2018 (4) TMI 1552 - AT - Central Excise

Valuation - inclusion of subsidy amounts in the value of the goods cleared by the appellants - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - Held that - Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR 2018 (1) TMI 915 - CESTAT NEW DELHI , where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Appeal against Order-in-Appeal regarding inclusion of subsidy amounts in assessable value for excise duty calculation under the Central Excise Act.

Detailed Analysis:

Issue 1: Background and Facts
The appellants established factories in Rajasthan under the Investment Promotion Scheme, eligible for subsidies. They deposited VAT/CST/SGST with the Government and received subsidies in Form 37B. Revenue included subsidy amounts in goods' value, demanding duty payment. Appellants appealed against this.

Issue 2: Tribunal's Observation
The Tribunal noted a similar case involving investment promotion schemes in Shree Cements Ltd. v/s CCE, Alwar, where VAT subsidies were disputed. The Tribunal analyzed the concept of transaction value under Section 4 of the Central Excise Act, post-2000 amendments, allowing deduction of VAT paid. Revenue argued that VAT paid using 37B Challans wasn't actual payment.

Issue 3: Judicial Precedents
The Tribunal referred to the Supreme Court's decision in Super Synotex India Ltd., emphasizing actual VAT payment for excise duty benefits. However, it cited Welspun Corporation Ltd. case, distinguishing the Apex Court's ruling based on the Gujarat VAT Act, 2003, where subsidy amounts weren't included in transaction value.

Issue 4: Tribunal's Decision
The Tribunal found that the VAT paid using subsidy Challans was considered legal payments under the Rajasthan Government's scheme. It rejected Revenue's argument that such payments weren't actual VAT payments. Following the Welspun Corporation Ltd. case, the Tribunal concluded that VAT amounts paid with 37B Challans shouldn't be included in assessable value for excise duty calculation.

Conclusion:
In line with the Welspun Corporation Ltd. case, the Tribunal set aside the impugned orders, allowing all appeals with consequential relief. The decision clarified the treatment of subsidy amounts in VAT payments under the Investment Promotion Scheme, providing relief to the appellants in this case.