.
In this connection it is noted that the facts of the present case are different from the facts of the case of Nuchem Plastic Ltd. (supra). As pointed out earlier it is admitted by the assessee himself in its written submissions that it had not to keep the full amount as margin money with the bank for obtaining bank guarantees. It is categorically admitted by the assessee that the bank allowed 50% margin for fixed deposits in case of certain bank guarantees. Therefore, under these circumstances, when the assessee has merrily used funds by way of recovery of excise duty from the merchants and kept only a part of it as fixed deposits, where also the assessee was enjoying the fruits thereof by way of bank interest etc. how it can be said that the assessee should be deemed to have made actual payment of excise duty by furnishing bank guarantee. Further, a specimen copy of the bank guarantee as submitted by the assessee in its paper book also shows that in case of default only by the assessee, the bank will pay the excise duty to the Department. The guarantor has thus undertaken to make good to the Excise Department only in the event of default by the assessee. Therefore the logic explained in the case of Purolator India Ltd. (supra) squarely applies to the facts of the present case whereby the provisions of guarantee cannot be treated as synonymous with the actual payment. Thus, the contention of the assessee to treat furnishing of bank guarantee as equal to actual payment of excise duty for the purpose of Section 43B cannot be accepted. On the same analogy, the alternative contention of the assessee's counsel that the amount of fixed deposits of Rs. 7,85,000 as against collection of Rs. 9,50,000 for the assessment year 1985-86 should be allowed is rejected.
8. As regards reliance placed by the assessee's counsel on the order of the Bombay Bench of Tribunal in the case of Sunil Silk Mills Ltd. (supra) it is held that in view of the true nature of the excise duty as held by the Supreme Court in various decisions which we have discussed earlier, the ratio laid down is not applicable to the facts of the present case. It is evident from the observations of the I.T.A.T. Bombay Bench in the following words: No doubt in a case where the assessee manufactures the goods itself, the price of the goods would include the excise duty, sales-tax etc.
and it would be difficult to say that those levies cannot form part of the trading receipt. On the other hand in the present case, there was no liability on the part of the assessee to take out a licence as a manufacturer or collect the excise duty as part of the price of goods manufactured by it. The assessee was only authorised to give the particulars of the goods for the purpose of levy of excise duty.
However, in view of the correct position about the nature of excise duty as brought out in the preceding paras by us, it may be stated that the I.T.A.T. Bombay Bench did not appreciate the facts in right perspective. In fact, the Tribunal's attention was not drawn to this aspect which was the deciding factor in the case of Sunil Silk Mills Ltd. (supra). Further, it is noted that the facts of the present case are different from the facts in the case of Sunil Silk Milb Ltd. (supra). In that case the entire work of processing was carried out by the assessee on job work basis for others which prompted the Tribunal to take the view that excise duty recovered by the assessee was not trading receipts in the hands of that assessee. However, in the present case the assessee has carried out processing not only for merchants but has also done processing on his own account. The extent of such processing on his own account is quite substantial. For example, turnover on own account in assessment year 1986-87 is Rs. 38,03,312, in assessment year 1987-88 Rs. 87,48,081 and in assessment year 1988-89 Rs. 83.11 lakhs. It will not be out of place to mention that processing on job work basis also includes the processing for sister concerns viz.
Vimal Silk Mills, J.K. Silk Mills, Anil Silk Mills. Therefore, in view of these distinguishing facts the decision of the Tribunal in Sunil Silk Mills Ltd's case (supra) cannot be applied to the facts of the present case.
8.1 As regards the bank guarantee it may be stated that the attention of the I.T.A.T. was not drawn to the observations of the Supreme Court in the case of Dunlop India Ltd. (supra).
9. While on the subject we would like to refer to the provisions of Excises and Salt Act, 1944. The provisions of Section 11D read as under: Duties of excise collected from buyer to be deposited with Central Government. Notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court in any other provision of this Act or the rules made thereunder, every person who has collected any amount from the buyer of any goods in any manner as representing duty or excise shall forthwith pay the amount so collected to the credit of the Central Government.
The above provision makes it clear beyond doubt that any payment which falls short of resulting in credit of the amount to the Central Government cannot be treated as payment of excise duty as it clearly states that notwithstanding anything to the contrary contained even in any order of any Court. Thus, also the payment in dispute being payment of excise duty cannot be treated as actually paid if the statute itself docs not treat it as a payment.
10. Further, when we analyse the provisions of Section 43B and the object with which these provisions were brought on the statute book as enumerated by the Andhra Pradesh High Court in the case of Srikakollu Subba Rao & Co. (supra) and the relevant extracts reproduced at page 15 in para 5.4 above, one thing which clearly emerges is that "time" was the essence as the Government wanted the funds immediately for its developmental projects and in case the payments were not so forthcoming no deduction was to be allowed under Section 43B. Here even if the bank guarantee is treated as constructive payment then also it falls short of payment as the actual realisation of these amounts to the credit of Central Government is well beyond the time prescribed under Section 139(1) and hence the assessee does not become entitled to the deduction of such payment.
10.1 We do not find any merit in the contention of the Departmental Representative that since the CIT(A) has not fully complied with the directions given by the Appellate Tribunal, the case should be restored back to the file of the CIT(A) because the CIT(A) did consider the directions given by the Appellate Tribunal and tried to arrive at the conclusion as per material placed before him by the assessee. Further, in our opinion, no useful purpose will be served by restoring the matter again to the file of the CIT(A) in view of the detailed discussions by us (supra) on different issues involved in the case.
11. In the light of the above discussion, we hold that the excise duty collected by the assessee constituted trading receipts in its hands and as such liable to be assessed during the year under appeal and further the bank guarantee furnished by the assessee did not tantamount to actual payment of excise duty. We accordingly reverse the findings of the CIT(A) and restore those of the Assessing Officer.