2005 (12) TMI 437 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Appeal Nos. 93/2003 and 125/2003 passed by the Commissioner of Central Excise (Appeals -II), Bangalore regarding the deduction of turnover tax from the assessable value for excise duty refund claims.

Detailed Analysis:
1. Background of the Case:
The respondents, manufacturers of excisable goods, paid turnover tax to the Department of Commercial Tax Karnataka and filed refund claims for excise duty paid on the turnover tax. The Assistant Commissioner rejected the claims, stating the respondents had no appeal against the levy of turnover tax or excise duty and filed claims based on other cases' outcomes.

2. Contentions of the Revenue:
The Revenue argued that under the Karnataka Sales Tax Act, manufacturers cannot recover turnover tax from customers, implying it should not be included in the assessable value for excise duty. The Revenue also highlighted a pending departmental appeal in the Supreme Court on a similar issue.

3. Tribunal's Analysis and Decision:
The Tribunal reviewed the case records and acknowledged the Revenue's arguments. However, citing precedents, including the Bangalore Paints Ltd. case, the Tribunal found that deduction of turnover tax from the assessable value is permissible. The Tribunal referenced the Law Ministry's opinion supporting this deduction, irrespective of passing on the tax to consumers.

4. Law Ministry's Opinion and Tribunal's Decision:
The Law Ministry clarified that turnover tax should be deducted from the sale price to calculate the assessable value, regardless of passing on the tax to consumers. The Tribunal emphasized that the Central Excise and Salt Act does not mandate excluding taxes passed on to consumers from the assessable value.

5. Final Ruling:
Despite the Revenue's appeal to the Supreme Court, the Tribunal upheld the Commissioner (Appeals)'s decision based on judicial discipline and previous Tribunal rulings. The Tribunal rejected the Revenue's appeals, affirming the deduction of turnover tax from the assessable value for excise duty refund claims.

In conclusion, the Tribunal's judgment upheld the allowance of turnover tax deduction from the assessable value for excise duty refund claims, based on legal interpretations and precedents, despite the Revenue's contentions and pending appeals.