Page 112 - ELT_15th June 2020_VOL 372_Part 6th

790 EXCISE LAW TIMES [ Vol. 372

factory. The manufacture of the raw materials or inputs which have been used by
the appellant are the excisable items within the meaning of Central Excise Rules,
1944. The Excise Duty is leviable on the manufacturer of raw materials and in-
puts. The supplier of raw materials or inputs includes the Excise Duty paid on
such articles in his sale invoices. The appellant when purchases raw materials
and inputs for manufacture of vehicles it maintains a separate account containing
the Excise Duty as mentioned in sale invoices. The credit of such Excise Duty
paid by the appellant is to be given to the appellant by virtue of Rule 57A to 57F
of Central Excise Rules, 1944 as it then existed. The appellant was fully entitled to
discharge his liability to pay Excise Duty on vehicles manufactured by adjusting
the credit of Excise Duty earned by it as per MODVAT scheme. The liability to
pay Excise Duty is not fastened on two entities as per the scheme of Central Ex-
cise Act and Central Excise Rules. It is the manufacturer of raw materials and
inputs which are used by appellant who has statutory liability to pay Excise Du-
ty. The appellant is not assessee within the meaning of Central Excise Act, 1944,
with reference to raw materials and inputs manufactured by the entities from
which appellant had purchased the raw materials and entities.
16. As per Section 43B(a) of Income-tax Act, deduction is allowed on
“any sum payable by the assessee by way of tax, duty, cess or fee.” The credit of
Excise Duty earned by the appellant under MODVAT scheme as per Central Ex-
cise Rules, 1944 is not sum payable by the assessee by way of tax, duty, cess. The
scheme under Section 43B is to allow deduction when a sum is payable by as-
sessee by way of tax, duty and cess and had been actually paid by him.
17. Furthermore, the deductions under Section 43B is allowable only
when sum is actually paid by the assessee. In the present case, the Excise Duty
leviable on appellant on manufacture of vehicles was already adjusted in the
concerned assessment year from the credit of Excise Duty under the MODVAT
scheme. The unutilised credit in the MODVAT scheme cannot be treated as sum
actually paid by the appellant. The assessee when pays the cost of raw materials
where the duty is embedded, it does not ipso facto mean that assessee is the one
who is liable to pay Excise Duty on such raw material/inputs. It is merely the
incident of Excise Duty that has shifted from the manufacturer to the purchaser
and not the liability to the same.
18. We thus, conclude that the unutilised credit under MODVAT
scheme does not qualify for deductions under Section 43B of the Income-tax Act.
19. Shri Ganesh has relied on judgment of this Court in Eicher Motors
Ltd. and Another v. Union of India and Others, (1999) 2 SCC 361 = 1999 (106) E.L.T. 3
(S.C.), and submits that facility of credit is as good as tax paid, hence, it be ac-
cepted that by payment of Excise Duty although which is part of sale invoice is-
sued by manufacturer or producer of raw material or inputs, the payment by
appellant was Excise Duty which qualified for deduction under Section 43B.
20. In Eicher Motors Ltd. and Another, the challenge to the validity of
scheme as modified by introduction of Rule 57F of Central Excise Rules, 1944
was under consideration. According to Section 57F(4A) of Central Excise Rules,
1944, credit which was lying unutilised on 16-3-1995 with the manufacturers,
stood lapsed, Rule 57F(4A) has been extracted in paragraph 2 of the judgment
which is to the following effect :-
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