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of Central Excise Act, 1944, which provides for valuation of raw material covered
by MODVAT Scheme. Referring to Rule 57A(1) and Rule 57F(1), this Court laid
down following in paragraph 18, 19 and 20 : -
“18. It is clear from these rules, as we read them, that a manufacturer
obtains credit for the Excise Duty paid on raw material to be used by him in
the production of an excisable product immediately it makes the requisite
declaration and obtains an acknowledgment thereof. It is entitled to use the
credit at any time thereafter when making payment of Excise Duty on the
excisable product.....
19. It is, therefore, that in the case of Eicher Motors Ltd. v. Union of
India, this Court said that a credit under the MODVAT Scheme was as good
as tax paid.
20. With this in mind, we must now determine whether the Excise
Duty paid on the raw material should form part of the cost of the excisable
product for the purposes of Section 4(1)(b) of the Act read with Rule 6 of
the Valuation Rules.”
26. In the above case, this Court held that in determining the cost of the
excisable product covered by MODVAT Scheme under Section 4(l)(b) of the Act
read with Rule 6 of the Valuation Rules, the Excise Duty paid on raw material
covered by MODVAT Scheme is not to be included. The question which was an-
swered in the above case was entirely different to one which has arisen in the
present case.
27. This Court as noted above in the above case has laid down that
credit for the Excise Duty paid for the raw material can be used at any time when
making payment of Excise Duty on excisable product. The user of such credit is
at the time of payment of Excise Duty on the excisable product i.e. at the time
when appellant is to pay Excise Duty on its manufactured vehicle.
28. The judgment of this Court in Berger Paints India Ltd. v. Commission-
er of Income Tax, 2004 (266) ITR 99 = 2004 (165) E.L.T. 488 (S.C.), has also been re-
ferred to. The assessee company in the above case had claimed that under Sec-
tion 43B of the Income-tax Act, it was entitled to deduction of the entire sum be-
ing the duties actually paid during the relevant previous years. The appellant in
the year in question had incurred expenditure on account of customs and Excise
Duty aggregating to Rs. 5,85,87,181/- which was duties debited to the profit and
loss account of the company for the relevant previous year. In assessment pro-
ceedings the company’s claim that it was entitled to deduct the entire sum of
Rs. 5,85,87,181/- being the duties actually paid during the relevant year was ac-
cepted. The Commissioner of Income Tax initiated proceedings under Section
263 of the Act claiming that Assessing officer had wrongly allowed the claim for
deduction. The Commissioner held that assessing officer incorrectly relied on
judgment of Gujarat High Court in Lakhan Pal National Ltd. v. ITO, (1986) 162 ITR
240, ITAT also. ITAT referred a question to the High Court. The High Court an-
swered the question in favour of Revenue against which the appeal was filed.
The relevant facts have been noticed in the judgment of this Court in following
words : -
“...In the assessment proceedings of the assessment year 1984-85, the
Inspecting Assistant Commissioner of Income-tax allowed the appellant-
assessee’s claim that it was entitled to deduct the entire sum of
Rs. 5,85,87,181/- being the duties actually paid during the relevant year
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