2006 (8) TMI 386 - AT - Central Excise

Summary

Issues:
1. Whether the abatement received by the appellant should be included in the assessable value for calculating excise duty.
2. Whether the deduction of sales tax permissible as abatement should be based on the amount actually paid by the appellant.
3. Whether the demand for excise duty for the year 2002-03 is valid when the abatement was related to the period 1997-2000.

Analysis:
1. The appellant availed abatement under a deferred payment scheme for sales tax payers. The abatement was claimed and received for sales made between 1997-2000. The issue arose when the appellant was served a notice for not including the abatement amount in the assessable value for excise duty calculation, resulting in alleged undervaluation and short levy of excise duty. The appellant argued that the abatement was a subsidy and incentive from the government, allowing them to retain part of the sales tax as an incentive. Citing relevant precedents and circulars, the appellant contended they were entitled to deduct the full sales tax payable, even if part of it was retained as an incentive.

2. The appellant relied on Circulars and Tribunal decisions to support their claim that the permissible deduction of sales tax for abatement should be based on the amount legally chargeable from the buyer, not just the amount actually paid. The appellant argued that the abatement was correctly deducted from the assessable value as per the provisions and circulars, emphasizing that the abatement was a form of subsidy and incentive granted by the government.

3. The Tribunal considered the timeline of abatement availed by the appellant (1997-2000) and the demand for excise duty for the year 2002-03. The Tribunal noted that the demand for excise duty appeared to be unrelated to the period when the abatement was received. Additionally, the Tribunal acknowledged that the abatement was provided by the State Government as an incentive for early payment of sales tax, allowing the appellant to charge the full sales tax rate from customers. Consequently, the Tribunal found that the appellant had established a prima facie case in their favor, leading to the waiver of pre-deposit of duty and penalty pending appeal resolution.