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pute that the assessee was entitled to the duty paid by it to the manufacturer un-
der Rule 57A to Rule 57-I of the Central Excise Rules, 1944. Further it is not in
dispute that the assessee was entitled to utilise MODVAT credit towards pay-
ment of Excise Duty leviable on the final products manufactured by it. The liabil-
ity under the Central Excise Act to pay Excise Duty is only on the manufacture of
the excisable goods. The assessee is not one who is liable to pay Excise Duty on
the raw materials/inputs. It is merely the incidence of Excise Duty that has shift-
ed from the manufacturer to the purchaser and not the liability to pay the same.
Answering the submission of Counsel for the assessee based on proviso to Sec-
tion 43B, it is submitted that liability to pay Excise Duty of the assessee is in-
curred on the removal of the finished goods in the subsequent year, therefore, on
31-3-1999, the assessee was not liable to pay the Excise Duty and, therefore, the
proviso will also not come to the aid of the assessee.
8. We have considered the submissions of the Learned Counsel for the
parties and perused the records.
9. The two issues which need to be answered by us in these appeals
are :
“(i) Whether the ITAT had committed an error of law in upholding the
disallowance of the amount of Rs. 69,93,00,428/- which represented
MODVAT credit of Excise Duty that remained unutilised by 31st
March, 1999 i.e. the end of the relevant accounting year ?
(ii) Whether the ITAT has committed an error of law in upholding the
disallowance of Rs. 3,08,99,171/- in respect of Sales Tax Recoverable
Account, under Section 43B of the Income-tax Act ?”
10. We need to first notice the provisions of Section 43B under which
deduction is sought to be claimed. Section 43B is as follows :
“43B. Certain deductions to be only on actual payment. - Notwithstand-
ing anything contained in any other provision of this Act, a deduction oth-
erwise allowable under this Act 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
(b) any sum payable by the assessee as an employer by way of contribu-
tion to any provident fund or superannuation fund or gratuity fund
or any other fund for the welfare of employees, or
(c) any sum referred to in clause (ii) of sub-section (1) of Section 36, or
(d) any sum payable by the assessee as interest on any loan or borrowing
from any public financial institution or a State financial corporation or
a State industrial investment corporation, in accordance with the
terms and conditions of the agreement governing such loan or bor-
rowing, or
(e) any sum payable by the assessee as interest on any loan or advances
from a scheduled bank [or a co-operative bank other than a primary
agricultural credit society or a primary co-operative agricultural and
rural development bank] in accordance with the terms and conditions
of the agreement governing such loan or advances, or
(f) any sum payable by the assessee as an employer in lieu of any leave at
the credit of his employee, or
(g) any sum payable by the assessee to the Indian Railways for the use of
railway assets,
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