TaxTMI 
TaxTMI 
2020 (3) TMI 198
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.... their customers as representing VAT but which has not been deposited as VAT forms an additional consideration for sale and therefore, Excise Duty has to be paid on the same. It is the case of the assessee that they are not liable to pay Excise Duty on this amount. 5. Ld. Counsel for the appellant contests the demand confirmed on the impugned order on the following grounds:- (i) No Excise Duty is payable on the amounts which they have collected as representing VAT, but which they have not paid to the State Government under the Remission Scheme. He would submit that in the impugned Order, the Adjudicating Authority has confirmed the demand relying upon the judgment of the Hon'ble Apex Court in the case of Super Synotex (India) Ltd. [2014 (301) E.L.T. 273 (S.C.)] in which the Hon'ble Apex Court has held that where an amount is collected as the representing VAT/Sales Tax but which has not been paid to the State Government, is includable in the assessable value for the purpose of Central Excise Duty. Ld. Counsel would argue that this judgment of the Hon'ble Apex Court has not taken into account the fact that VAT itself is payable on the price plus Excise Duty. Therefore, if VAT is t....
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....m the customers some amount as representing VAT but does not deposit the same with the State Government as per some Scheme and is entitled to keep the amount, the amount so collected and retained can be treated as additional consideration for sale. Accordingly, whether Excise Duty can be charged on such amounts. He would submit that this issue has been discussed at length in batch of civil appeals decided by the Hon'ble Supreme Court in the case of Super Synotex (Supra). (ii) Paras 20 to 28 of this judgment read as follows":- 20. The question that would still remain alive is that what would be the effect of amendment of Section 4 which has come into force with effect from 1-7-2000. The Section 4(3)(d) which defines "transaction value", reads as follows :- "4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) & (2) * * (3) For the purposes of this section, - (a) to (cc) * * * (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 th....
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.... and that for sales tax can be best illustrated through an example. If the sales tax on a product 'A' of value Rs. 100/- is, say 5% and the set off available in respect of the purchase tax/sales tax paid on inputs going into the manufacture of the product is, say, Re. 1/-, then the sales tax law permits the assessee to recover sales tax of Rs. 5/-. But while paying to the sales tax deptt. be deposits an amount of Rs. 5 - 1 = Rs. 4 only. On the central excise duty payable would have been Rs. 5 - 1 = Rs. 4, in view of the set off notification, and the assessee would recover an amount of Rs. 4 only from the buyer as Central Excise duty. Thus, it is seen that the set off scheme in respect of sales tax operate in these cases somewhat like the Cenvat Scheme which does not have the effect of changing the rate of duty payable on the finished product. 6. Therefore, since the set off scheme of sales tax does not change the rate of sales tax payable/chargeable on the finished goods, the set off is not to be taken into account for calculating the amount of sales tax permissible as abatement for arriving at the assessable value u/s 4. In other words only that amount of sales tax will be perm....
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....words that gain signification are "actually paid". The situation after 1-7-2000 does not cover a situation which was covered under the circular dated 12-3-1998. Be that as it may, the clear legislative intent, as it seems to us, is on "actually paid". The question of "actually payable" does not arise in this case. 23. In view of the aforesaid legal position, unless the sales tax is actually paid to the Sales Tax Department of the State Government, no benefit towards excise duty can be given under the concept of "transaction value" under Section 4(4)(d), for it is not excludible. As is seen from the facts, 25% of the sales tax collected has been paid to the State exchequer by way of deposit. The rest of the amount has been retained by the assessee. That has to be treated as the price of the goods under the basic fundamental conception of "transaction value" as substituted with effect from 1-7-2000. Therefore, the assessee is bound to pay the excise duty on the said sum after the amended provision had brought on the statute book. 24. What is urged by the learned counsel for the assessee is that paragraphs 5 and 6 of the circular dated 9-10-2002 do protect them, as has been more....
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....dated 9-10-2002 by the Tribunal is legally impermissible for two reasons, namely, the circular does not so lay down, and had it so stated that would have been contrary to the legislative intention. 26. In view of the aforesaid analysis, we are of the considered opinion that the assessees in all the appeals are entitled to get the benefit of the circular dated 12-3-1998 which protects the industrial units availing incentive scheme as there is a conceptual book adjustment of the sales tax paid to the Department. But with effect from 1-7-2000 they shall only be entitled to the benefit of the amount "actually paid" to the Department, i.e., 25%. Needless to emphasise, the set off shall operate only in respect of the amount that has been paid on the raw material and inputs on which the sales tax/purchase tax has been paid. That being the position the adjudication by the Tribunal is not sustainable. Similarly the determination by the original adjudicating authority requiring the assessees to deposit or pay the whole amount and the consequential imposition of penalty also cannot be held to be defensible. Therefore, we allow the appeals in part, set aside the orders passed by the Tribuna....
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....ssioner (2015) 317 E.L.T. A 187 (SC)." He would therefore, urge that the ratio of the judgment of the Hon'ble Apex Court is binding in this Bench and there is no scope for taking any different view. (iv) As far as the question of invoking the extended period of limitation, alleging suppression, etc. and imposition of penalty is concerned, he reiterates the impugned order. (v) On the argument of the issue being res judicata, he would argue that after the year 2000, valuation of each consignment is a separate assessment in itself. Merely because the Department has not challenged an order passed by the Commissioner for an earlier period, it does not mean that the Department is estopped from raising a demand for a subsequent period. Therefore, there is no force in the argument that the matter is hit by the principle of res judicata. (vi) On the argument that the Tribunal Mumbai had in the case of Welspun Corporation Ltd. (Supra) distinguished the case from the case of Super Synotex Ltd. (Supra), he would take us through the case and submit that in Para 5.5 of the Order, it is clearly recorded that the Commissioner (Appeals) in that case distinguished that case from the case of....
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....highest Court of the land. We, therefore, find the case in favour of the revenue and against the appellant on merits. 9. As far as the argument of res judicata is concerned, it estops either party from raising the same case again and again. In Central Excise Duty, each individual consignment is an assessment by itself and a mistake made in one assessment by either party and not challenged by the other, does not mean that the other party is bound by such decision contrary to law for all subsequent periods. Such a view will lead us to absurd conclusions. For instance, Service Tax was paid by many assessees on Works Contract Service prior to 01/06/2007 although subsequently, it was held by the Hon'ble Apex Court that no such tax is payable. Merely because assesses had paid Service Tax wrongly for an earlier period, it does not mean that they are bound to pay Service Tax for subsequent periods also on the principle of res judicata. In this particular case, when there is a clear ruling by the Hon'ble Apex Court, the assessee cannot be get away from tax liability on the ground that a wrong decision was taken for some earlier period by the Commissioner which was not challenged for that p....