2012 (11) TMI 296 - AT - Central Excise

Deduction of sales tax from the assessable value - alleged that they are contesting element of sales tax before Sales Tax Authority, and therefore, the demand for differential duty was confirmed Held that - Explanation to Section 4(4)(d)(ii) only refers to the amount of duty of excise payable on excisable goods - test to be applied is that of the actual value of the duty payable and, therefore, there is no merit in the argument advanced on behalf of the Assessee that the Explanation is restricted to the duty of excise. This principle can therefore, apply also to actual value of any other tax including TOT payable. Even without the explanation, the scheme of Section 4(4)(d)(ii) shows that in computing the assessable value, one has to go by the actual value of the duty payable, and therefore, only the reduced duty was deductible from the value of the goods - Appellants could not produce any evidence that their liability was at any stage converted into tax liability so far as the sales tax is concerned - appeal dismissed

Summary

Issues:
- Appeal against Order-in-Appeal upholding Lower Adjudicating Authority's Order
- Deduction of sales tax from assessable value disallowed
- Conversion of liability into tax liability not proven
- Applicability of principle that only tax is deductible from assessable value

Analysis:
The Appellants filed an appeal against the Order-in-Appeal upholding the Lower Adjudicating Authority's Order, which disallowed the deduction of sales tax from the assessable value. The Department contended that only tax, not liability, should be deductible, and the Appellants failed to show that their liability had been converted into tax liability. The Tribunal referred to previous decisions, including one by the Hon'ble Supreme Court, emphasizing that only tax is liable for deduction from the assessable value. The Appellants were unable to provide evidence that their liability had been converted into tax liability regarding sales tax. Consequently, the Tribunal upheld the lower authorities' findings and dismissed the appeal.

The main issue revolved around whether the deduction on account of sales tax, contested by the Appellants before the Sales Tax Authority, was allowable to be taxed. The Tribunal clarified that only tax, not liability, can be deducted from the assessable value. The Appellants' failure to demonstrate the conversion of their liability into tax liability regarding sales tax led to the rejection of their appeal. The Tribunal highlighted the principle that in computing the assessable value, one must consider the actual value of the duty payable, and only reduced duty is deductible from the value of the goods. The Appellants' inability to prove the conversion of their liability into tax liability for sales tax resulted in the affirmation of the lower authorities' decisions.

In conclusion, the Tribunal upheld the lower authorities' findings, emphasizing that only tax, not liability, can be deducted from the assessable value. The Appellants' lack of evidence to support the conversion of their liability into tax liability concerning sales tax led to the dismissal of their appeal. The decision was in line with established legal principles and previous judgments, including those by the Hon'ble Supreme Court, regarding the deduction of taxes from the assessable value.