2018 (12) TMI 1781 - AT - Central Excise

Valuation - inclusion of reimbursed subsidy amount admissible under the Scheme towards the payment VAT on future sale in assessable value - HELD THAT - The same issue has been decided by this Hon ble Tribunal in 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:
Central excise duty evasion based on subsidies received under Rajasthan Investment Promotion Policy 2010.

Analysis:
The appellant, engaged in transformer manufacturing, received investment and employment subsidies under Entitlement Certificate No. 1/1 dated 31 October 2013. The department alleged non-payment of central excise duty on additional consideration collected from buyers, leading to evasion of duty amounting to ?74,011. The Assistant Commissioner confirmed the charges in the show cause notice through order-in-original No. V (CEX) SCN/RPT/Pali/62/2015/1691 dated 24 November 2016. The Commissioner (Appeals) upheld this decision in order No. 445 (CRM)/CE/JDR/2018 dated 15/05/2018, prompting the appellant to appeal.

The Tribunal referred to a similar case involving M/s Shree Cements Ltd. vs. CCE, Alwar, where the issue revolved around whether subsidies received should be included in assessable value under Section 4 of the Central Excise Act. The Tribunal noted that subsidies received in the form of VAT 37 B challans, which were utilized to discharge VAT liability, should not be included in the assessable value. This conclusion was based on the Welspun Corporation Ltd. case, where subsidies were linked to capital investment and were not considered part of the assessable value. Consequently, the Tribunal set aside the impugned order and allowed the appeal, citing the similarity in facts to the previous case.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting that subsidies received in the form of VAT challans should not be considered part of the assessable value for central excise duty calculation, following precedents set in similar cases.