2020 (5) TMI 503 - AT - Central Excise

Tribunal Upholds Decision: VAT Paid via Subsidy Challans Excluded from Excise Duty Calculation

The Commissioner, Central Excise & Central Goods and Service Tax Udaipur Versus M/s. Birla Corporation Limited

The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Department's appeal and affirming that VAT paid using subsidy Challans should not ... Valuation - inclusion of amount of sales tax paid by the appellant in the form of VAT 37B Challan in the assessable value - HELD THAT:- The matter is already been decided by this Tribunal in 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 dismissed - decided against Revenue. Issues:Central Excise duty liability on payment of sales tax using VAT 37B Challan under Rajasthan Investment Promotion Policy Scheme.Analysis:1. The appellants, engaged in cement manufacturing, paid sales tax using VAT 37B Challan under the Rajasthan Investment Promotion Policy Scheme. The Department alleged non-payment of sales tax, demanding Central Excise duty of Rs. 1,15,30,261 under section 11A(1) of the Central Excise Act, 1944, with interest and penalties.2. The Joint Commissioner confirmed all charges in the show cause notice, leading to the appellant's appeal before the Commissioner (Appeals). The Commissioner (Appeals) set aside the order-in-original, favoring the appellant. The Department appealed against this decision.3. The Tribunal noted a previous case involving a similar issue, where it was held that VAT paid using subsidy Challans should not be included in the assessable value. The Tribunal emphasized that the Rajasthan Government's scheme requires actual payment of VAT, and the subsidy received back should not be considered for excise duty calculation.4. Referring to the decision in Welspun Corporation Ltd. case, the Tribunal reiterated that subsidies in the form of remission of sales tax, directly linked to capital investment, should not be added to the assessable value. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Department's appeal.5. The Tribunal concluded that the VAT paid through Challans is a legal payment of tax under the Rajasthan scheme, and such subsidies should not be included in the assessable value for excise duty calculation. The decision was based on the principles outlined in previous cases and the specific provisions of the Rajasthan Investment Promotion Policy Scheme.6. The Tribunal's decision aligned with the interpretation that actual payment of VAT, including through subsidy Challans, should be deducted from the transaction value for excise duty calculation. The Tribunal highlighted the distinction between actual VAT payment and schemes involving remission or subsidy, emphasizing the legal validity of VAT payments using subsidy Challans.7. By following established legal principles and previous judgments, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the Department's appeal and affirming that VAT paid using subsidy Challans should not form part of the assessable value for excise duty calculation.