TaxTMI 
TaxTMI 
2024 (6) TMI 240
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....te orders-in-original for recovery of duties of central excise amounting to Rs. 3,18,013/-, Rs. 11,696/-, Rs. 23,07,113/-, Rs.48,795/-, 1,89,966/-, Rs. 3,13,406/- and Rs. 48,795/- under section 11A of Central Excise Act, 1944, respectively, along with interest thereon under section 11AB of Central Excise Act, 1944 upheld the detriment, is the effect of tax waiver by the state government as to warrant deeming of the such amount as additional consideration received by them for clearances effected during the respective periods by the appellants. 2. None appeared for M/s Mandovi Metals Pvt Ltd but the facts, and issue, being identical, to the other appeals before us, we take up that too for disposal. Learned Counsel for appellants submits that the demands were raised on the ground that they, in terms of notification no. 4/5/2005-Fin(R&C)(13) dated 31st March 2005 of Government of Goa which modified an earlier scheme for deferment of sales tax for a period prescribed in accordance with the Goa Sales Tax Deferment-cum-Net Present Value Compulsory Payment Scheme, 2003 to offer option of retaining tax so accumulated, and at their disposal for time being, for all time subject to surrenderi....
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....x (India) Ltd to set aside the demand. 4. Learned Authorised Representative submits that the amounts retained by the appellant was tantamount to additional consideration as these had been collected from the buyers of the excisable goods as invoiced price, and not liable to duty owing to temporary custodianship for Government of Goa, but now to be added back. It was also submitted that the specific exclusion of 'tax on sales' in the computation of 'transaction value' left no option but to add back that element once that ceased to be tax due payable to the Government of Goa. 5. The scheme of the Government of Goa, for deferment of sales tax to be accumulated by 'dealer' and paid to the exchequer at the end of the specified period - in effect a temporary accommodation of cash flow by the state government - was modified to permit immediate discharge thereof to the extent of 'net present value (NPV)' of the accumulated amount to be deemed as discharged at end of the specified period. We find from the mandate of section 4 of Central Excise Act, 1944 that 'transaction value', which has been defined to include any amount that the buyer was liable to pay the assesse in connection with the....
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.... of clearance. We are not impressed with the said argument of the learned Commissioner (AR). The definition of "transaction value" given in Section 4(3)(d) very clearly stipulates exclusion of the amount of sales tax and other taxes actually paid or actually payable on such goods. In the present cases, the goods were cleared excluding the amount of sales tax actually payable. This amount has not been changed by the Sales Tax Authority. All that has been done is the manufacturer-assessees were given an option to make pre-payment of the deferred sales tax based on the Net Present Value. Thus, though the Net Present Value may be less than the actually payable amount but the fact remains the timings have changed. The difference between the amount actually paid and actually payable has arisen due to the time when the amount was paid and originally stipulated date of payment under the deferral scheme. As discussed earlier, the concept of actually paid or actually payable is to be determined at the time of removal. Thus the amount actually paid cannot be determined at some other time. In any case, in the present case, the amount payable has not been varied by the Sales Tax Authorities. Un....
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....that the law permits Rs. 100/- to be collected as sales tax which was collected by the manufacturer but law also provided that Rs. 75/- will be retained by the manufacturer and only Rs. 25/- will be paid to the Government. The question was whether Rs. 75/- will form part of the transaction value or not. The issue in all the appeals here is not this but a different. Here the issue involved is that the manufacturer assessees were required to collect certain amount as sales tax which was collected by them. The said amount of sales tax was to be paid after a specified period say 11 to 15 years and in the meantime, was allowed to be retained by the law with the assessees. In 2002, the law was amended by which it became optional for the manufacturer assessees to pay the amount either at the end of stipulated period or at any point of time earlier on the basis of net present value (on the date of prepayment) of the amount of sales tax to be paid at the end of deferral period. We also note that there is no discussion about such a scheme in the Super Synotex judgment of the Hon'ble Supreme Court. The obvious conclusion is that none of the parties who were appearing before the Hon'ble Suprem....
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....d at that point of time. In other words, if sales tax is permitted to be abated while determining the assessable value, the deduction towards sales tax will be in respect of sales tax actually paid or actually payable at the time and place of removal of the goods. The word "payable" means "to be paid" or "liable to be paid" as per ordinary dictionary meaning. "Liable to be paid" means, liability in accordance with the law. Therefore, what is permissible to be abated in respect of sales tax is the sales tax, actually paid or actually payable in accordance with the law at the time of removal of the goods. If that liability undergoes any change subsequently, such alterations/ modifications should not have any impact on the determination of the assessable value. This is for the reason that "certainty in taxation" is a fundamental cannon of taxation; if that cannon is not followed, there will be confusion and chaos in the tax administration. If tax liability is made dependent on a future event, such a law can not be enforced or implemented in a fair and reasonable way. That is the reason why in all the provisions relating to determination of value, right from 1944 onwards, it has been p....
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....ho has cleared the goods from 1992-1993 onwards could not have anticipated that ten years later the Government will introduce a law providing for discharge of duty liability on NPV basis. Therefore, in our view, the appellant cannot be saddled with a tax liability on account of changes in law, which took place several years after the clearance of the goods. xxxxx 5.9 The appellants have relied on a number of judicial pronouncements of this Tribunal in support of their contention that sales tax collected and retained by the manufacturer as an incentive does not change the character of amount collected and they remain as sales tax payable, which is eligible for deduction. However, as Civil appeals filed by the department in all these cases have been admitted by the Hon'ble Apex Court, these judgments are in jeopardy till the matter is finally decided by the Hon'ble Apex Court and hence they may not have any precedential value. However, it would be relevant to note that the Hon'ble Apex Court did not stay any of these orders, which implies the law as interpreted in these orders are still valid and enforceable. In all these judgments (cited in para 3.5 supra), the consistent view t....
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.... of claiming exemption. In the case of MRF Ltd. v. CCE, Madras, reported in 1997 (92) E.L.T. 309 (S.C.), the Hon'ble Apex Court held as follows : "Once the assessee has cleared the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices for whatever reason cannot be a matter of concern to the Central Excise Department insofar as the liability to payment of excise duty was concerned. This is the view which was taken by the Tribunal in the case of Indo Hacks Ltd. v. Collector of Central Excise, Hyderabad - 1986 (25) E.L.T. 69 (Tribunal) and it seems to us that the Tribunal's view that the duty is chargeable at the rate and price when the commodity is cleared at the factory gate and not on the price reduced at a subsequent date is unexceptionable. Besides as rightly observed by the Tribunal the subsequent fluctuation in the prices of the commodity can have no relevance whatsoever so far as the liability to pay excise duty is concerned. That being so, even if we assume that the roll back in the price of tyres manufacture....
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....use for re-determination of the assessable value determined in accordance with the law of central excise as it stood at the time of removal of the goods. Applying the ratio of these judgments to the facts of the present case, we hold that the abatement towards sales tax has to be allowed in terms of the sales tax liability (as per law) at the time of clearance of the goods. Such abatement cannot be subsequently altered or restricted to the net present value of sales tax subsequently paid in complete discharge of such sales tax liability. In other words, there is no cause for re-determination of assessable value on account of changes which arose in the sales tax law much after the clearance of the goods. 5.11 The C.B.E. & C. has issued a number of circulars clarifying the abatement towards sales tax under various situations. These have been discussed in paragraphs 5.1 to 5.4 supra. From these clarifications, it is very evident that the deduction towards sales tax is permissible based on the amount billed or charged from the customers in accordance with the law irrespective of the fact whether the amount is retained by the assessee or incentives are given by the State Government to....