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The Supreme Court has ruled that the burden to claim excise duty deductions lay with the manufacturer and not the department.

The court said for claiming deductions, the order book should be properly maintained by assessees while it dismissed a plea of an assessee who had failed to disclose the details while filing a price declaration and upheld the order of the department raising the demand of differential duty on the assessee.

A bench comprising Justice S H Kapadia and Justice B S Reddy said, the burden to claim deduction is on the manufacturer. The burden is on the manufacturer to maintain the proper records as it is again the onus on such manufacturer to file a proper price declaration, said the court.

The court said that every efficient manufacturer has to plan his operations carefully to know what raw materials he will use and in what proportion in the manufacture of his final product.

A prudent manufacturer would ordinarily work out an estimate, the extent of exemption which he is likely to get.

The verdict came on an appeal filed by Modipon Fibre, Modinagar, UP. The appellant assessee was engaged in manufacture of nylon and polyester yarn and cleared to its various depots situated all over India including Surat from where the yarn was sold to dealers. The assessee used to pay duty at time of removal of yarn on basis of depot sale price after claiming permissible deductions under section 4 of the Central Excise Act, 1944. One such deduction was TurnOver Tax (TOT) in respect of yarn cleared and despatched to Surat depot from the factory of the assessee in UP. In respect of such despatch, the assessee had claimed deduction at 2% on account of TOT.

The department issued notice of demand on the ground that it was in excess as the assessee claimed deductions at 2% for its entire clearances of nylon yarn sent to Surat depot without mentioning that in Gujarat two rates of TOT were in existence, one in backward areas and second one for other areas. The demand was confirmed by all the authorities against which the assessee came to the apex court.

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