2016 (12) TMI 149 - AT - Central Excise

Demand of duty on textile committee cess which was collected and not paid by the appellant - whether the cess collected to be included in the assessable value? - Held that - As per amendment dated 1.1.1995, the units located in the State of Jammu and Kashmir were also liable to collect the textile committee cess, therefore, the observation of the Commissioner (Appeals) is factually incorrect. Further, we find that similar issue came up before this Tribunal in the case of Shruti Synthetics Ltd. 2004 (9) TMI 260 - CESTAT, NEW DELHI wherein it was held that The mere fact that the respondents had collected the Textile CESS from their Customers but did not deposit with the Government does not mean that the CESS is not liable to be paid or the amount collected looses its character of the amount collected for payment of CESS. The textile committee cess collected by the appellant is not required to be included in the assessable value - appeal allowed - decided in favor of appellant.

Issues:
Appeal against duty on textile committee cess collection and non-payment.

Analysis:
The appellant, engaged in manufacturing manmade and cotton yarn, collected textile committee cess from customers but did not show it in accounts since 2000, claiming deductions in assessable value. Revenue demanded duty, interest, and penalty, contending that collected cess should be included in assessable value. The Commissioner (Appeals) observed that in Jammu and Kashmir, textile committee cess is not leviable, which was factually incorrect. The Tribunal referenced a previous case where it was held that taxes are not includible in the assessable value, even if collected but not deposited with the government. The Tribunal rejected the Revenue's appeal, citing that the collected cess retains its character and does not lose its liability for payment. The Tribunal's decision was affirmed by the Supreme Court in a similar case, establishing a precedent that textile committee cess collected by the appellant is not required to be included in the assessable value. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment primarily revolves around the issue of whether the textile committee cess collected by the appellant should be included in the assessable value. The Tribunal clarified that even though the appellant collected the cess but did not deposit it with the government, the cess remains liable for payment and does not lose its character. The Tribunal relied on legal provisions and precedent to establish that taxes are not to be included in the assessable value, emphasizing that the mere act of collection does not change the liability of the cess. The decision was further supported by a previous case and affirmed by the Supreme Court, making it a settled legal position that the textile committee cess collected by the appellant does not need to be included in the assessable value.

Another crucial aspect of this judgment is the factual error made by the Commissioner (Appeals) regarding the levy of textile committee cess in Jammu and Kashmir. The Tribunal corrected this error by referencing the relevant amendment, which established that units in Jammu and Kashmir were also liable to collect the cess. By addressing this factual inaccuracy, the Tribunal ensured that the correct legal position was applied to the case, strengthening the overall reasoning behind the decision to set aside the impugned order and allow the appellant's appeal.

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