VAT remission under an industrial incentive scheme is not additional consideration and stays outside central excise assessable value.

State-granted VAT remission under an industrial incentive scheme was treated as a subsidy for setting up a new unit, not as additional consideration for the goods cleared. On that basis, the retained remission did not form part of the assessable value under central excise valuation rules, and the demand based on its inclusion was unsustainable. The Tribunal followed the earlier co-ordinate Bench view on the same issue and held that the impugned demand could not survive, with the order set aside and consequential relief granted.

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Issues: Whether the VAT remission retained by the assessee under the State industrial incentive scheme was liable to be included in the assessable value for levy of central excise duty.

Analysis: The remission of 99% of VAT was treated as a subsidy/incentive granted by the State Government under the industrial policy for setting up a new industrial unit, and not as an additional consideration for the goods cleared. On that basis, the amount retained could not form part of the assessable value under the valuation provisions governing central excise. The earlier co-ordinate Bench view on the same question was followed, and the demand based on inclusion of the VAT remission was found unsustainable.

Conclusion: The VAT remission retained by the assessee was not includable in the assessable value, and the duty demand failed.

Final Conclusion: The impugned demand and order were set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: A State-granted VAT remission treated as an industrial incentive or subsidy for establishing a new unit is not an additional consideration for the goods and therefore does not enter the central excise assessable value.

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