2019 (5) TMI 1861 - AT - Central Excise

Tribunal remands case for correct Sales Tax deductions & SSI exemption eligibility

The Tribunal remanded the case to the Adjudicating Authority for reassessment based on correct Sales Tax deductions to determine the Appellant's ... SSI Exemption - threshold limit of aggregate value of clearances - inclusion/deduction of Sales Tax/Trade Tax paid by the Appellant on the clearances effected during the relevant Financial Year - benefit of N/N. 8/2003-CE dated 01.03.2003 denied - HELD THAT:- While computing the aggregate value of the clearance in a particular Financial Year, the value has to be determined as provided under Section 4 of the Central Excise Act, 1944. This provides that the tax element of taxes such as Sales Tax/Trade Tax/VAT need to be deducted while determining the transaction value of the product. Thus, for determination of the aggregate value of the clearances under Notification No.8/2003-CE dated 01.03.2003, the aggregate value has to be calculated after making the necessary deductions of the Sales Tax/Trade Tax/ VAT etc. On a perusal of the assessment order of the Sales Tax Department, it is seen that though the Appellant may not have shown sales tax element/amount separately for the individual invoices, but the fact of the matter is that it has been paying sales tax on all the clearances effected from both the factories. As per the mandate of Section 4 of Central Excise Act, 1944, the amount of the Sales Tax /VAT/Trade tax need to be deducted from the invoice value for computing the transaction value. The Original Adjudicating Authority, therefore, needs to consider the assessment order of the Sales Tax Department for giving the necessary deduction from the aggregate value of the clearances for determining the aggregate value of the clearances as required under proviso (VII) of Para-2 of Notification No.8/2003-CE dated 01.03.2003. The matter is therefore remanded to the Original Adjudicating Authority to consider all the facts including the assessment order of the Sales Tax Department for the Financial Year 2005-2006 and re-determine the aggregate value of the clearances of the Appellant and, accordingly, decide whether the Appellant is entitled for benefit of Notification No.8/2003-CE dated 01.03.2003 or not - Appeal allowed by way of remand. Issues:1. Interpretation of SSI exemption under Notification No.8/2003-CE dated 01.03.2003.2. Applicability of Sales Tax/Trade Tax deduction in determining the aggregate value of clearances for SSI exemption.Analysis:1. The case revolved around the Appellant's eligibility for SSI exemption under Notification No.8/2003-CE dated 01.03.2003 due to exceeding the aggregate value of clearances specified. The Department contended that the Appellant's clearances from two factories surpassed the limit, leading to the evasion of Central Excise duty. Three show cause notices were issued demanding duty amounting to &8377; 11,16,966. The Adjudicating Authority confirmed the charges, imposing penalties and interest. The Appellant's appeal was rejected by the Commissioner (Appeals), prompting the appeal to the Tribunal.2. The Tribunal considered whether the Sales Tax/Trade Tax paid by the Appellant during the relevant Financial Year should be deducted when calculating the aggregate value of clearances, as per the SSI exemption conditions. Referring to Section 4 of the Central Excise Act, 1944, the Tribunal agreed that taxes like Sales Tax should be deducted to determine the transaction value. The Appellant claimed to have paid Sales Tax of &8377; 27,63,672, but the Sales Tax Department's assessment revealed a lower amount. It was argued that deducting the correct Sales Tax amount would bring the total clearances below the exemption threshold. The Tribunal emphasized the need to consider the Sales Tax Department's assessment order for deductions as mandated by law.3. Consequently, the Tribunal remanded the matter to the Adjudicating Authority for a reassessment based on the correct Sales Tax deductions. The Authority was instructed to reevaluate the aggregate value of clearances, factoring in the Sales Tax payments, to determine the Appellant's entitlement to the SSI exemption under Notification No.8/2003-CE dated 01.03.2003. The appeal was allowed in favor of the Appellant based on the above considerations.