Sales tax concession retained by manufacturer must be included in assessable value for Central Excise duty calculation

CESTAT Kolkata held that sales tax concession retained by appellant must be included in assessable value for Central Excise duty, following SC precedent in Super Synotex case. However, extended limitation period was improperly invoked as appellant did not suppress information, having relied on conflicting tribunal decisions. Penalty under Section 11AC was set aside since no suppression occurred. Appeal partially allowed with matter remanded for duty calculation under normal limitation period with consequential relief.

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Issues involved:
The issues involved in the judgment are the confirmation of demand by invoking the extended period of limitation, imposition of penalty under Section 11AC of the CEA, 1944, and the includability of sales tax concession in the assessable value for the levy of Central Excise duty.

Confirmation of Demand and Penalty Imposition:
The appeal was filed against the Order-in-Appeal confirming the demand of Rs.20,41,472/- including Education Cess and SHE Cess along with interest, by invoking the extended period of limitation. The Appellant argued that the demand was confirmed incorrectly as per the decision of the Hon'ble Supreme Court and Board Circular. The Tribunal observed that the Appellant agreed to pay duty for the normal period and had not suppressed any information. As there was no evidence of suppression, the demand confirmed by invoking the extended period was set aside. Regarding the penalty imposed under Section 11AC, the Tribunal found that the adjudicating authority did not provide a proper basis for imposing the penalty and held it as not tenable.

Includability of Sales Tax Concession:
The main issue in the appeal was the includability of the sales tax concession retained by the Appellant in the assessable value for the levy of Central Excise duty. The Tribunal referred to the decision of the Hon'ble Supreme Court in the case of Super Synotex (India) Ltd. Vs CCE, Jaipur, where it was held that the sales tax concession retained by assesses must be added to the assessable value for Central Excise duty. The Tribunal upheld this decision and concluded that the sales tax concession retained by the Appellant should be included in the assessable value for levy of Central Excise duty.

Relevant Circular and Conclusion:
The Tribunal also considered Circular No. 1063/2/2018-CX issued by the Board, which clarified that the extended period should not be invoked in cases where sales tax concession was retained. The Tribunal found that there was no evidence of suppression by the Appellant and held that the extended period was not invocable in this case. Consequently, the penalty under Section 11AC of the CEA, 1944 was also deemed not imposable. The appeal was partially allowed, setting aside the demand confirmed by invoking the extended period and the penalty imposed, with the case remanded for calculating the duty payable for the normal period of limitation.

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