2026 (4) TMI 512

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....ce dated 01.07.2015. 2. The facts of the case are as under: 2.1. That the Appellant unit is a New Industrial Unit in terms of The Assam Industrial Policy, 2003 and North East Industrial Investment Promotion Policy, 2007 and is eligible for exemption of Central Excise Duty on manufacture of Goods, Income Tax on income derived out of manufacture activities for a period not exceeding ten (10) years from the date of commencement of commercial production. Further, the Appellant unit is eligible for Sale Tax exemption by way of remission of Sales Tax to the extent of 99% of the Assam Value Added Tax payable during the relevant period by virtue of remission granted by the State Authorities under the Assam Industries (Tax Remission) Scheme, 2....

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....and Assam Industries (Tax Exemption Pipeline Units) Order, 2009 for claiming Sales Tax exemption/remission for a period of 7 (Seven) years w.e.f/28.07.2008 to 27.07.2015 to maximum amount of Rs. 380.05 lakh. 2.5. That it was alleged by the department that the Appellant had short paid the Central Excise Duties amounting to Rs. 7,71,115/- including Ed. Cess and S & H Ed. Cess during the period from June, 2010 to March, 2015 by way of undervaluation of goods by non-inclusion of the VAT amount collected under the Assam Industries Order, 2005 and retained by them in violation of Section 4 of the Central Excise Act, 1944. 3. In view of this the Show Cause Notice was issued to the appellant to demand duty on the amount of VAT retained by the....

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....(Appeals) of Central Excise, Customs & Service Tax vide Final Order No. 75669/2025 dated 10.03.2025 wherein this Tribunal observed as under: "8. We find that the Show Cause Notice alleged that the appellant has retained that 99% of the VAT collected from the buyers and the same is to be includable in assessable value as per the decision of the Hon'ble Apex Court in the case of CCE, Jaipur II v Super Synotex (India) Ltd but we find that it is not the case that appellant has retained the VAT as his income, in fact 99% of VAT retention by the appellant is a capital subsidy/incentive given by the State Government for setting up a new industrial unit as per Industrial Policy of Assam, 2003 read with Assam Industrial Taxation Remissi....

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.... payable and adjusting it against the incentive. In their case not only Sales Tax was actually payable but in fact it stood actually paid, as the remission was nothing but adjustment of the Sales Tax paid by them against the incentive which the State Government granted with respect to the fixed capital investment made by it in the State of Gujarat. There is no blanket exemption from sales tax from the levy or payment of sales tax." 12. Therefore, we hold that the remission of 99% of VAT retention by the appellant is nothing but a subsidy given by the State Government as per industrial policy. Therefore, the same is not includable in the assessable value of the goods cleared by the appellant. Consequently. no demand is sustainable a....