2018 (5) TMI 1409 - AT - Central Excise

Valuation - inclusion of subsidy in assessable value - Department is of the view to include such subsidy amounts in the value of the goods cleared by the appellants and demanded the differential duty - Held that - identical issue has came up before the Tribunal in the case of M/s. Shree Cement Ltd. & other 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 involved:
Interpretation of whether subsidy amounts are required to be included in the assessable value of goods for excise duty calculation under Section 4 of the Central Excise Act.

Analysis:
The appeals were filed against an Order-in-Appeal regarding the inclusion of subsidy amounts in the value of goods cleared by the appellants. The appellants operated under the Rajasthan Investment Promotion Scheme and were eligible for subsidies under various schemes of the Rajasthan Government. The department demanded differential duty by including the subsidy amounts in the value of goods cleared. The issue revolved around whether such subsidies should be part of the assessable value for excise duty calculation.

Upon hearing both sides and reviewing the case, the Tribunal referred to similar cases like M/s. Shree Cement Ltd. and M/s. UltraTech Cement Ltd. where the issue was discussed. The Tribunal highlighted the concept of transaction value under Section 4 of the Central Excise Act, emphasizing that actual payment of VAT is crucial for excise duty calculation. The Tribunal differentiated between actual payment of VAT and subsidies received back, noting that VAT paid using 37B Challans should be considered as VAT actually paid.

Referring to the decision in the case of Welspun Corporation Ltd., the Tribunal concluded that subsidies received in the form of remission of tax, related to capital investment, should not be included in the assessable value. The Tribunal emphasized that VAT amounts paid using VAT 37B Challans should not be part of the assessable value for excise duty calculation. Following previous orders and the rationale provided in the Welspun Corporation Ltd. case, the Tribunal set aside the impugned order and allowed the appeals filed by the appellant-assessees.

In conclusion, the Tribunal ruled in favor of the appellants, stating that the VAT amounts paid using VAT 37B Challans should not be included in the assessable value for excise duty calculation. The impugned orders were set aside, and the appeals filed by the appellants were allowed.