Recovery of Excise duty -Reg.

[vinay wakde]

Ours is a manufacturing unit and enjoying benefit of Maharashtra Sales Tax incentive scheme. In the matter, we refer recent case of Commissioner of Central Excise, Delhi III vs. Maruti Suzuki India Limited = 2014 (10) TMI 764 - CESTAT NEW DELHI (2014 VIL 17 SC CE), the CESTAT held that 50% of the Sales Tax collected and retained by the assessed should form part of the transaction value and balance 50% paid to the State Government should be allowed as deduction from the transaction value.

The definition of ‘transaction value’ under Section 4(1)(d) of the Central Excise Act, 1944 (‘the Act’) permits deduction of Sales Tax charged and recovered from buyers from the transaction value only if such Sales Tax is actually paid or is actually payable by the manufacturer on such goods.

In view of the above, kindly let us know whether the Excise duty subsequently recovered from us with Interest and Penalty? time bar period for such recovery?

Regards,

VINAY

[DR.MARIAPPAN GOVINDARAJAN]

Your query is not clear. The term 'transaction value' is defined under Explanation VI (d) to Section 4 of Central Excise Act as - (d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods;

[YAGAY andSUN]

Dear Vinay,

It seems that your organization is/was working under Maharashtra State Industry promotion Package incentive Scheme and your organization must have kept some portion of sales tax/VAT with itself according to such incentive package scheme. In this scenario, you would be liable to pay the Excise Duty on such amount on the basis of Maruti Suzuki judgment along with the interest at applicable rate.

Regards

NeelamTaneja- Executive Consultant

(YAGAY and SUN - Management, Business and Indirect Tax Consultants)

[Mahir S]

Yes sir, you shall be liable for payment of excise duty on such amount in view of Supreme Court judgment in the case of M/s. Super Synotex India Limited 2014 (3) TMI 42 - SUPREME COURT, and as clarified vide Board Circular No. F. No. 6/8/2014-CX.1 dated 17,09.2014.

 

[DR.MARIAPPAN GOVINDARAJAN]

Thank you for the clarification in this case.

AI Summary

Manufacturer Challenges Excise Duty Recovery on Sales Tax Incentives; Cites Maruti Suzuki Precedent Under Central Excise Act, 1944. A manufacturing unit benefiting from the Maharashtra Sales Tax incentive scheme is questioning the recovery of excise duty, including interest and penalties, based on the transaction value definition under the Central Excise Act, 1944. The discussion references a legal precedent involving Maruti Suzuki, where it was ruled that 50% of the sales tax retained by the manufacturer should be included in the transaction value, while the remaining 50% paid to the state can be deducted. Respondents confirm that excise duty is applicable on the retained sales tax amount, referencing relevant Supreme Court judgments and circulars.