2024 (10) TMI 1052 - AT - Central Excise

Tribunal Rules 75% VAT/CST Subsidy Excluded from Assessable Value for Excise Duty; Overturns Past Demands.

The Tribunal allowed the appeal, setting aside the confirmed demands for the periods 2011-2015, 2016-2018, and the extended period, ruling that the 75% ... Valuation of Excise Duty - inclusion of 75% VAT/CST subsidy received from the State Government in the assessable value - HELD THAT:- The issue is no mere res integra. The Tribunal in the case of M/S. MAHINDRA STEEL SERVICE CENTRE LTD. VERSUS PRINCIPAL COMMISSIONER OF CGST & CENTRAL EXCISE, BHOPAL (M.P.) [2023 (12) TMI 476 - CESTAT NEW DELHI], has held that no Excise Duty is required for the VAT subsidy granted by the State Govt. This decision has been upheld by the Hon’ble Supreme Court. The impugned order is set aside - appeal allowed. Issues:1. Whether the 75% VAT/CST subsidy received from the State Government should be added to the Assessable Value for Excise Duty.2. Whether the confirmed demands for the period 2011-2015 should be upheld.3. Whether the confirmed demands for the subsequent period of 2016-2018 should be upheld.4. Whether the confirmed demand for the extended period should be set aside due to time limitation.Analysis:1. The appeal involved the question of whether the 75% VAT/CST subsidy received by M/s INOX Air Products Private Limited from the State Government should be included in the Assessable Value for Excise Duty. The appellant argued that a similar issue had been addressed by the CESTAT in the case of Mahindra Steel Service Central Ltd, where it was held that such subsidies do not affect the selling price of goods and should not be included in the transaction value. The Tribunal upheld this argument, citing the previous decision, and set aside the impugned order, allowing the appeal.2. The confirmed demands for the period 2011-2015 were based on the contention that the subsidy received by the appellant attracted central excise duty. The Adjudicating Authority had upheld the demands, leading to the appeal before the Tribunal. The appellant relied on the decision in the Mahindra Steel case to argue that the subsidy should not be included in the transaction value for excise duty purposes. The Tribunal, following the precedent, set aside the demands for this period.3. Regarding the confirmed demands for the subsequent period of 2016-2018, the Commissioner (Appeals) had set aside the impugned order and allowed the appeal filed by the appellant. The appellant's counsel argued that the issue had already been settled by the Tribunal and the Supreme Court in previous cases, leading to the dismissal of the Revenue's appeal. The Tribunal, considering the previous decisions, set aside the demands for this period as well.4. The appellant further contended that the confirmed demand for the extended period should be set aside due to time limitation. The appellant argued that there was no suppression or willful act to evade payment of excise duty, and the issue had been a matter of interpretation that had reached the Tribunal and Supreme Court levels. The Tribunal agreed with the appellant, considering the previous decisions and the absence of willful evasion, and set aside the demand for the extended period on account of the time limitation.In conclusion, the Tribunal, after considering the arguments and precedents, allowed the appeal, setting aside the confirmed demands for all the periods in question based on the interpretation that the VAT/CST subsidy received should not be included in the Assessable Value for Excise Duty.