2018 (4) TMI 1787 - AT - Central Excise

Exclusion of Subsidy Payments from Excise Duty Calculation Upheld

Greenlam Industries Ltd, Marudhar Polysacks Pvt Ltd, Vaishno Wire Pvt Ltd, Maharaja Cables, Wellmac Plastics Private Limited, SRV International Pvt Ltd, Star Global Endura Ltd, Alliance Polysacks Pvt Ltd. Versus Commissioner Of CGST & Central Excise-Jaipur-I, C.C.E. & S.T. JAIPUR-I

The Tribunal held that subsidy amounts paid by the appellants using VAT 37B Challans should not be included in the assessable value for excise duty ... Valuation - inclusion of reimbursed subsidy amount admissible under the Scheme towards the payment VAT on future sale, in assessable value - HELD THAT:- The same issue has been decided by this Hon’ble Tribunal in case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI] where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant. Issues:Appeal against Order-in-Appeal regarding inclusion of subsidy amounts in the value of goods for excise duty calculation.Analysis:1. Background: The appellants established factories in Rajasthan under the Investment Promotion Scheme, eligible for subsidies disbursed in Form 37B for VAT liability. Revenue included subsidy amounts in goods' value for excise duty calculation, leading to the present appeals.2. Legal Dispute: Tribunal considered whether subsidy amounts disbursed to appellants should be included in assessable value under Section 4 of the Central Excise Act, as per the Investment Promotion Schemes of Rajasthan Government.3. Judicial Precedents: Referring to Shree Cements Ltd. case, Tribunal analyzed the concept of transaction value under Section 4, post-2000 amendments, and the actual payment of VAT for excise duty benefit, citing the Super Synotex India Ltd. case.4. Interpretation: Tribunal distinguished the Apex Court's decision in Welspun Corporation Ltd. case, where subsidy amounts under a remission of tax scheme were not included in transaction value, emphasizing the legal nature of VAT payments using subsidy challans.5. Conclusion: Relying on Welspun Corporation Ltd. case, Tribunal held that VAT amounts paid by appellants using VAT 37B Challans should not be included in assessable value. Consequently, impugned orders were set aside, and all appeals were allowed with consequential relief.This comprehensive analysis of the judgment highlights the legal dispute, relevant precedents, interpretation of statutes, and the ultimate conclusion reached by the Tribunal in favor of the appellants.