2018 (6) TMI 870 - AT - Central Excise

Valuation - inclusion of amount of VAT paid on subsidy in assessable value - Held that - Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR 2018 (1) TMI 915 - CESTAT NEW DELHI , where it was held that the incentive is in the nature of the subsidy which have been received from the State Government and therefore such subsidy cannot be considered as an additional consideration - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant, engaged in the manufacture of cement, contravened the provisions of the Central Excise Act by retaining sales tax collected from buyers?
2. Whether the subsidy received under "The Rajasthan Investment Promotion Scheme, 2003" is includable in the assessable value of the appellant's product?
3. Whether the VAT paid by the assessee using VAT 37B challans is considered as actual payment of VAT and thus not includable in the assessable value?
4. Whether the Tribunal's decision in the case of M/s Shree Cement Ltd. vs. CCE, Alwar, supports the appellant's position regarding the inclusion of subsidy in the assessable value?

Analysis:
1. The appellant, a cement manufacturer, faced allegations of not paying central excise duty on sales tax collected from buyers, leading to a demand of duty amounting to ?9,94,74,256. The appellant argued that previous Tribunal judgments supported their position that the subsidy received under the RIPS scheme should not be included in the assessable value of their product. The Department contended that the sales tax retained by the appellant constituted a violation of the Central Excise Act.

2. The issue revolved around whether the subsidy received by the appellant under the RIPS scheme should be considered in the assessable value. The appellant cited various judgments supporting their stance that such subsidies should not be included. The Tribunal's decision in the case of M/s Shree Cement Ltd. vs. CCE, Alwar, highlighted that the subsidy received in the form of VAT 37B challans should not be part of the assessable value under Section 4 of the Central Excise Act.

3. The debate centered on whether the VAT paid by the assessee using VAT 37B challans should be deemed as actual payment of VAT, thereby excluding it from the assessable value. The Tribunal referenced the decision in the Welspun Corporation Ltd. case, where it was established that such subsidy amounts need not be included in the transaction value, aligning with the appellant's argument.

4. The Tribunal's decision in the case of M/s Shree Cement Ltd. vs. CCE, Alwar, was crucial in supporting the appellant's position regarding the inclusion of subsidy in the assessable value. The Tribunal emphasized that the subsidy received from the State Government should not be considered as additional consideration, leading to the allowance of the appeal based on the similarity of facts with the cited matter.