2019 (2) TMI 471 - AT - Central Excise

Tribunal excludes sales tax from excise duty calculation, provides relief to appellant

M/s Alok Industries Versus CCE & ST, Jaipur – I

The Tribunal held that the sales tax amount retained by the appellant should not be included in the assessable value for central excise duty payment. ... Valuation - includibility of VAT in assessable value - Revenue was of the view that the VAT liability discharged by utilizing the investment subsidy granted in form 37B cannot be considered as VAT actually paid, for the purpose of Section 4 of the Central Excise Act, 1944 - Held that:- This matter is no longer res-integra as this Tribunal in several cases on similar facts decided the matters holding that the amount of the subsidy in the form of retention of VAT/sales tax under Rajasthan Investment Promotion Scheme is not includable in the assessable value for payment of central excise duty on the manufactured goods - reliance placed in the 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:Central excise duty on sales tax amount retained by the appellant.Analysis:The appellant, engaged in manufacturing disposal cups, glasses, and containers, paid central excise duty under protest on the sales tax amount allegedly collected from buyers and retained by the appellant. The department contended that the retained sales tax amount needed to be added to the assessable value of the manufactured goods for central excise duty payment, as per Section 4 of the Central Excise Act, 1944. A show cause notice was issued demanding central excise duty, which was confirmed in an order dated 8 September 2017, along with applicable interest under Section 11AA of the Act. The appellant appealed to the Commissioner (Appeals), who upheld the order. The Tribunal noted that in similar cases, it was held that subsidies in the form of retention of VAT/sales tax were not includable in the assessable value for central excise duty payment. Referring to a specific case, the Tribunal emphasized that VAT amounts paid using certain challans were considered legal payments of tax, and such subsidy amounts were not required to be included in the transaction value for excise duty payment. Therefore, the Tribunal set aside the order-in-appeal, allowing the appeal and providing consequential relief, based on the precedent and the interpretation of relevant legal provisions.This judgment primarily dealt with the issue of whether the sales tax amount retained by the appellant should be included in the assessable value for central excise duty payment. The Tribunal relied on previous decisions and legal interpretations to conclude that subsidies in the form of retained VAT/sales tax were not to be included in the transaction value for excise duty calculation. The Tribunal emphasized that the VAT amounts paid using specific challans were considered legal tax payments, and therefore, such subsidy amounts did not need to be added to the assessable value. By following established legal principles and precedents, the Tribunal allowed the appeal, providing relief to the appellant.In conclusion, the Tribunal's decision revolved around the interpretation of relevant legal provisions and precedents to determine whether the retained sales tax amount should be included in the assessable value for central excise duty payment. By analyzing previous cases and legal principles, the Tribunal held that such subsidies in the form of retained VAT/sales tax were not to be included in the transaction value for excise duty calculation. Consequently, the Tribunal set aside the order-in-appeal, allowing the appellant's appeal and providing consequential relief based on the established legal interpretation and precedents.