2018 (4) TMI 1294 - AT - Central Excise

Valuation - inclusion of VAT in assessable value - appellants were allowed to collect the VAT/sale tax from the customers as per the tariff and retain the same, only 1% of the VAT collected will have to be paid to the state exchequer - whether the VAT which has been collected and retained by the appellant to the extent of 99% (as 1% deposited with the state exchequer) is to be added to the assessable value for determining the Central Excise duty payable? - Held that - To promote industrial development in the north-east India, the Union Govt. as well as State Governments have launched various schemes. As per the Industrial Policy, where the Central Govt. has given exemption from the payment of excise duty vide Notification No.20/2007 dated 25.04.2007. At the same time, the State Governments have also given the benefit of incentives under the VAT/Sales Tax and also from Central Sales Tax. These schemes vary from State to State, but the spirit is the same i.e. to promote the industrial development in the area. For maintaining uniformity and consistency in the law, it is expected that all the appeals will have to be decided in a similar manner which is lacking in the present case - matter remanded to the Adjudicating Authority to decide the issues de novo, but by providing reasonable opportunity to the appellants - appeal allowed by way of remand.

Summary

Issues Involved:
Determining whether VAT collected and retained by appellants should be added to assessable value for Central Excise duty.

Detailed Analysis:

1. Identical Issue in Multiple Appeals:
- All appeals filed against different Orders-in-Original/Orders-in-Appeal for various periods.
- Issue of including VAT collected by appellants in assessable value for Central Excise duty is common.
- Appeals disposed of collectively for convenience.

2. Factual Background:
- Appellants established factories in northeast region under Notification No.20/2007.
- Enjoyed subsidies, VAT benefits, allowed to collect VAT from customers.
- Dispute: Whether 99% VAT retained by appellants should be added to assessable value for Central Excise duty.

3. Contention of Appellants:
- State policy in northeast different from other regions.
- VAT collected can be retained as per state policy.
- Cited cases supporting their stance.
- Claimed Circular No.983/7/14 applicable retrospectively.

4. Department's Stand:
- VAT retained by appellants should be part of goods' price.
- Relied on Supreme Court cases to support their argument.
- Opposed claim of revenue neutrality.

5. Decision and Reasoning:
- Promoting industrial development in northeast through various schemes.
- Lack of uniformity in Commissioners' decisions.
- Orders passed without considering Supreme Court rulings.
- Emphasized need for consistency in decision-making.
- Set aside all impugned orders and remanded for fresh adjudication with reasonable opportunity to appellants.
- All appeals allowed by way of remand for uniformity and fairness in decision-making.

This judgment addresses the issue of whether VAT collected and retained by appellants should be included in the assessable value for Central Excise duty. The Tribunal emphasized the need for consistency and uniformity in decision-making while remanding all appeals for fresh adjudication. The decision considered the unique industrial policies in the northeast region and highlighted the importance of following legal principles and Supreme Court rulings in determining such issues.