Assessable value and retained VAT/Sales Tax were remanded for fresh adjudication, leaving the valuation issue open.

VAT/Sales Tax retained by assessees under an industrial incentive scheme was examined for inclusion in assessable value for central excise duty, where 99% of the tax collected was retained and 1% deposited with the State Exchequer. The adjudication had treated the retained portion as includible in value. Following an earlier coordinate bench approach on identical issues, the impugned order was set aside and the matter remanded for fresh adjudication de novo, with liberty to adduce fresh evidence and after granting reasonable opportunity. The issue was thus not decided on merits and remained open for reconsideration.

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Issues: Whether the VAT/Sales Tax amount retained by the assessees to the extent of 99% was liable to be included in the assessable value for determination of central excise duty, and whether the matter required fresh adjudication.

Analysis: The dispute arose from the industrial incentive scheme under which the assessees collected VAT/Sales Tax from customers and retained a substantial portion, while 1% was deposited with the State Exchequer. The adjudication below had included the retained amount in assessable value. A coordinate bench had already remanded an identical issue in earlier cases for decision afresh. Following that approach, the impugned order was set aside and the matter was sent back for reconsideration, with liberty to admit fresh evidence in accordance with law and after granting reasonable opportunity.

Conclusion: The issue was not finally decided on merits; the impugned order was set aside and the matter was remanded to the adjudicating authority for de novo decision, in favour of the assessees to that extent.

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