2013 (11) TMI 537 - AT - Central Excise

Eligibility for Deduction from assessable value Deferment Scheme under sales tax - Waiver of Pre-deposit - Revenue was of the view that the appellant are not eligible for deduction of the tax which was not actually paid by them Held that - Following Maruti Udyog Limited vs. CCE, Delhi-III 2004 (1) TMI 158 - CESTAT, NEW DELHI - Prima-facie the deferment scheme dealt with in the Tribunal s judgement in the case of Maruti Udyog Limited and the scheme in this case is different only in respect of the point that while in the scheme dealt with in case of Maruti Udyog Limited the deferred amount of tax was to be paid within fourteen years, in the present scheme there is no time limit - However, in both the schemes there was an option available to the assessee to have the deferred amount adjusted against the capital subsidy to be received from the Government and in case of Maruti Udyog Limited it is a second option which had been opted by the assessee to this case - The requirement of pre-deposit of duty demand, interest thereon and penalty waived for hearing of the appeal and recovery stayed till the disposal of the appeal - Stay granted.

Issues:
1. Availing sales tax concession under a state government scheme.
2. Eligibility for deduction of tax not actually paid.
3. Tribunal's judgment applicability in the case.
4. Stay application for waiver of pre-deposit of duty demand, interest, and penalty.

Analysis:

1. The appellant, engaged in manufacturing two wheelers, availed a sales tax concession under a Haryana state government scheme from April 2003 to March 2009. They were required to pay only 50% of the sales tax payable at the time of sale, collecting the full amount from customers and retaining the balance to be paid later with interest or adjusted against capital subsidy. The appellant opted to adjust the retained 50% against the capital subsidy, leading to a dispute with the department regarding eligibility for deduction of tax not actually paid.

2. The department issued a show cause notice demanding a differential duty amount along with interest and penalty, which was confirmed by the Commissioner. The appellant filed an appeal and stay application, arguing that a similar issue had been settled in their favor by the Tribunal in the case of Maruti Udyog Limited. The appellant's advocate contended that the Tribunal's decision in Maruti Udyog Limited was applicable to their case, citing the Tribunal's follow-up decisions in other cases.

3. The appellant's advocate highlighted that the Tribunal's judgment in Maruti Udyog Limited was relevant as it involved a similar issue of tax deferment and adjustment against capital subsidy. The department, however, opposed the stay application, arguing that the facts of the present case differed from Maruti Udyog Limited as there was no specific time limit for payment of the deferred amount in the current scheme. The Tribunal examined both arguments and found that despite the difference in time limit, the core aspect of deferring tax and adjusting it against capital subsidy was similar in both schemes.

4. After considering the submissions from both sides and reviewing the records, the Tribunal concluded that the judgment in Maruti Udyog Limited was applicable to the appellant's case. Therefore, the requirement of pre-deposit of duty demand, interest, and penalty was waived for the appeal hearing, and recovery was stayed until the appeal's disposal. The Tribunal allowed the stay application accordingly, granting relief to the appellant pending the final decision on the appeal.

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