2011 (2) TMI 565 - AT - Central Excise

Applications for stay - It was the case of the Department that in the course of scrutiny of the purchase invoices of the appellants by the audit party, it was revealed that the appellants were enjoying the sales tax exemption under Notification issued by the State Government being exemption Notification No. 30A/99-2000-452 dated 25-10-1999 and T/30A/2002-03/654 dated 25-3-2003, and were availing the credit for the purpose of payment of excise duty in terms of the said notification - Merely because the appellants had not declared to the Department that they were availing the benefit of the said exemption notification in relation to the sales tax payment cannot be sufficient to allege suppression of fact by the appellants - once the statutory provisions clearly state that in order to avail exemption of certain amount from the transaction value, it has to be the amount actually paid or actually payable as tax, and the said provision being found in the Central Statute, merely because certain exemption is granted in relation to the State tax by the State authorities, it would not automatically be deemed to have incorporated in the Central statute to enable the assessee to extend the benefit available under the State statute to the Central Statute Regarding limitation - Suppression of facts - it is revealed that the fact that the appellants were availing sales tax exemption was revealed to the Department only in the course of audit and it was not disclosed by the appellants to the Department - Decided against the assessee

Summary

Issues:
1. Stay of order passed by Commissioner requiring payment of central excise duty, interest, and penalty.
2. Interpretation of exemption notification by State Government regarding sales tax.
3. Applicability of actual payment or payable requirement for exclusion from transaction value.
4. Bar of limitation for invoking extended period.
5. Prima facie case for waiver of duty demanded under the impugned order.

Analysis:
1. The appellants sought a stay on the order requiring payment of central excise duty, interest, and penalty. The Department issued show cause notices based on scrutiny revealing sales tax exemption benefit availed by the appellants under State Government notifications. The impugned order demanded payment based on retained sales tax amount from buyers, leading to the appeal for stay.

2. The appellants argued that once the State Government grants exemptions, the Commissioner cannot construe the phrase 'actually paid or actually payable' contrary to Tribunal decisions and Board instructions. They contended that the amount received while clearing goods should not be part of assessable value, as it would negate State Government benefits. The Department, however, emphasized actual sales tax payment requirement for exclusion from transaction value.

3. The Tribunal analyzed the amended Section 4's 'actually paid' or 'actually payable' requirement for taxes in transaction value exclusion. The appellants availed State Government exemption but had not actually paid the required sales tax, leading to a dispute on exclusion criteria. The Tribunal rejected the argument that excess duty payment precedent applied, emphasizing actual tax payment necessity for availing benefits.

4. Regarding the bar of limitation, the Department invoked an extended period due to the appellants' non-disclosure of sales tax exemption during audit. The Tribunal found no irregularity in invoking the extended period based on suppression of relevant information, supporting the Department's decision.

5. The appellants claimed a prima facie case for total waiver of duty demanded, citing interpretation of statutory provisions. However, the Tribunal found no justification for waiver based solely on interpretation, emphasizing the absence of supporting decisions. Consequently, the Tribunal directed the appellants to deposit the excise duty demanded within a specified timeline, waiving interest and penalty pending appeal disposal.