2008 (4) TMI 290 - AT - Central Excise

Appellants filed this appeal against the impugned order whereby abatement claim in respect of Sales Tax was disallowed and ordered to be added to the assessable value of the goods - Circular No. 2/94-Cx clarified that set-off scheme of sales tax does not change the rate of sales tax payable/chargeable on the finished goods, the set-off is not to be taken into account for calculating the amount of sales tax permissible as abatement for arriving at the assessable value - demand is not sustainable

Summary

Issues:
1. Disallowance of abatement claim in respect of Rajasthan Sales Tax.
2. Interpretation of set-off scheme in relation to sales tax paid on goods purchased.
3. Applicability of abatement on the net amount of sales tax paid by the appellants.

Analysis:
The appellants filed an appeal against the impugned order disallowing their abatement claim concerning Rajasthan Sales Tax. The issue revolved around whether the appellants were entitled to abatement only on the net amount of sales tax paid by them, excluding any set-off amounts related to exemption or rebate in sales tax. The appellants argued that in Rajasthan, they were entitled to set off the sales tax paid on goods purchased, with no exemption or rebate during the relevant period. They relied on the assessment order allowing set off on raw material sales tax and Board circulars emphasizing that the set-off should not affect the calculation of abatement for assessable value under Section 4.

The Revenue contended that since the appellants did not pay the full sales tax amount claimed for abatement, only the net amount after deducting set-off should be considered for abatement. They cited a Tribunal decision where abatement was denied due to non-payment of exempted sales tax. However, the Tribunal differentiated the present case from the cited precedent, noting that the appellants were only seeking abatement on the net sales tax paid. The appellants' argument regarding set-off entitlement under Rajasthan Sales Tax Act was supported by the Board's circulars, clarifying that set-off should not impact the calculation of abatement for assessable value.

In light of the Board's circulars and the specific circumstances of the case, the Tribunal found the Revenue's demand unsustainable and allowed the appeal in favor of the appellants. The judgment highlighted the importance of correctly interpreting the set-off scheme in relation to sales tax paid on goods purchased and affirmed that abatement should be granted based on the net amount of sales tax paid, as per the local sales tax laws.