Tribunal overturns duty & penalty decision, excludes VAT from assessable value

The Tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s decision to confirm duty and impose a penalty on the appellant for alleged non-payment of central excise duty on additional consideration of sales tax collected and retained. Citing precedents involving similar schemes, the Tribunal held that VAT amounts paid using subsidy challans under the Rajasthan Government scheme should not be included in the assessable value. Emphasizing the legality of such payments, the Tribunal concluded that the Revenue's position was incorrect, leading to the appeal being allowed.

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Issues:
Alleged non-payment of central excise duty on additional consideration of sales tax collected and retained, contravention of Section 4 of Central Excise Act, confirmation of duty and imposition of penalty by Commissioner (Appeals).

Analysis:
The appellant, engaged in manufacturing PP bags, was accused of not paying central excise duty on additional consideration of sales tax collected and retained, resulting in short payment of duty amounting to Rs. 1,60,229. The Commissioner (Appeals) confirmed the duty and imposed a penalty. The Tribunal noted a similar issue in a previous case involving an Investment Promotion Scheme of the Rajasthan Government, where the Tribunal held that VAT amounts paid using subsidy challans need not be included in the assessable value. The Tribunal referred to a Supreme Court decision and a previous Tribunal case to support its conclusion. The Tribunal emphasized that the subsidy amounts were considered legal payments of tax under the Rajasthan Government scheme, and therefore, the Revenue's view that such payments cannot be considered as VAT actually paid was incorrect.

The Tribunal cited a previous case involving a "Remission of Tax Scheme" where the Tribunal concluded that VAT amounts paid using subsidy challans should not be included in the assessable value. By following the decision in that case, the Tribunal set aside the impugned order and allowed the appeal. The Tribunal emphasized that the VAT amounts paid using subsidy challans were considered legal payments of tax under the Rajasthan Government scheme, and therefore, should not be included in the assessable value. The Tribunal concluded that there was no justification for including such VAT amounts in the assessable value, and therefore, set aside the impugned order and allowed the appeal.

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