2013 (6) TMI 696 - AT - Central Excise

Summary

Issues involved: Determination of assessable value u/s 11AC of the Central Excise Act, 1944.

Summary:

Issue 1: Appeal by M/s. Grindwell Norton Ltd (assessee) against the adjudication order:
M/s. Grindwell Norton Ltd filed an appeal against the adjudication order confirming a demand of Rs. 97,70,637/- with interest and penalty imposed u/s 11AC of the Central Excise Act, 1944. The assessee, engaged in the manufacture of abrasive grinding wheels, availed the benefit of deferred payment of sales tax under the Government of Maharashtra 1993 Package Incentive Scheme. Show Cause Notices were issued alleging that amounts of sales tax collected but not paid to the State Exchequer were retained by the assessee, constituting additional consideration in the sale of goods. The Tribunal's decision in Kinetic Engineering Ltd v CCE established that the amount of sales tax paid or payable is permissible to be deducted regardless of immediate or deferred payment. Consequently, the impugned order was set aside, and the appeal by the assessee was allowed.

Issue 2: Appeal by the Revenue against the Order-in-Appeal:
The Revenue filed an appeal against the Order-in-Appeal where the Commissioner (Appeals) set aside the adjudication order. However, based on the Tribunal's decision regarding the deductibility of sales tax paid or payable, the appeal by the Revenue was dismissed. The Tribunal's ruling in Kinetic Engineering Ltd v CCE clarified the treatment of sales tax amounts retained by the assessee, leading to the dismissal of the Revenue's appeal.

Conclusion:
The Tribunal's decision provided clarity on the treatment of sales tax amounts retained by the assessee, resulting in the allowance of the assessee's appeal and the dismissal of the Revenue's appeal.