2018 (8) TMI 308 - AT - Central Excise

Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - 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 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 Rajasthan Investment Promotion Scheme for VAT/CST/SGST liabilities and subsidy disbursement.

Analysis:
The appeal was filed against order-in-appeal No. 108 (AG) CE/JDR/2018 dated 16/02/2018. The appellant had established a factory in Rajasthan under the Rajasthan Investment Promotion Scheme, eligible for subsidies subject to depositing VAT/CST/SGST with the government. The Revenue included subsidy amounts in the value of goods cleared by the appellant, demanding the duty difference. The Tribunal referred to a similar case involving Shree Cements Ltd., where the issue was whether subsidy amounts should be included in the assessable value of goods under Section 4 of the Central Excise Act. The Tribunal noted that VAT payments made using subsidy challans were considered legal payments of tax under the Rajasthan government scheme, contrary to the Revenue's view. The Tribunal also referenced a case involving Welspun Corporation Ltd., where subsidy amounts were not required to be included in the transaction value. Ultimately, the Tribunal concluded that VAT amounts paid using VAT 37B challans should not be included in the assessable value, following the decision in the Welspun Corporation Ltd. case.

In the Welspun Corporation Ltd. case, the company opted for the "Remission of Tax Scheme," eligible for capital subsidy in the form of remission of sales tax based on capital investment in fixed assets. The Tribunal emphasized that the remission of tax was directly related to capital investment and issued separate assessment orders for the incentive scheme amount. The Tribunal concluded that there was no justification for including VAT amounts paid using VAT 37B challans in the assessable value, aligning with the decision in the Welspun Corporation Ltd. case. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief, if any.

Overall, the Tribunal's decision in this case clarified the treatment of subsidy amounts under the Rajasthan Investment Promotion Scheme, emphasizing that VAT payments using subsidy challans were considered legal tax payments under the scheme, and such amounts should not be included in the assessable value of goods.