2016 (6) TMI 1094 - AT - Central Excise

Valuation - Includibility of entry tax in the assessable value of goods cleared from the bonded warehouse - Held that - . We find that the learned Commissioner (Appeals) did not appreciate the facts of the case in correct legal perspective. The entry tax, as the name suggest, is on the entry of goods into Rajasthan. But the State Government categorically stated that the same can be collected and paid on the basis of prevalent market value of goods. The entry tax can be recovered through invoices at the time of sale. We find that the value under section 4 does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods. Hon ble Supreme Court in Bombay Tyre International,(1983 (11) TMI 70 - SUPREME COURT OF INDIA ) held that sales tax, turnover tax and octroi where payable/paid should be allowed deduction. Thus we find that the entry tax paid by the appellant is not includible in the value for excise duty.

Summary

Issues:
Inclusion of entry tax in the assessable value for excise duty clearance.

Detailed Analysis:

Issue 1: Inclusion of entry tax in the assessable value
The appeal was filed against the order of the Commissioner (Appeals) regarding the inclusion of entry tax in the assessable value for excise duty clearance. The Appellants, engaged in manufacturing petroleum products, cleared goods from a bonded warehouse in Rajasthan, paying central excise duty and entry tax of 1%. The Revenue contended that entry tax, payable before goods clearance, should be part of the assessable value. The appellant argued that entry tax was collected at the time of sale, not entry into Rajasthan, citing clarifications on the levy collection method. The Tribunal noted that entry tax could be collected based on the market value of goods at the time of sale and should be deductible under Section 4(1) of the Central Excise Act, 1944. Referring to a Supreme Court judgment, the Tribunal emphasized that taxes like sales tax and octroi, when payable/paid, should be allowed as deductions. The Tribunal found that entry tax, though collected on entry, was akin to excise duty collected at the time of clearance. In a previous case, the Commissioner had dropped the demand for entry tax for earlier periods, drawing a parallel with the exclusion of excise duty from transaction value. After careful examination, the Tribunal concluded that the entry tax paid by the appellant was not includible in the value for excise duty, setting aside the impugned order and allowing the appeal.

This judgment clarifies the treatment of entry tax in the assessable value for excise duty clearance, emphasizing the collection method and legal provisions under the Central Excise Act. It highlights the distinction between taxes collected at entry and those collected at the time of sale, drawing parallels with excise duty for a comprehensive analysis.