TaxTMI 
TaxTMI 
2017 (6) TMI 419
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....ppellant was allowed to recover the amount of sales tax involved on sales transaction of final product and retain the same. According to the department such an amount which has been retained by appellant is additional consideration flowing from buyer to appellant and as per the provisions of Rule 6 of the Central Excise Valuation Rules, read with Section 4 of the CEA and Board's Circular dt 30th June 2000, central excise duty needs to be discharged. Coming to such conclusion two show cause notices dt 27.02.2015 and 09.10.2015 were issued for the demand of differential duty, one of them by invoking the extended period. Appellant contested the show-cause notices on merits by stating that the definition of transaction value, if read holistically, will apply directly in the case in hand; that the provisions of Section 4(1)(a) of the CEA will be applicable as the transaction between the appellant and customer is a sales transaction and the buyer and the appellant are not related, hence adverting to Rule 6 of CER is incorrect as there is nothing on record to show that sales transaction is covered under the provisions of Section 4(1)(b) of the Central Excise Act, 1944; that the entire sal....
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.... the CBEC vide Circular No.983/7/2014-CX dt 10.07.2014 dt 10.07.2014 also clarified that subsidy provided by the Government of India under the fertilizer policy cannot be said to be a consideration flowing from the buyer to the manufacturer so as to be included in the assessable value. (vi) It is his further submission that independent of the argument that the capital subsidy granted by way of sales tax incentive could not form a part of the assessable value as the same did not represent consideration flowing from buyer to the seller, even otherwise, the amount of sales tax remitted was eligible for exclusion from the transaction value as defined in Section 4(3)(d) of the Central Excise Act, 1944. He would then takes us to the definition of transaction value and submit that the definition clearly excludes the sales tax and other taxes, if any, actually paid or actually payable on such goods. (vii) It is his submission that it is undisputed that appellant was operating under the Remission Scheme of Gujarat Vat Act (GVAT Act). Section 41 of the GVAT Act is enabling the provisions grant of remission and mere perusal of the said provisions would show that the State Government / Commi....
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....at all at the threshold itself. He would submit that the adjudicating authority has placed reliance on the judgement of the Apex Court in the case of Super Synotex and Maruti Suzuki India Ltd. for coming to a conclusion that the Sales Tax remitted is includable in the assessable value, is incorrect view for the reason that the judgements which have been rendered by the Apex Court were in respect of sales tax exemption scheme and were actually not paid nor was actually payable, hence the Apex Court held that there was an exemption in payment of sales tax and the assessee being excluded from the transaction value of the amount on sales tax collected from the customer which was neither actually paid nor actually payable to the State Govt. (x) It is his further submission that in the case of Maruti Suzuki India Ltd., the Apex Court has observed that 50% of the sales tax collected by the appellant and retained was not paid to exchequer nor was actually paid. On this background that the Apex Court held that Maruti Suzuki India Ltd. was entitled to seek exclusion of the amount of sales tax which was neither actually paid nor actually payable. He would draw our attention to this fact and ....
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....14 -(307) ELT 625 (S.C.) are directly on the point. It is his further submission that the provisions of Section 4 and the definition of transaction value does not allow the subsidies of sales tax incentives and also submits that the Incentive Scheme 2001 for Economic Development of Kutch District is promulgated to subsidise the investment cost and the said capital receipts scheme is an income which is recoverable by retaining the sales tax imposed by the Govt. of Gujarat and remission of sales tax is nothing but an income under the category of capital subsidy and is the same or equal to the sales tax remitted by the Govt. of Gujarat hence this amount is nothing but an additional consideration cannot be deducted from assessable value on which central excise duty is payable. It is also his submission that identical issue was before the Bench of the Tribunal in the case of Commissioner of CE & ST v. Welspun Corporation Ltd. in appeals No.E/87230 - 87410/16 which was heard and the matters were reserved. 5. We have considered the detailed of submissions made by both sides and perused the records. 6. Undisputed facts are appellant has opted for Incentive Scheme of 2001 for Economic Dev....
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....ovalmeans - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the? excisable goods have been permitted to be deposited without [payment of duty;] (iii) a depot, premises of a consignment agent or any other? place or premises from where the excisable goods are to be sold after their clearance from the factory;] from where such goods are removed; "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 elling 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." In terms of above section 4, the duty is ch....
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....partment of Sales Tax. Hence for the above reason also we find that such amount, allowed to be remitted to the respondents as incentive which was otherwise payable to the Sales Tax department, cannot form part of the transaction value. 5.7 The respondents have argued that in similar situation in case of manufacturers of fertilizers, where the subsidy was being received by such manufacturers from the Department of Fertilizers the CBEC vide Circular No.983/7/2014-CX dated 10.07.2014 has clarified that subsidy is not any additional consideration flowing directly or indirectly from the buyer to the seller and hence, is not required to be included in the assessable value. Applying the same analogy to the facts of the present case and agreeing with the contentions of the respondents, we are of the view that since in the present case the remission is incentive for setting up the unit is Kutch area, the same would not form part of transaction value. 5.9 We find that even sub section (7A) of Section 11 of the Gujarat Value Added Tax Act, 2003 states that the tax that remitted is deemed to have been statutorily paid. The said provision is as under:- "notwithstanding anything contained ......