2018 (7) TMI 986 - AT - Central Excise

Valuation - VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B - inclusion of subsidy amounts in assessable value - Held that - An identical issue decided in the case of Shree Cements Ltd. V/s 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:
Interpretation of investment subsidy scheme under Rajasthan Government in relation to VAT liability and inclusion in assessable value for excise duty calculation.

Analysis:
The case involved appeals against an Order-in-Appeal regarding the inclusion of subsidy amounts received by the appellants under the Rajasthan Investment Promotion Scheme in the assessable value for excise duty calculation. The appellants were required to deposit VAT/CST/SGST with the government and were entitled to subsidies disbursed in Form 37B, which could be used to discharge VAT liability in subsequent periods. The Revenue contended that the subsidy amounts should be included in the value of goods cleared by the appellants. The Tribunal referred to a similar case involving Shree Cements Ltd. and analyzed the issue in detail.

The Tribunal considered whether the subsidy amounts disbursed to the appellants should be included in the assessable value of goods manufactured, as per Section 4 of the Central Excise Act. The dispute centered around whether the VAT liability discharged using subsidy amounts should be considered as actual payment of VAT. The Tribunal referred to the concept of transaction value outlined in Section 4 and noted conflicting decisions, including a Supreme Court ruling post-2000 emphasizing actual payment of VAT for excise duty benefits.

Referring to a previous case involving Welspun Corporation Ltd., the Tribunal distinguished situations where a portion of VAT was remitted back to the assessee under a tax scheme. In the present case, the Tribunal observed that the subsidy amounts received by the appellants were considered legal payments of tax under the Rajasthan Government scheme. The Tribunal concluded that utilizing subsidy challans for VAT payment constituted legal tax payments, contrary to the Revenue's argument.

By following the decision in the Welspun Corporation Ltd. case, the Tribunal held that there was no justification for including VAT amounts paid by the appellants using VAT 37B Challans in the assessable value. Consequently, the impugned orders were set aside, and the appeals were allowed, providing consequential relief to the appellants based on the Tribunal's earlier ruling.