COMMISSIONER OF CENTRAL EXCISE Vs. CROMPTON GREAVES LTD.

JUDGEMENT

(1.) THIS is an appeal filed by the Revenue.

(2.) BRIEF facts of the case are that the respondents M/s. Crompton Greaves Ltd. are engaged in the manufacture of electric fan and parts thereof and were filing declaration under Rule 173C of Central Excise Rules, 1944 in respect of the clearances undertaken by them during the period April 1998 to Feb 1999. Scrutiny of the price list revealed that the respondents have claimed deduction in respect of turnover tax. The Jurisdictional Superintendent enquired from the respondents from time to time as to whether turnover tax has been actually paid to the relevant authorities or not and to provide evidence to that effect but the respondents did not furnish the relevant information. In view of the same they were issued show cause notices seeking to demand duty totally amounting to Rs. 33,07,580.67 for the period April 1998 to Feb 99 in respect of the deduction of turnover tax claimed by them from the price for which they could not produce evidence of having paid the same to the relevant authority. The show cause notices were adjudicated by the Deputy Commissioner wherein they stated that they have actually claimed deduction of Rs. 1,38,81,004/ - as against Rs. 2,54,42,922/ - alleged to be claimed as deduction in the show cause notice. Further as per their own books of accounts they actually paid Rs. 1,20,72,200/ - as turnover tax to the State Government and submitted a Chartered Accountant's certificate in respect of the same and therefore the excess turnover tax claimed as deduction amounted to only Rs. 18,08,804/ - on which the excise duty at the applicable rate came to Rs. 2,35,145/ -. They however claimed that the deductions are always claimed on an average basis and the actual incidence of taxes may vary from what is claimed as deduction. Therefore the question of imposing a ceiling of the actual would not arise in such a case provided the genuineness of the equalized amount is accepted. They referred to the decision of the Hon'ble Apex Court decision in the case of Baroda Electric Meters Ltd. 1999 (94) ELT 34 (SC) and Geep Industrial Syndicate Ltd. v. Collector of C. Ex. in which it is held that turnover taxes and octroi which were made irrecoverable could not have been collected but once these taxes were paid by the assessees to the authorities concerned the deduction of the same cannot be denied. The Deputy Commissioner agreed with the pleas advanced by the respondents and accordingly dropped the proceedings. This order was also upheld by the Commissioner (Appeals) on appeal being filed by the Revenue. It is against this order that the Revenue has come up in appeal.

(3.) THE ld. Advocate for the respondents however submits that the Supreme Court has in the case of Baroda Electric Meters Ltd. as well as Geep Industrial Syndicate Ltd. clearly held that turnover taxes which are in the nature of irrecoverable taxes can be claimed as deduction on average basis. Since the taxes are dependent on the turn over, they cannot be ascertained at the time of clearances and are therefore claimed as deduction on the basis of average of the past year and such deductions on average basis cannot be disallowed. He referred to the decision of the Tribunal in the case of Peico Electronics and Electricals Ltd. v. Collector of Central Excise, Pune where a similar view has been taken.