2018 (5) TMI 1662 - AT - Central Excise

Valuation - inclusion of subsidy in assessable value - differential duty demand - appellants received certain subsidies upon payment of commercial tax/ sales tax/ CST. - Revenue was of the view that the subsidy amounts are required to be included in the assessable value for payment of Central Excise duty - Held that - Similar case has come up before the Tribunal in the case of M/s Pioneer Engineer Industries V/s CCE, Indore 2018 (3) TMI 1229 - CESTAT, NEW DELHI , where relying on the case of M/s. Pioneer Engineer Industries vs. CCE, Indore 2018 (2) TMI 9 - 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:
1. Inclusion of subsidy amounts in assessable value for payment of Central Excise duty.

Analysis:
The case involved three appeals against different Orders-in-Appeal where the appellants, having factories in Madhya Pradesh, received subsidies under a government scheme upon payment of taxes. The revenue demanded differential duty by including the subsidy amounts in the assessable value for Central Excise duty. The Tribunal referred to a similar case involving an Investment Promotion Scheme of the Rajasthan Government where the Tribunal held that subsidy amounts received by the appellants need not be included in the assessable value. The Tribunal distinguished the decision of the Apex Court in the case of Super Synotex India Ltd., emphasizing that VAT liability discharged using subsidy challans should be considered as VAT actually paid. The Tribunal concluded that the subsidy amounts should not be included in the assessable value, following the precedent set in the Welspun Corporation Ltd. case. Consequently, the impugned orders were set aside, and the appeals were allowed.

This judgment clarifies the treatment of subsidy amounts received under government schemes concerning the assessable value for Central Excise duty. It establishes that VAT liability discharged using subsidy challans should be considered as VAT actually paid, and such subsidy amounts need not be included in the assessable value. The decision provides guidance on interpreting the concept of transaction value under Section 4 of the Central Excise Act and emphasizes the legal validity of utilizing subsidy challans for tax payments. The Tribunal's reliance on previous rulings and the distinction made from the Apex Court's decision ensures consistency in the application of tax laws and schemes across different cases.