AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2025 (11) TMI 1543
X X X X Extracts X X X X
X X X X Extracts X X X X
....mand of excise duty along with interest against the appellant by rejecting their appeal, and has again accepted the appeal of the department and imposed the penalty on the appellant which had already been imposed vide the first OIA. 2. Briefly stated facts of the present case are that the Appellant is engaged in the manufacture of Catalytic Converter and Canisters falling under Chapter Heading No. 8421300 of the First Schedule to the Central Excise Tariff Act, 1985. The Appellant was clearing their final products after due payment of excise duty and was availing Cenvat credit of the duty paid inputs utilized in the manufacture of the final products. During the relevant period, the Appellant was availing the benefit of retention of 50% of the sales tax collected in lieu of capital subsidy under the Rule 28C(5)(a) of the Haryana General Sales Tax Rules, 1975, up till 31.03.2003. Thereupon, with effect from 01.04.2003, the Appellant was entitled to a deferment scheme provided under the Rule 69 of the Haryana VAT Rules, 2003 ('HVAT Rules'). Under the said scheme, the Appellant was entitled to defer its liability of payment of Sales Tax/VAT for a period of 5 years or just pay 50% of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 26.07.2016, the learned Counsel submits that the Commissioner (Appeals) has confirmed the demand of excise duty on the 50% of the sales tax retained by the Appellant under deferment scheme; it has been held by the Commissioner (Appeals) that the said retained amount is not permissible to be deducted from the transactional value for the purpose of payment of excise duty. She further submits that the Commissioner (Appeals) has held that since the duty/tax actually paid or payable is only excluded from the definition of 'transactional value', the 50% sales tax retained under the deferment scheme is not actually payable by the Appellant to the government and therefore the said amount shall not be excluded. In this regard, she submits that the deferment scheme provided under Rule 69 of the HVAT Rules clearly states that an eligible industrial unit, instead of opting for deferment of payment of tax for 5 years, may opt for making 50% of the payment of the sales tax collected, and it shall be deemed to be the full payment. She further refers to Rule 69 of the HVAT Rules and submits that the payment of 50% the sales tax collected from the customers, shall deemed to be full an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is always on the department and in this case, the department has failed to do so. For this, she places reliance on the following decisions: * Suzuki Motorcycle India Private Limited vs. CCE, Delhi-III - 2024 (3) TMI 1135 CESTAT Chandigarh * FMI Automotive Components Ltd vs. CCE, Delhi-III - 2025 (2) TMI 141 CESTAT Chandigarh * Shree Arihant Tradelinks India Private Limited and Maha Shakti Coke vs. CCE, Kutch (Gandhidham) - 2021 (12) TMI 581 CESTAT Ahmedabad 4.2.2 She further submits that it is a settled principle of law that extended period of limitation cannot be invoked when the demand proposed is arising out of the audit proceedings. For this, she places reliance on the following decisions: * FMI Automotive Components Ltd (supra) * CCE, Rohtak vs. M/s S.G. Engineers - 2024 (8) TMI 199 CESTAT Chandigarh * M/s BST Infratech Ltd vs. Commr of CGST & Excise, Bolpur - 2020 (12) TMI 875 CESTAT Kolkata 4.2.3 She further submits that it has been consistently provided in various circulars, viz. Circular No. 378/11/98-CX dated 12.03.1998, Circular No. 354/81/00-TRU dated 30.06.2000, Circular No. 671/62/2002-CX dated 09.10.2002 iss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase is of interpretational in nature and it is a settled law that no penalty is imposable in cases involving interpretation of statutory provisions. For this, reliance is placed on the following decisions: * Uniflex Cables Ltd vs. CCE, Surat-II - 2011 (271) ELT 161 (SC). * Hindustan Coca Cola Beverages Pvt Ltd vs. CCE, Chennai - 2018 (1) TMI 761 CESTAT Chennai * M/s. Sree Gokulam Food and Beverages Pvt Ltd and Sri K. Sinosh, Executive Director (supra) 5. On the other hand, the learned Authorized Representative for the department reiterates the findings of the impugned orders. 5.1 The learned Authorized Representative submits that retention of part collection of sales tax by the assessee under tax concession granted by the State and which was neither paid nor payable to exchequer of the State, was required to be included while calculating transaction value by the assessee under Section 4(3)(d) of the Central Excise Act, 1944, but in the present case, the Appellant neither intimated about the said practice nor paid the excise duty on such retained part. He further submits that this issue is no more res integra and has been decided in favour of the dep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of 50% of the amount under tax concession scheme allowed by the Haryana State Government and has held as under: "5. The main point of dispute is, whether or not the amounts collected by the appellants as Sales Tax from the customers but not paid to the State Sales Tax authorities should be included in the assessable value for the purpose of levy of Central Excise duty. The admitted facts of the case are that, the appellants have been issued with an Entitlement Certificate on 20-10-2003 by the Haryana VAT authorities. The appellants collected an amount of Rs. 73,12,73,423/- as VAT from their customers during the periods 2003-04 to 2008-09 and this amount has not been paid to the VAT authorities. The said amount has been retained by the appellants in terms of the applicable regulations of the VAT Rules. Section 61(2)(d) of Haryana Value Added Tax Act, 2003 stipulates that, tax concessions to the industrial units in terms of Haryana General Sales Tax Act, 1973 shall remain in force with certain modifications. Sub-clause (i) states that, an industrial unit availing the benefit of exemption from the payment of tax may, in the prescribed manner, change-over to deferment of pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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 Biscuits industries Ltd vs Commissioner of Central Excise, UP, 2007 (210) ELT 161 (SC), and Commissioner of Central Excise, Bangalore vs Meyer Health Care Pvt. Ltd., 2011 (267) E.LT. 145 (S.C.), held that, deeming fiction of a particular Act cannot be extended to the excise law automatically. Further, the purpose and reason behind the legal fiction, when examining the context, will clearly show that such deeming fiction has limited application to the enactment which contains the same. In the present case, it is the appellants' plea that when they pay 50% of VAT (out of 100% collected from the clients) they have fulfilled their VAT liability in full. Hence, full VAT liability should be available for abatement for Central Excise. In this connection, we find that the Hon'ble Supreme Court examined the issue of retention of collected Sales Tax and its treatment in ascertaining the transaction value for excise purpose. In Comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or payable to the State Government towards sales tax, VAT, etc is excluded because it is not an amount paid to the manufacturer towards the price, but an amount paid or payable to the State Government for the sale transaction, i.e., transfer of title from the manufacturer to a third party. Accordingly, the amount paid to the State Government is only excludible from the transaction value. What is not payable or to be paid as sales tax/VAT, should not be charged from the third party/customer, but if it charged and is not payable or paid, it is a part and should not be excluded from the transaction value. This is the position after the amendment, for as per the amended provision the words "transaction value" mean payment made on actual basis or actually paid by the assessee. The 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 17-3-1998. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that post 1-7-2000 in arriving 'transaction value' Sales Tax benefit which was retained by the assessee, would be included while fixing the 'transaction value'. 10. We find while the case on merit is against the appellants, their plea of time-bar of that portion of demand beyond normal period has merit. We have examined the impugned order with reference to reasons for upholding the extended period of demand. The original authority had very briefly dealt with the issue. No reasons for confirmation of demand for extended period has been recorded except quoting the Tribunal's order in Emsons Organics Pvt Ltd. 2011 (267) ELT 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant has relied upon the decision of this Tribunal in the case of Uttam Galva Steels Ltd (supra) and Man Industries (India) Ltd (supra). We find that those decisions are not applicable to the facts of the present case as those decisions are related to Maharashtra Vat Act and Gujarat Vat Act, whereas in the case of Maruti Suzuki India Limited (supra), the Hon'ble Apex Court has examined the provisions of Haryana Vat Act, therefore, those decisions are not applicable to the facts of the present case as the appellant is located in the State of Haryana following the provisions of Haryana Vat Act. 8. ------ 9. ------ 10. ------ 11. As we have already held that the show cause notice dated 4.5.2009 has been issued to the appellant by invoking the extended period of limitation, therefore, the demands for the extended period of limitation in the show cause notice dated 4.5.2009 are also set aside. Remaining demands as per show cause notice dated 4.5.2009 which are within the limitation and the demands as per show cause notice dated 7.5.2010 are confirmed. The appellant is liable to pay interest for the intervening period for these demands. 12. W....