2015 (10) TMI 1727 - AT - Central Excise

Valuation - Determination of transaction value - sales tax Incentive scheme - Difference between the sales tax payable and actual sales tax (equal to NPV) paid - manufacturer-assessees are of the view that the sales tax amount payable was as per the sales tax rate applicable on the goods or the deferred amount of sales tax and thus they are liable to pay excise duty on the price excluding the deferred sales tax payable. Exercising the option to wipe out the deferred tax liability on NPV will not make any difference in their liability to pay excise duty. - demands are pertaining to period beginning prior to 1.7.2000 and in other cases after 1.7.2000. Held that - As per old Section 4, normal value was defined under Section 4(4)(d)(ii) and excluded sales tax payable. - Thus under old section, sales tax payable was to be excluded while under new section sales tax actually paid or actually payable to be excluded. But both the normal value and the transaction value are at the time of removal. A combined reading of the definition of time of removal, place of removal and normal value or transaction value would indicate that the normal value or transaction value is required to be determined keeping in view the situation/factors prevailing at the time and place of removal. When the goods are being cleared (i.e. time of removal) actual sales tax paid is nil but sales tax actually payable is the normal sales tax or what has been collected by the assessee from its customers. Among the terms actually paid or actually payable used in transaction value, actually paid is not relevant in the present set of appeals. What is relevant is actually payable . Actually payable at the time of clearance is the deferral sales tax. Thus, in our view, the amount of deferral sales tax will require to be excluded. It would thus be seen from the above three circulars that the Board has all along been of the view that under the deferment scheme of sales tax, the sales tax is payable though after a long period of time and since the sales tax is payable, the same will stand excluded from the normal value or the transaction value. - Difference between the sales tax payable and actual sales tax (equal to NPV) paid - Held that - As far as the Sales Tax Act authorities are concerned, whole of the deferred sales tax amount payable has been paid by the assessee/dealer. The fact that the said amount has been paid after the clearances of the goods and before the deferred date of payment, to our view will not make any difference. Further, the actual amount paid is equal to NPV (which is less than originally payable), cannot make the amount actually payable at the time and place of removal different, particularly when under Sales Tax Law such a payment is considered as deemed payment of the sales tax payable. Quantum of sales tax payable does not change in the above scheme of pre-payment. Demand set aside - Decided in favour of assessee.

Issues Involved:
1. Determination of Transaction Value under Section 4 of the Central Excise Act, 1944.
2. Applicability of Sales Tax Incentive Scheme and its impact on Transaction Value.
3. Inclusion of Differential Sales Tax in Assessable Value.
4. Applicability of Limitation Period for Demand Notices.

Detailed Analysis:

1. Determination of Transaction Value under Section 4 of the Central Excise Act, 1944:
The main issue revolves around whether the sales tax collected but deferred under the incentive scheme should be included in the transaction value for excise duty purposes. The transaction value, as per Section 4(3)(d), excludes the amount of sales tax and other taxes actually paid or actually payable on such goods. The judgment clarifies that the amount of sales tax actually payable at the time of removal should be excluded from the transaction value, even if the payment is deferred.

2. Applicability of Sales Tax Incentive Scheme and its impact on Transaction Value:
The assessees availed the sales tax deferral scheme, collecting sales tax from customers but deferring payment to the state. Later, they opted to pay the deferred tax on its Net Present Value (NPV). The Revenue argued that only the NPV should be deducted from the selling price, while the assessees contended that the full deferred amount should be excluded. The Tribunal held that the deferred sales tax amount, as per the applicable rate, should be excluded from the transaction value, aligning with the statutory fiction created by the Sales Tax Act deeming the deferred tax as paid upon NPV payment.

3. Inclusion of Differential Sales Tax in Assessable Value:
The Revenue's contention was that the difference between the deferred sales tax and the NPV paid should form part of the assessable value. The Tribunal rejected this, stating that the sales tax amount payable at the time of removal is relevant, and the statutory fiction of deemed payment upon NPV payment should be given full effect. The Tribunal emphasized that the transaction value should exclude the sales tax actually payable, not the NPV paid.

4. Applicability of Limitation Period for Demand Notices:
The Tribunal addressed the issue of limitation, noting that the extended period of limitation is a mixed question of fact and law. Since the Tribunal decided in favor of the assessees on merits, it did not delve deeply into the limitation issue. However, it acknowledged that the Commissioner had invoked the extended period in some cases, and the matter could be remanded if the decision on merits was unfavorable to the assessees.

Conclusion:
The Tribunal concluded that the transaction value should exclude the amount of sales tax actually payable at the time of removal, even if the payment is deferred and later paid on NPV. The appeals filed by the Revenue were dismissed, and those by the assessees were allowed, emphasizing the statutory fiction of deemed payment under the Sales Tax Act.

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