2024 (3) TMI 1279 - AT - Central Excise

Excise Duty Demand Overturned: Subsidy Excluded from Assessable Value, Interest & Penalty Demands Nullified.

Ranar Agrochem Ltd. Versus Commissioner of Central Tax Visakhapatnam– GST

The appeal challenging the confirmation of Central Excise duty demand was allowed, setting aside the impugned order. The appellant successfully argued ... Valuation - it is alleged that appellant is receiving Nutrient Based Subsidy, treating the same as additional consideration and thus form part of the assessable for the levy of Central Excise Duty - suppression of facts or not - HELD THAT:- The issue is covered in favour of appellant in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE VERSUS MAZAGON DOCK LTD. [2005 (7) TMI 105 - SUPREME COURT] and M/S CORAMANDEL INTERNATIONAL LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, VISAKHAPATNAM-I [2014 (8) TMI 775 - CESTAT BANGALORE] where it was held that Subsidy paid by the Government cannot be considered as an additional consideration includable for excise duty in accordance with statute. As the issue is apparently covered in the favour of the appellant in view of the precedent rulings, the impugned order is set aside - this appeal is allowed. Issues involved: Appeal against confirmation of Central Excise duty demand, Allegation of suppression of facts regarding Nutrient Based Subsidy, Interpretation of Board's Circular regarding subsidy as part of consideration.Confirmation of demand: The appeal was filed against the order confirming the demand of Central Excise duty for a specific period under Section 11(A)(2) and (10) of the Central Excise Act, 1955. The Additional Commissioner's order was upheld, demanding interest and equal penalty under Section 11AC of the Act and Rule 25 of Central Excise Rules, 1944.Suppression of facts: The show cause notice was issued alleging suppression of facts, specifically related to the appellant receiving Nutrient Based Subsidy, treating it as additional consideration forming part of the assessable for the levy of Central Excise Duty.Interpretation of Board's Circular: The appellant argued that the confirmation of demand goes against Board's Circular No. 983/7/2017-CX, stating that the subsidy provided by the Government to the manufacturer is not part of the consideration flowing from the buyer to the manufacturer. Citing precedent rulings, the appellant contended that departmental officers are bound by the Board's instructions as per the Supreme Court's decision in Ranadey Micronutrients Vs CCE [1996 (87) ELT 19 (SC)].Precedent rulings: The issue was found in favor of the appellant based on several decisions such as Commissioner of Central Excise, Bangalore Vs Mazagon Dock Ltd., Coramandel International Ltd., Vs CCE, Visakhapatnam-I, Hindustan Petroleum Corpn Ltd., Vs Commissioner of Central Excise, Guntur, Vasantdada SSK Ltd., Vs Commissioner of C.Ex, Pune-II, Harit Polytech Pvt Ltd., Vs Commissioner, Central Excise & CGST, Jaipur-I, and Mahindra Steel Service Centre Ltd., Vs Principal Commissioner of CGST and Central Excise, Bhopal.Judgment: After hearing the parties and considering the precedent rulings, the appeal was allowed, and the impugned order was set aside. The appeal was allowed with consequential relief as per law.