2018 (5) TMI 816 - AT - Central Excise

Valuation - inclusion of subsidy amounts in the value of the goods - subsidy concern is sanctioned and disbursed in Form 37B - 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:
1. Inclusion of subsidy amounts in the assessable value of goods manufactured by the appellants.
2. Interpretation of Section 4 of the Central Excise Act regarding the actual payment of VAT.
3. Application of Investment Promotion Schemes of the Rajasthan Government on VAT liability.
4. Validity of utilizing subsidy challans (VAT 37B) for payment of VAT liability.

Analysis:
1. The case revolved around the inclusion of subsidy amounts in the assessable value of goods cleared by the appellants. The Revenue contended that VAT liability discharged using investment subsidy granted in Form 37B should be considered as actually paid VAT for the purpose of Section 4 of the Central Excise Act. The appellants, under the Rajasthan Investment Promotion Scheme, were eligible for subsidies and required to deposit VAT, CST, SGST with the Government. The subsidy was disbursed in Form 37B, which could be utilized for VAT liability in subsequent periods.

2. The Tribunal considered the interpretation of Section 4 of the Central Excise Act, focusing on the concept of transaction value and the actual payment of VAT. Referring to previous judgments, including the Apex Court's decision in a similar case, it was noted that unless sales tax/VAT is actually paid, no benefit towards excise duty can be granted. However, the Tribunal distinguished cases where subsidy amounts were not required to be included in the transaction value based on specific schemes and conditions.

3. The application of the Investment Promotion Schemes of the Rajasthan Government on VAT liability was crucial. The Tribunal analyzed that the subsidy received by the appellants in the form of VAT 37B challans was a legitimate payment of tax as per the scheme's provisions. The challans could be used for VAT payment in subsequent periods, and the Revenue's argument that such subsidy challans did not constitute actual VAT payment was deemed incorrect.

4. The validity of utilizing subsidy challans (VAT 37B) for the payment of VAT liability was extensively discussed. Relying on a previous case involving a similar scheme, the Tribunal concluded that there was no justification for including VAT amounts paid using VAT 37B challans in the assessable value. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief, if any. The judgment emphasized the legality of utilizing subsidy challans for VAT payment under the Rajasthan Government's scheme.