2018 (2) TMI 9 - AT - Central Excise

Valuation - includibility - The department is of the view that the amount of the subsidy received from the M.P. Government is includible in the assessable value of the goods cleared during the period of dispute - Held that - the identical issue has come up before the Tribunal in Shree Cement Ltd. vs. 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:
Inclusion of subsidy received from the government in the assessable value of goods for excise duty calculation.

Analysis:
The case involved an appeal against an order passed by the Commissioner (Appeals) concerning the inclusion of a subsidy received from the Madhya Pradesh Government in the assessable value of goods cleared during the period of dispute (2009-2012). The appellant, engaged in manufacturing CI Casting and Auto Parts, received an investment subsidy from the government under the MPIIPAS scheme, which was adjusted as advance payment towards VAT/CST. The dispute centered around whether this subsidy should be included in the assessable value for excise duty calculation. The Tribunal referred to a similar case involving the Rajasthan Government's investment promotion schemes, where it was held that subsidies received in the form of VAT 37 B challans, which were considered legal tax payments, should not be included in the assessable value. The Tribunal emphasized that the subsidy was directly related to capital investment and was not an option to claim exemption from tax. Therefore, based on precedent and the nature of the subsidy, the Tribunal concluded that there was no justification for including the VAT amounts paid using the subsidy challans in the assessable value. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment highlights the interpretation of the concept of transaction value under Section 4 of the Central Excise Act, particularly in cases involving subsidies received from the government. It underscores the importance of distinguishing between subsidies directly related to capital investment and those that provide exemptions from tax liability. The decision also references relevant case law, such as the Supreme Court ruling on actual payment of sales tax/VAT for excise duty benefits. Overall, the judgment clarifies the treatment of subsidies received under government schemes in the context of excise duty calculation, providing a clear precedent for future cases involving similar issues.