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2022 (6) TMI 1375
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....o. Name and address of the appellant Amount involved in Rs. OIO No. and Date Adjudicating authority Date of personal hearing 1 CE/JP/774/X/17 M/s. Harit Polytech Pvt Ltd., G-79 & E93, RIICO Industrial Area, Bagru Extension, Jaipur- 303007 C. Ex. Duty - Rs. 3,33,510/ Penalty - Rs. 1,66,755/ 17/Dem/2017 dt. 05.06.2017 Assistant Commissioner, Central Excise Division-II, Jaipur 29.01. 2019 and 15.02. 2019 2 CE/AL/219/V/18 M/s. Tirupati Balaji Furnaces Pvt. Ltd., Plot No. B-35 I & II, RIICO Industrial Area, Khushkhera, Bhiwadi 301019 Distt. - Alwar C. Ex. Duty - Rs. 10,73,474 /- and Rs. 1,84,320/ Penalty - Rs. 10,73,474/- and Rs. 1,84,320 / 5758/CE/BH D D/201718 dt. 28.02.2018 Assistant Commissioner, CGST Division D, Bhiwadi 19.12.2018 3 CE/AL/266/V/18 M/s. Jai Bharat Furnace Pvt. Ltd., F-225, 226 & 227, RIICO Industrial Area, Khushkhera, Bhiwadi C. Ex. Duty - Rs. 21,19,301/- and Rs. 3,28,397/- Penalty - Rs. 21,19,301/- and Rs. 3,28,397/- 5152/CE/BH D D/17-18 dt. 27.02.2018 Assistant Commissioner, CGST Division D, Bhiwadi 20.12.2018 4 CE/AL/261/V/18 M/s. Maha Maya Steels, G-1/106-107, RIICO Industrial....
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....e Adjudicating authority Date of personal hearing 1 CE/AL/333/VII/18 M/s. Trans ANCR Solutions Pvt. Ltd., G-19, 20, 31 & 32, RIICO Industrial Area, Majarkath, Neemrana, Distt. Alwar C. Ex. Duty - Rs.3,50,263/- Penalty - Rs.35,000/- 19/20 18 dated 10.05.2018 Assistant Commissioner, CGST Division-E, Behror 03.06.2019 2 CE/AL/369/IX/18 M/s. Nisin Brake India Pvt. Ltd., SP-1-33 and SP-1-34-35, New Industrial Area, Majarkath, Neemrana, Distt. Alwar C. Ex. Duty - Rs. 25,45,708 /- and Rs. 25,45,708/ - 31/20 18 dated 13.07. 2018 Assistant Commissioner, CGST Division-E, Behror 20.05.2019 3 CE/AL/370/IX/18 Asstt. Commissioner, CGST Division-E, Behror in the case of M/s. Frystal Pet Pvt. Ltd., G1171 & 172, RIICO Industrial Area, Neemrana, Dist. Alwar C. Ex Duty - Rs.3,80,975/- 20/20 18 dated 10.05.2018 Assistant Commissioner, CGST Division-E, Behror 24.05.2019 1.3 Appeals filed by some of the Appellants against the order in appeal, have been decided by this tribunal earlier and at present we are concerned with the appeal of following appellants: Sr No Excise Appeal No Appellant Sr No in table above 1 510....
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....bsidy for fresh employment generation, it is linked with the payment of Provident Fund as well as VAT payable. • The scheme categorically states that the said amount of subsidy on account of wage component shall be credited to the account of the investor (Unit). By no stretch of imagination it could be inferred as VAT Subsidy. • The amount of wage subsidy was credited by the State Government by way of issue of Entitlement Certificate under scheme of RIPS 2003/2010, and same was provided to them by way of 37B Challans issued. The appellants having paid the wages to their workmen utilized these Challans for discharging their VAT liability. • VAT was in no way exempted either in part or toto, but was discharged by utilization of these Challans. It was just like payment of duty from CENVAT credit account. • The schemes covered in the cited Supreme Court Judgements and the CBEC circular F. No. 06/08/2014-CX1 dt.17.09.2014 is drastically different from the impugned RIPS, 2010, in so far as that in the schemes covered under SC orders, the unit used to charge full VAT and pay only half. The units were allowed to retain 50% of VAT so colle....
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....Member is contrary to the provisions of Section 35D(3)(a) providing as follows: "Section 35D. Procedure of Appellate Tribunal . - (3) The President or any other member of the Appellate Tribunal authorised in this behalf by the President may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member where - (a) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or" 5.4 Now we are concerned with seven appeals out of which five are those which have been disposed of by the Commissioner (Appeal) simultaneously along with the appeals of appellants as listed in para 5.2 and 5.3. 5.5 We note that vide order dated 25.08.2010, Government of Rajasthan introduced Rajasthan Investment Promotion Scheme, 2010. The salient features of the scheme relevant for our consideration of the issue are reproduced below: "4. SUBSIDY A. Subsidy shall consist of Investment Subsidy and Employment G....
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..... 5 Exemptions A. The Enterprise to which an Entitlement Certificate as prescribed under the Scheme has been issued shall be eligible to claim the exemption(s) from the taxes/duties/charges, to the extent and for the period as mentioned in Table-4 given below XXXXXXXXXX B. In case of Enterprises going for Modernization/ Expansion/ Diversification, the exemption from payment of tax (es) shall be allowed only to the extent to which additional tax liabilities accrue due to utilization of additional capacity created after Modernization/ Expansion/ Diversification. 6. Procedure for Claim D. Claim of Subsidy: (a) The Enterprises making new investment or investment for Modernization/ Expansion/ Diversification or for revival of Sick Industrial Enterprise or setting up project for common social good under the Scheme, for availment of Şubsidy under the Scheme, shall submit duly completed application in Form - VI or Form - VII, appended to the Scheme, as the case may be, to the Member Secretary of the appropriate Screening Committee within 90 days of commencement of commercial production, Such application shall be accompanie....
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....he opinion that the enterprise is not eligible to avail the benefit of the Scheme, it shall provide an opportunity of being heard to the enterprise and shall record the reasons of rejection. The decision of the Committee shall be communicated in Form - XII, appended to the Scheme, by the Member Secretary of the appropriate committee to the enterprise and all concerned immediately but not later than thirty days from the date of decision taken by the Committee in its meeting, unless specifically extended for reasons to be recorded in writing 7. PROCEDURE FOR DISBURSEMENT OF SUBSIDY: A. For disbursement of subsidy the enterprise to which an Entitlement Certificate as prescribed under the Scheme has been issued shall apply quarterly in Form - IX, appended to the Scheme, to Assistant Commissioner/ Commercial Taxes Officer of the area where the enterprise is registered with the Commercial Taxes Department along with proof of deposit of tax and copy of Challan for the amount of contribution of EPF and/or ESI or copy of insurance policy obtained for medical treatment of employees. B. On receipt of the application, the officer concerned shall verify the facts ment....
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....producers are better off by either supplying market price support, direct support, or payments to factors of production. Consumer/consumption subsidies commonly reduce the price of goods and services to the consumer. For example, in the US at one time it was cheaper to buy gasoline than bottled water. Investopedia A subsidy is a benefit given to an individual, business or institution, usually by the government. It is usually in the form of a cash payment or a tax reduction. The subsidy is typically given to remove some type of burden, and it is often considered to be in the overall interest of the public, given to promote a social good or an economic policy. Cambridge Money given by a government or an organization to reduce the cost of producing food, a product etc. and to help to keep prices low. Oxford A sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low. 5.7 From the above definition it is evident that the subsidies provided by the government as part of investment policy etc, tend to reduce the sale price of the goods. In terms of the principle of....
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....ferred to as the 'Act') read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the 'Rules'). The assessee challenged the stand of the Revenue by filing replies. After examining the matter, the Commissioner took the view that price was not the sole consideration flowing from the buyer to the assessee. Not only such buyers, who were sold the goods at a lower price, were 'related persons', even the goods were sold at depressed price. Therefore, the Commissioner confirmed the demand of differential duty as mentioned in the show cause notices and also levied penalties and interest. The assessee challenged the order of the Commissioner by filing appeal before the Custom Excise & Service Tax Appellate Tribunal (for short, the 'Tribunal') taking the plea that 'additional consideration' under Section 4 of the Act refers only to the additional consideration flowing from the buyer to the assessee and in the present case no such additional consideration flew from the advance licence buyers of the 'deemed exports'. The Tribunal, in arriving at this conclusion, relied upon its own decision in the case of IFGL Refractor....
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....ntract of sale between the respondents and M/s. Visakhapatnam Steel Plant that the licences were made available to the respondents. The Export and Import Policy had nothing to do with the arrangements/contract under which the licences flowed from the buyer to the seller. At the cost of repetition it must be mentioned that had the respondents had advance intermediate licence on their own i.e. without M/s. Visakhapatnam Steel Plant having to surrender its licences for the purposes of the contract, then the reasoning of the Tribunal may have been correct. But here, in pursuance of the contract of sale, there is directly a flow of additional consideration from the buyer to the seller. The value thereof has to be added to the price. We are thus unable to accept the broad submission that where parties take advantage of policies of the Government and the benefits flowing therefrom, then such benefit cannot be said to be an "additional consideration". 4. In a matter like this, this Court could simply follow the aforesaid judgment and set aside the order of the Tribunal, allowing this appeal. However, Mr. V. Lakshmikumaran, learned counsel appearing for the assessee, made a fervent....
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....fits for deemed exports. 7. The advance licence holder category buyers got their licences invalidated/surrendered. Thereafter, DGFT issued licence in favour of the assessee herein permitting it to procure the goods duty free from indigenous manufacturers and on the supply of this material to such buyers, treating the same as 'deemed exports', thereby earning the benefits of duty drawback. Para 7.11 of the EXIM Policy facilitated this process and it reads as under : "7.11 Advance Licence for Intermediate Supplies - The Advance Licence for intermediate supply shall be considered by the licensing authority concerned. The Advance Licence for intermediate supply shall be issued after making the licence invalid for direct import of items to be supplied by the intermediate manufacture. In such cases, a copy of the invalidation letter will be given to the licence holder and copy thereof will be sent to the intermediate supplier as well as the licensing authority of the intermediate supplier. The licencee in such case has an option either to supply the intermediate product to holder of Advance Licence for physical exports/ deemed exports or to export directly." 8.....
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....t 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." 9. As is clear from the reading of the aforesaid provision, the duty of excise is chargeable on the excisable goods with reference to the value of such goods. Generally, the price of the goods, i.e. the price at which such goods are ordinarily sold by the assessee to a buyer is to be the value of the goods. This value is called the 'transaction value'. The Central Government has also framed the Rules which, inter alia, lay down the provisions for determination of value. Rule 6 thereof, with which we are specifically concerned, reads as under: "RULE 6. Where the excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such tr....
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....rm of additional consideration which flows from the buyer to the assessee, monitory value thereof is to be included while arriving at the transaction value. It is not necessary that such an additional consideration is to flow directly and even indirect consideration is includible. It is in this context we have to examine as to whether the consideration in the form of drawback, which accrued in favour of the assessee, could be connected with the buyer. To put it otherwise, though the immediate source of the duty drawback is the Government, whether its flow can be traced back to the buyer? If it is so, it may become a case of indirect consideration coming from the buyer and can be added to the transaction value. 11. In the case of IFGL, this Court has given the answer in the affirmative to the aforesaid issue. It is also conceded by the learned counsel appearing for the assessee that the said judgment was rendered on almost identical fact situation. That is why the endeavour of Mr. Lakshmikumaran is to impress upon us to take a different view. He sought to discredit the opinion of the Court in the said case by arguing that the advance licence for intermediate supply was gran....
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....see under this Notification that it is able to effect supply of polyester staple fiber on discounted price to an ultimate exporter holding advance licence. Therefore, the additional discount offered to a customer, who is the exporter, is never an additional consideration. 14. The aforesaid argument of the learned counsel for the assessee may appear to be impressive, when taken in isolation i.e. without having regard to all the attending facts. However, when the argument is tested keeping in view the entirety of the circumstances, as already taken note of above, the hollowness of this argument stands exposed, inasmuch as, this argument glosses over the fundamental fact that the assessee had been able to get the benefit of Notification No. 31/1997-CUS based on licence issued by DGFT in its favour and the raison d'etre for issuance of said licence by the DGFT to the assessee was invalidation of the advance licence by the buyers. Therefore, the source or gangotri from where the benefit has ultimately reached the assessee is the advance licences which were held by the buyers and their act of invalidation made it possible to flow down the benefit so as to reach the stream of the....
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....er concept is a subdivision of the latter. The consideration for a promise is (unless the consideration is nominal or invented) always a motive for promising; but a motive for making a promise is not necessarily consideration for it in law. Thus the testator's desire in Thomas v. Thomas was a motive for the executors' promise but not part of the consideration for it. The widow's promise to pay and repair was another motive for the executors' promise and did constitute the consideration for that promise." 16. From this very judgment, Chitty also explains the distinction between consideration and condition. According to him, the plaintiff's remaining a widow was not part of the consideration but a condition of her entitlement to enforce the executor's promise. This case is contrasted with another judgment in Re Soames - (1897) 13 TLR 439. The discussion in this behalf reads as under : "On the other hand, in Re Soames A promised GBP3,000 to B if B would set up a school in the running of which A was to have an active part. It was held that, by establishing the school, B had provided consideration for A's promise. It seems that the distinction between consideration and....
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....er and there was a flow back and the price was not the sole consideration for sale in these cases in accordance with the provisions of Section 4(1)(a) of the Act. (b) Therefore, they were related persons in terms of provisions of the erstwhile Section 4(4)(c), presently Section 4(3)(b)(iv) of the Act. (c) It is observed that para 7.7 of the EXIM Policy on Advance Release Order speaks of mutuality of interest as the assessee had procured duty free imported raw materials against invalidation of advance licence of the consignees and in turn it sold the finished goods to the said consignees at lower prices as compared to other normal buyers. Thus, the price was not the only consideration. (d) Once the advance licence is invalidated, the said clearance to the buyers who were earlier holding the said licences need not be treated as deemed export and rightly the assessee had cleared the said goods to such buyers on payment of excise duty, but at lower value than the clearance made to the normal buyers. Thus, the assessee appeared to have derived double benefits in these transactions, i.e. (i) enhanced sale and paid less duty on lower value; and (ii) imported dut....
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....y. Hence the subsidy provided when linked to the amount of tax paid as VAT/ Sales Tax, is nothing but subsidy directly or indirectly related to sale of goods and is an additional consideration received. In the present case the appellants collects the full amount of sales tax/ VAT from their customers and would deposit a part of the same with the exchequer retaining the remaining amount with himself as subsidy as per the provisions of RIPS-2010. Hence the amount so received is nothing but additional consideration received by the appellant from their customer and needs to be added to the transaction value. The appellant at the time of entering into agreement for sale/ contract o sale are fully aware of the entitlement they have in terms of the RIPS-2010, hence will determine the tax to be paid accordingly. 5.10 In light of above we examine reproduce below the decisions of the Apex Court which have been rendered in terms of the same/ similar schemes: Decisions of Hon'ble Apex Court on the issue A. Super Synotex "23. In view of the aforesaid legal position, unless the sales tax is actually paid to the Sales Tar Department of the State Government, no benefi....
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....hat since the assessee had succeeded before the Tribunal, it would not be appropriate to saddle it with any penalty. Conclusion 31. Accordingly, while we restore the order of the adjudicating authority dated 22nd May, 2003 and set aside the order of the Tribunal dated 16th January, 2004, we set aside the penalty imposed on the assessee." B. Shree Rajasthan Syntex Ltd [2015 (318) ELT 626 (SC)] "4. We may state here that the period involved is November 1996 to July, 2001. Show cause notice in this behalf, as noted above, was issued on 26-11-2001. The valuation of the excisable goods has to be in terms of Section 4 of the Central Excise Act, 1944. The said Section was amended in the year 2000 which amendment came into effect on 1-7-2000. The legal position relating to identical sales tax incentives Scheme which would prevail in view of the unamended provision as well as amended provision, came up for consideration before this Court in Commissioner of Central Excise, Jaipur-II v. Super Syncotex (India Ltd.) - 2014 (301) E.L.T. 273 (S.C.). This Court took the view, after analysing the provision of Section 4 which provided prior to the amendment, that ....
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....ch a response which is clearly not supported by the decision of the HPC taken on 14th June, 2001 nor is it in consonance with the entitlement certificate issued to the assessee nor is it in consonance with Rule 28C(5)(b). As mentioned above there is nothing in the decision of the HPC or the entitlement certificate to indicate that 50% of the sales tax retained by the assessee on the sale of its vehicles was liable to be adjusted against any capital subsidy entitlement of the assessee. 24. Learned Additional Solicitor General contended that Section 13B of the Act which relates to the power to exempt certain class of industries from payment of tax is also relevant. We are not inclined to consider this submission since the very basis on which the Tribunal has proceeded namely the application of Rule 28C(5)(a) is not only incorrect but the Tribunal has overlooked the decision of the HPC and the entitlement certificate apart from overlooking Rule 28C(5)(b). 25. Finally, our attention was drawn to a Circular dated 30th June, 2000 issued by the Central Board of Excise and Customs. This circular was issued in view of the coming into force of Section 4 of the Excise Act (a....
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....xchequer nor was it actually payable to the exchequer. That being the position, the transaction value was required to be calculated by including the amount of about Rs. 22.44 crores retained by the assessee. 29. In our opinion, the Tribunal misdirected itself in law on several counts and erroneously decided the appeal in favour of the assessee and, therefore, the order of the Tribunal is set aside." D. National Engineering Industries [2015 (320) ELT 27 (SC)] "The respondent-assessee is engaged in the manufacture of Ball and Taper-Rollers Bearings falling under Chapter Heading No. 84.82 of the Schedule to the Central Excise Tariff Act, 1985. It had availed sales tax benefits in the sense that the sales tax was paid at concessional rates under the sales tax incentive scheme which was floated by the State of Rajasthan. The question arose as to whether the benefit of sales tax which was availed by the respondent would be included while fixing the value of the product for the purpose of payment of Excise duty. This issue squarely stands covered by the judgment of this Court in Commissioner of Central Excise, Jaipur-II v. Super Synotex India Limited - 2014 (301....
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....y movement and not just book adjustments. 5 The unit were receiving the full VAT reflected in the invoice and retaining a portion as cash subsidy. The unit were paying full VAT as reflected in the invoice. Nothing was retained. 6 Returns reflected -part payment of VAT and retention of the other part Return reflected complete payment of VAT 7 The excess collected portion was never paid by assessee or the State Govt, under the VAT to the Commercial Taxes Department. The subsidy portion already the utilized against wage subsidy and thereby credited by the GOVT to the account of the appellant. The appellant in all discharged the complete tax payment as collected. 8 Its entitlement certificate did not give any indication of deferment of tax or capital subsidy. The entitlement certificate clearly mentions it as wage subsidy. 9 The subsidy was never received by the state Govt in their account in real value terms. The subsidy was received by the in unit from the State Govt in their account. As the subsidy was received subsequently to disbursement in the intended purpose, the same could be utilized for any purpose by the appellant. 10 It wa....
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....ellant regarding the correct quantum of exclusion towards sales tax from the transaction value for Central Excise purpose. We find that the Hon'ble Supreme Court in CCE, Jaipur-II v. Super Synotex (India) Ltd. (supra) examined the scope of the abatement available under Section 4(3)(d) and held that any amount collected towards sales tax if not paid to the State and retained by the Assessee shall form part of a transaction value. The Hon'ble Supreme Court held that after 1-7-2000, the assessees shall only be entitled to the benefit of the amount "actually paid to the Department". We find that the appellant's plea that they have paid sales tax on inputs and such amount is being adjusted to arrive at the tax payable on the final products and as such it should be treated, when taken together, they have discharged full sales tax on the final product. We find that this submission is not factually or legally admissible. The Central excise valuation is being done for the final product and the sales tax actually payable or paid on such final product only can be given exclusion. The appellant's argument as above is against the concept of transaction value in terms of Section 4. The principle....
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....n 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 period by the Revenue." B. In the case of Honda Motorcycles and Scooters India Pvt Ltd [2017 (357) ELT 828 (T-Chand)], Chandigarh Bench has held as follows: "5. The main point of dispute is, whether or not the amounts collected by the appellants as Sales Tax from the custo....
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....way of an exemption. The said exemption was converted into the scheme of deferring payment of tax upon introduction of Haryana Value Added Tax Act, 2003. In fact, it is apparent that we are dealing with an exemption scheme where the mode of payment has been modified by the Act of 2003. This is relevant in view of the reliance placed by the appellants on the decision of the Tribunal in Uttam Galva Steels Ltd. (supra). There the Tribunal was dealing with a scheme under Maharashtra Value Added Tax Act, 2002. Section 94 of the said Act provides for deferred payment of Sales Tax. No reference has been made to any exemption of Sales Tax in the said provision. One of the points considered by the Tribunal in Uttam Galva Steels Ltd. (supra) is that, as per the incentive scheme of the Maharashtra Government there is no 'exemption' from payment of Sales Tax, whereas in the present case we find that the exemption scheme of 1973 Act is continued in 2003 Act by the Haryana Government. 7. As correctly noted by the original authority, the implication of deeming provision in a VAT enactment for the purpose of Central Excise valuation has to be examined. The Hon'ble Supreme Court in Meghraj....
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....T. 263 (Tri.-Del.). On perusal of the said order, we find that the same is passed while disposing a stay application and that is only an interim order. We find that there is nothing in the impugned order which examined the party's submissions against longer period demand. We note that in the present case the correct valuation for Central Excise purpose is in dispute. The dispute is directly relatable to Sales Tax amount paid/payable by the appellants to the State authorities. The Sales Tax amounts collected were all reflected in the invoices issued to the clients. Out of this amount, the appellants retained 50% based on a scheme announced by the State Government. In this factual matrix, we find that the allegation of fraudulent intent or suppression of fact against the appellants is not sustainable. It is also a fact that the issue involved has been subject matter of various Circulars before/after the introduction of new provisions for valuation w.e.f. 1-7-2000 and also matter of decision by this Tribunal in various cases including Maruti Suzuki India Ltd. (supra). This last mentioned case was taken up on appeal by the Revenue and the Hon'ble Supreme Court set aside the order of th....
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....on has to be treated as the value on which duty liability has to be discharged as per Rule 6 of the Central Excise Valuation Rules, 2000 (supra) read with Section 4(1) of the Central Excise Act, 1944. The Tribunal's Larger Bench decision in the case of ONGC Ltd. (supra) also makes it clear that "the price actually paid or payable for the goods, when sold, in addition includes any additional consideration which is being received by seller or assessee on behalf of the buyer, by reason of, or in connection with, the sale. In the present case, additional consideration which is being received by the assessee by reason of or in connection with the sale is the reimbursement money being received from Oil Pool Account." 5.13 Decisions of Tribunal rendered distinguishing the case of Super Synotex: A. Welspun Corporation Ltd. [2017 (358) ELT 630 (T-Mum)] "5.1 We have gone through the relevant clauses of Chapter IV-A of the Gujarat Value Added Tax Act, 2003. We find that the Government of Gujarat had declared "Incentive Scheme 2001" wherein benefits provided under Economic Development of Kutch District, Government of Gujarat, Industries of Mines Department. Subsequently un....
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.... means that the sales tax was actually payable at the time of clearance of goods but was remitted at a later date by passing of assessment orders by the Sales Tax authorities. We find that Section 4(c) and (d) of the Central Excise Act, defines "transaction value" and "Place of removal" as under :- "place of removal" means - (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 mak....
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.... while computing the transaction value. However, the adjudicating authority overlooked the fact that Apex Court in this case was dealing with the Rajasthan Sales Tax Incentive Scheme of 1989. This incentive scheme was in the nature of an exemption from the levy of Sales Tax III excess of 25% of the Sales Tax leviable, and consequently the balance 75% of Sales Tax was neither paid nor was payable. In the said case before the Hon'ble Supreme Court the issue concerned collection and retention of Sales Tax or deferred payment of Sales Tax where the tax initially collected was retained with the assessee for a certain period of years. As per the scheme of the State Government a lump-sum payment of a certain percentage of this amount of. Sales Tax collected during the years was assumed to be sufficient discharge of the entire amount so collected, thus allowing the differential amount of Sales Tax to accrue to the benefit of the assessee. Hence, I find that the ratio of this ruling would not be applicable to the case of the appellants. The Instruction F. No. 6/S/2014-CX.1, Dated 17-9-2014 issued by the Board based on the ruling of Hon'ble Supreme Court in the case of Super Synotex India Lt....
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.... is of no help to the Revenue. 5.6 In the case in hand it is very much clear that from the Scheme as well as from the Eligibility Certificate, that the amount of Sales Tax allowed to be remitted to the respondent was towards capital subsidy. Even the requirement to re-invest 50% of the incentive in projects in the State of Gujarat further emphasizes the point that the amount of Sales Tax retained was only as capital subsidy. We further find from the facts narrated in the impugned order that the incentive receivable as capital subsidy by the appellants was from the Department of Industries, whereas the Sales Tax amount collected was payable to the Department of Sales Tax but allowed to be retained and adjusted against such incentive by their very department which also granted refund of tax paid on raw materials and CST paid. This scheme was thus operated by Department of Sales Tax and accordingly Commercial tax officer has necessarily to pass order for each tax period. It implies that the State Government of Gujarat under which both the departments fall, would have put in place some mechanism whereby the incentive paid to the appellants by way of retention of Sales Tax coll....
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.... Act, 1944 stands fulfilled. 5.11 We also find that remission and exemption was separately considered by the Govt. of Gujarat. While, Section 5 of the Gujarat Value Added Tax Act, 2003 provides in sub-Section (1) thereto that sales and purchase of goods specified in Schedule I shall be exempt from tax, sub-Section (2) empowers the State Government by a notification in the official gazette to exempt any specified class of sales or purchase or sales or purchases by any specified dealer or specified class of dealers from payment of the whole or part of the sales tax. On the other hand, the scheme of remission provided for under Section 41 of the Gujarat Value Added Tax Act, 2003, contemplates that the State Government/Commissioner of Sales Tax may remit the whole or any part of the tax payable in respect of any dealer or class of dealers. It is clear from reading of Section 5(2) as also Section 41 of the Act that while Section 5 grants exemption from the levy/payment of sales tax, remission under Section 41 is granted in respect of any part of the tax payable by a dealer. In case of exemption no tax is actually paid or actually payable, whereas in the case of remission, tax i....
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....However, we note that the Tribunal in the case of Welspun Corporation Ltd. (supra) has distinguished the decision of the Apex Court in the light of Gujarat VAT Act, 2003. In the Welspun Corporation Ltd. case, the assessee had opted for remission of tax scheme under which a portion of the VAT paid was remitted back to the assessee. The Tribunal held that such subsidy amounts are not required to [be] included in the transaction value. 9. In the present case we know that for the initial period the assessees are required to remit the VAT recovered by them at the time of sale of the goods manufactured. A part of such VAT is given back to them in the form of subsidy in Challan 37B. Such challans are as good as cash but can be used only for payment of VAT in the subsequent period. In terms of the scheme of the Government of Rajasthan payment of VAT using such challan are considered legal payments of tax. In view of the above, Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. 10. It is pertinent to reproduce the observations of the Tribunal in the Welspun Corporation Ltd. case ....
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....uently, on the basis of their application, the financial assistance is sanctioned by MP Trade and Investment Facilitation Corporation Limited and paid in favour of Commercial Tax Office. Such amount is to be considered as advanced tax deposited by the assesee and the balance is required to be paid by the assessee. 8. We find that a similar issue has come up before the Tribunal in the case of Shree Cement Ltd V/s Commissioner decided by the Tribunal vide Final Order No. 50189-50191/2018 dated 18/01/2018 = 2018-TIOL-748-CESTAT-DEL in which the Tribunal observed as follows:- ....... 11. By following the decision of the Tribunal in the Welspun Corporation Ltd. case we conclude that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. 12. In the result, the impugned orders are set aside and the appeals are allowed." 9. The facts of the present case are similar. In the case of the Schemes under the Rajasthan Government, the subsidy amount is paid in the form of VAT Challan whereas in the case of the Scheme of the MP Government, the same is allowed by way of book adjustmen....
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....ssion of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax. The quantum of remission was based upon the investment made in the fixed assets. The condition of the remission amongst others included to remain in production, employment of certain percentage of persons in assessee unit, and numerous other conditions as brought out in Para 9 of the impugned Order-inAppeal. 7. The Tribunal in the Welspun Corporation Ltd. (supra) case has concluded that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans." F. In the case of H-One India Pvt Ltd [Final Order No. 50675-50680/2019 dated 30.04.2019] "9. The Commissioner (Appeals) has placed reliance on the decision of the Supreme Court in Super Synotex (India) Ltd. This decision of the Supreme Court in Super Synotex (India) Ltd. was considered by Division Benches of the Tribunal in Welspun Corp. Ltd., Shree Cement Ltd. and M/s Maihar Cement and distinguished for the reason that the Supreme Court was examining a scheme under which only 25% of VAT was required to be d....
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....part of such VAT is given back to them in the form of subsidy in Challan 37 B. Such Challans are as good as cash but can be used only for payment of VAT in the subsequent period. In terms of the scheme of the Government of Rajasthan payment of VAT using such Challan are considered legal payments of tax. In view of the above, Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. 10. It is pertinent to reproduce the observations of the Tribunal in the Welspun Corporation Ltd. case "5.1 The Respondent company opted for "Remission of Tax Scheme" and was thus eligible for the Capital subsidy in the form of remission of Sales Tax subject to the conditions to be fulfilled.... The subsidy in the form of remission of sales tax was in fact a percentage of capital investment... Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly re....
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....ms of MOU, according to which the appellant is required to deposit to State Government the amount of VAT/CST recovered by them from their customers, Out of the said amount, the claim is submitted to the State Government for sanction of subsidy, which after sanction is paid directly to the bank account of the appellant. It is evident that the VAT/CST paid by the appellant is credited into the State Exchequer. 8. We have gone through the case laws relied upon by the appellant and we find that Tribunal consistently is taking the view, that subsidy amount cannot be included in the transaction value of the product for the purpose of payment of duty. In particular, in the case of Ultratech Cement Ltd. (supra) Tribunal has considered a similar issue pertaining to the Rajasthan State Government where subsidy was paid to the assessee by way of credit in the form VAT 37B. In the present case, we find that subsidy is sanctioned and credited to the bank account of the appellant. We find that the decision of the Tribunal is specifically applicable to the facts in the present case. The observations of the Tribunal in Shree Cement Ltd. case (supra) are reproduced below : "7. We ....
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....ew that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. 10. It is pertinent to reproduce the observations of the Tribunal in the Welspun Corporation Ltd. case "5.1 The Respondent company opted for "Remission of Tax Scheme" and was thus eligible for the Capital subsidy in the form of remission of Sales Tax subject to the conditions to be fulfilled.... The subsidy in the form of remission of sales tax was in fact a percentage of capital investment... Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax. The quantum of remission was based upon the investment made in the fixed assets. The condition of the remission amongst others included to remain in production, employment of certain percentage of persons in assessee unit, and numerous other conditions as ....
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.... Corporation Ltd. - 2017 TIOL 1287 (Tri. - Mum.) = 2017 (358) E.L.T. 630 (Tri. - Mum.) has held that once the Sales Tax Department has assessed the sales tax as paid, the Central Excise Department cannot contend that since the State Government has remitted the amount back to the appellants as incentive, sales tax was not paid by them. After the assessment by the Sales Tax Department for sales tax to have been paid, condition of Section 4(3)(d) of Central Excise Act, 1944 stands fulfilled. We are also of the opinion that there is a difference between remission and exemption. As while in case of exemption, the levy itself is statutorily exhausted and no sales tax is paid or payable by the assessee whereas in case of remission, the sales tax is payable as there is no exemption from levy and/or payment of sales tax at the time of clearance and the same has to be statutorily discharged. 8. In the present case, the remission is in the nature of subsidy which the appellant was receiving from the State Government in the form of VAT 37B Challans and not from the buyers of the appellant. The said remission was not only as good as cash but can also not be considered as an additional ....
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....ining 75% of the sales tax collected from the customers whereas in the present case, the appellant had paid the entire amount of sales tax collected from the customers, with the Sales Tax Department without retaining even a meagre portion thereof. Hence, the benefit granted by RIPS to the appellant herein is not in the nature of exemption or incentive from payment of sales tax but is a remission where nothing was initially retained by the appellant. Thus, the facts of present case are absolutely different from the case decided by the Hon'ble Apex Court." 5.13 From the above referred decisions it is observed that all the decision have been rendered by the tribunal distinguishing the Super Synotex of Hon'ble Supreme Court relying on the decision in the case Welspun Corporation. Interestingly in this case tribunal has not dealt with argument based on the decision of Hon'ble Apex Court in the case of Super Synotex, and have brushed aside the same as is evident from para 5.5 of that order. Further Tribunal also did not found the decisions rendered in the case of Uttam Galva Steels [2016 (331) E.L.T. 261 (Tri.-Mum.)], relevant and distinguished the same saying that decision was render....
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.... incentive scheme, regard being had to the language employed therein. In fact, by no stretch of imagination, it can be construed as a Scheme pertaining to exemption. Thus, analysed, though 25% of sales tax is paid to the State Government, the State Government instead of giving certain amount towards industrial incentive, grants incentive in the form of retention of 75% sales tax amount by the assessee. In a case of exemption, sales tax is neither collectable nor payable and if still an assessee collects any amount on the head of sales tax, that would become the price of the goods. Therefore, an incentive scheme of the present nature has to be treated on a different footing because the sales tax is collected and a part of it is retained by the assessee towards incentive which is subject to assessment under the local sales tax law and, as a matter of fact, assessments have been accordingly framed. In this factual backdrop, it has to be held that circular entitles an assessee to claim deduction towards sales tax from the assessable value. The fact situation in Modipon Fibre Company (supra), as is manifest, was different. In our considered opinion what has been stated in Modipon Fibre ....
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.... 5.16 Both the sides have made submissions on issue of limitation and penalties imposed. However, as we are referring the matter to Hon'ble President for constituting large bench to decide the issue on merit, we do not intend to take up those issues at present and shall be taken up after the decision of the larger bench on the issues referred. 6.1 In view of the discussions as above matter is referred to President to constitute a larger bench in the matter for considering the questions as framed in para 5.15,supra. (Order pronounced in the open court on _______.2022) (Anil Choudhary) Member (Judicial) (Sanjiv Srivastava) Member (Technical) ANIL CHOUDHARY: 7. I got the advantage to go through the order recorded by my ld. Brother, Shri Sanjiv Srivastava, Member (Technical), but, however, I am unable to agree with the same. I am writing my separate order as follows:- 8. It is evident from a plain reading of the Rajasthan Investment Promotion Scheme 2003-2010, that it provides for grant of Capital Investment Subsidy (interest subsidy) and Employment Generation (Wage Subsidy). The appellants herein are located in the state of Rajasthan ....
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....at as the State Government is normally in financial difficulty for disbursement of the amount of investment and/or wage subsidy in cash, the disbursement of such subsidy have been done by way of issue of VAT-37 B challan, which the appellant or enterprise can use for discharge of their sales tax liability in subsequent period. Under the facts and circumstances, it is not an amount, which is flowing to the appellant - enterprise or manufacturer, from the buyer of the goods. Thus, it is not an additional consideration (on sale of goods) by any stretch of imagination. Rather it is the amount of subsidy, which is not related to the selling price of the appellant nor flowing directly or indirectly from the Government to the appellant enterprise, by way of price subsidy. 11. Further, in the facts and circumstances of the present case, I find that the capital/wage subsidy has not reduced the selling price of the goods. Thus, there is no case of transfer value being depressed, which may amount to indirect flow from the buyer to the seller/appellant. 12. So far the ruling of the Apex Court in Indo Rama Synthetic (supra), the fact was that the selling price or consideration was at a lo....
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....ns arise for consideration by the ld. Third Member:- (A) Whether in the facts and circumstances, the capital/wage subsidy in question reduces the selling price of goods, as held by the Member (Technical). OR As held by the Member (Judicial) that the subsidy in question does not reduce the selling price of the goods. Nor does it amount to indirect flow from the buyer to the seller. (B) The amount of subsidy under dispute is an independent amount of subsidy received from the Government on the basis of the capital investment and employment generation/wages paid and thus, is not an additional sales consideration, as held by the Member (Judicial). OR The amount of subsidy under dispute is not an independent amount received by the appellant. Rather it is computed with reference to the sales tax paid and thus, is an additional consideration for sales, as held by the Member (Technical). (C) The facts in this appeal are similar to the facts in the case of Super Synotex India Ltd. (supra), as held by the Member (Technical) OR The facts in the present case are difference and hence, ruling of the Apex Court in the case ....