2018 (9) TMI 123 - AT - Central Excise

Valuation - includibility of VAT in assessable value - Revenue was of the view that the VAT liability discharged by utilizing the investment subsidy granted in form 37B cannot be considered as VAT actually paid, for the purpose of Section 4 of the Central Excise Act, 1944 - Held that - Identical issue decided by the Tribunal 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:
1. Whether the subsidy amounts disbursed in Form 37B should be included in the assessable value of goods for VAT liability?
2. Whether the VAT liability discharged using subsidy challans can be considered as VAT actually paid for the purpose of Section 4 of the Central Excise Act?

Analysis:
1. The appellant established a factory in Rajasthan under the Investment Promotion Scheme, eligible for subsidies subject to depositing VAT/CST/SGST with the Government. The Revenue contended that the subsidy amounts disbursed should be included in the value of goods cleared, demanding the duty difference. The Tribunal referred to a similar case involving investment schemes where VAT liability discharge through subsidies was disputed. The Tribunal highlighted the importance of actual VAT payment for excise duty benefits post-2000, citing a Supreme Court decision. However, the Tribunal distinguished a previous case involving VAT remission, emphasizing that subsidy amounts need not be included in the transaction value.

2. The Tribunal noted that the appellant remitted VAT initially, receiving a portion back as subsidy in Challan 37B, considered legal tax payments under the Rajasthan scheme. Contrary to Revenue's view, the Tribunal held that utilizing subsidy challans constituted actual VAT payment, aligning with the Welspun Corporation Ltd. case. The Tribunal emphasized the direct relation between remission of tax and capital investment, concluding that VAT amounts paid using Challans need not be included in the assessable value. Consequently, the impugned orders were set aside, and the appeal was allowed based on previous precedents and legal interpretations.