2018 (10) TMI 757 - AT - Central Excise

Tribunal rules VAT subsidy challans count as actual payment for excise duty calculation.

The Tribunal ruled in favor of the appellant, holding that the VAT liability discharged using subsidy challans should be considered as VAT actually paid ... Valuation - inclusion of subsidy amounts in the value of the goods cleared by the appellants - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - Held that:- Identical issue decided in the case of GREENLAM INDUSTRIES LTD [2018 (4) TMI 1552 - 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:1. Whether the subsidy received by the appellant in the form of VAT 37B challans should be considered as VAT actually paid for the purpose of Section 4 of the Central Excise Act, 1944.2. Whether the subsidy amounts should be included in the assessable value of the goods cleared by the appellants.3. Whether the VAT liability discharged by utilizing the subsidy challans can be considered as VAT actually paid.Analysis:Issue 1:The appellant, operating under the Rajasthan Investment Promotion Scheme, received subsidies in the form of VAT 37B challans. The Revenue contended that such subsidies cannot be considered as VAT actually paid. The Tribunal referred to a previous case and held that the VAT liability discharged using the subsidy challans should be considered as VAT actually paid. The Tribunal emphasized that the challans were legal payments of tax under the Rajasthan Government scheme.Issue 2:The Revenue included the subsidy amounts in the value of goods cleared by the appellants, leading to a demand for differential duty along with interest and penalty. However, the Tribunal, following the precedent set in a similar case, concluded that there was no justification for including the VAT amounts paid using VAT 37B challans in the assessable value. Therefore, the impugned order was set aside, and the appeal was allowed.Issue 3:The crux of the dispute was whether the subsidy amounts needed to be included in the assessable value of the goods manufactured by the appellants. The Tribunal, by considering the legal nature of the subsidy challans and the scheme of the Government of Rajasthan, ruled that the VAT liability discharged by utilizing such subsidy challans should indeed be considered as VAT actually paid. This decision was in line with the interpretation of Section 4 of the Central Excise Act, 1944, and the relevant legal precedents cited during the proceedings.In conclusion, the Tribunal overturned the impugned order, allowing the appeal in favor of the appellant. The judgment clarified the treatment of subsidies received in the form of VAT 37B challans under the Rajasthan Investment Promotion Scheme, emphasizing that such subsidies should be considered as VAT actually paid for the purpose of excise duty calculation.