2024 (10) TMI 1332 - AT - Central Excise

Package Scheme Incentive 1993 retention amounts covered by previous tribunal decisions, demand set aside following automotive precedents

Bharat Forge Ltd Versus Commissioner of Central Excise, Pune – III

CESTAT Mumbai held that the inclusion of amounts retained by appellant under Package Scheme of Incentive 1993, specifically the difference between ... Inclusion of amount retained by the appellant under the Package Scheme of Incentive 1993 - difference between the amount collected and the ‘net present value (NAV)’, computed with the date of schedule payments as benchmark - HELD THAT:- The issue stood covered by the decision of the Tribunal in COMMISSIONER OF CENTRAL EXCISE, RAIGAD, BALKRISHNA INDUSTRIES LTD., ESSEL PROPACK LTD. VERSUS UTTAM GALVA STEELS LTD., BHUSHAN STEEL LTD., JSW ISPAT STEEL LTD., COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [2015 (10) TMI 1727 - CESTAT MUMBAI] which, in identical circumstances of dispute of another similarly situated automotive parts manufacturer, RATIONAL ENGINEERS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE – I [2023 (11) TMI 363 - CESTAT MUMBAI] where it was held that 'In view of the decisions of the Tribunal, relating to the peculiarity of the scheme which was prevailed insofar as the impugned order is concerned, the demand is set aside'. In view of the decisions of the Tribunal, deciding on the dispute arising from the peculiar features of the said scheme of the Government of Maharashtra, the impugned order is set aside - appeal allowed. Issues Involved:1. Whether the amount retained by the appellant under the Package Scheme of Incentive 1993 should be included in the assessable value for the purpose of central excise duty.2. Applicability of the principles laid down by the Hon'ble Supreme Court in the case of Super Synotex and other related judgments.3. Impact of changes in sales tax laws on the determination of assessable value for central excise purposes.Detailed Analysis:1. Inclusion of Retained Amount in Assessable Value:The central issue in this case was whether the amount retained by the appellant, under the Package Scheme of Incentive 1993, should be included in the assessable value of goods for calculating central excise duty. The appellant was allowed to retain a portion of the sales tax collected under the scheme, which was later modified to permit payment of the net present value (NPV) of the deferred sales tax liability. The central excise authorities argued that the difference between the collected amount and the NPV should be included in the assessable value. However, the Tribunal found that the principles laid down in previous judgments, specifically in the case of Uttam Galva Steels Ltd, supported the appellant's position that such retention does not form part of the transaction value for excise duty purposes.2. Applicability of Super Synotex Judgment:The Tribunal examined the applicability of the Supreme Court's decision in the case of Super Synotex. It was noted that the Supreme Court had considered whether sales tax retained by a manufacturer forms part of the transaction value. However, the Tribunal clarified that the issue in the present case was distinct because it involved deferred sales tax liability and the option to discharge it by paying its NPV. The Tribunal concluded that the principles from Super Synotex should be considered, but the specific issue in the current appeals was not directly addressed by the Supreme Court's judgment.3. Impact of Changes in Sales Tax Laws:The Tribunal also addressed the impact of changes in sales tax laws on the determination of assessable value. It was emphasized that the assessable value must be determined at the time and place of removal of goods, based on the sales tax liability as it stood at that time. Subsequent changes in sales tax laws or liabilities, such as the option to pay NPV, should not affect the assessable value already determined. The Tribunal cited several judgments, including those in the cases of Kinetic Engineering Ltd and MRF Ltd, to support the view that changes in law after the clearance of goods do not warrant a re-determination of assessable value.In conclusion, the Tribunal set aside the demand for additional excise duty and penalties, allowing the appeal in favor of the appellant. The decision was based on the peculiar features of the incentive scheme and the consistent judicial interpretation that sales tax incentives or deferrals do not alter the assessable value for excise duty purposes.