Exclusion of Excise Duty from Cess Calculation and Clarification on Sales Tax Deductibility

The Tribunal held that excise duty should be excluded from the assessable value for determining cess under the Industries (Development and Regulation) Act, 1951. Regarding the deductibility of exempted sales tax under the Central Excise Act, 1944, the Tribunal ruled that when the Government grants exemption from sales tax, it cannot be considered as payable. Therefore, the sales tax on scooters manufactured in the exempted area was not deductible. All appeals were dismissed, with a clarification on a typographical error in the order.

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Issues:
1. Includibility of excise duty in the assessable value for determining cess under Industries (Development and Regulation) Act, 1951.
2. Deductibility of exempted sales-tax from the assessable value under Section 4(4)(d)(ii) of the Central Excise Act, 1944.

Analysis:
1. The Tribunal addressed the controversy regarding the includibility of excise duty in the assessable value for determining cess under the Industries (Development and Regulation) Act, 1951. The Tribunal consistently held that excise duty payable should not be included in the assessable value for cess calculation. The Collector (Appeals) had taken the correct view in this regard, despite a typographical error in the order where the word "inclusion" was mistakenly used instead of "exclusion." The Tribunal affirmed the position that excise duty should be excluded from the assessable value for cess determination.

2. The second issue involved the deductibility of exempted sales-tax from the assessable value under Section 4(4)(d)(ii) of the Central Excise Act, 1944. The case revolved around the manufacturing of scooters in a backward district where the State Government granted total exemption from sales-tax. The assessee argued that sales tax was payable even if exempted later, but the Tribunal disagreed. It held that when the Government grants exemption from sales tax on certain goods, it cannot be considered as sales tax being payable on those goods. The Tribunal relied on a previous decision to support this stance and rejected the applicability of another decision cited by the assessee, emphasizing that the exemption granted by the Government precludes the sales tax from being considered as payable.

3. Ultimately, the Tribunal concluded that the sales tax on scooters manufactured in the exempted area was not payable under the law, and therefore, it could not be deducted from the price declared by the assessee. Consequently, all appeals were dismissed, with a clarification regarding the typographical error in the order, where "inclusion" should have been read as "exclusion." The judgment provided a detailed analysis of the legal principles surrounding the includibility of excise duty and the deductibility of exempted sales tax in the context of the Central Excise Act, 1944.

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