2019 (4) TMI 747 - AT - Central Excise

Valuation - inclusion of subsidy 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 - The issue herein is squarely covered by the precedent decision of the Tribunal 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:
- Whether the VAT liability discharged by utilizing investment subsidy vouchers can be considered as VAT actually paid for the purpose of Central Excise Act, 1944?
- Whether the subsidy amounts disbursed in the form of vouchers can be included in the assessable value of goods manufactured by the appellants?
- Whether the decision in the case of Shree Cement Ltd. provides precedent for the present appeals?
- Whether the Tribunal's decision in the case of Welspun Corporation Ltd. is applicable in the current scenario?

Analysis:
1. The appellants, manufacturers of PP Woven Sacks & PP Woven Fabrics in Rajasthan, operated under the Rajasthan Investment Promotion Scheme, eligible for subsidies. The issue arose when the Revenue included the subsidy amounts in the value of goods cleared by the appellants, demanding differential duty, interest, and penalties.

2. The Revenue contended that the VAT liability discharged using investment subsidy vouchers cannot be considered as VAT actually paid, citing the Super Synotex case. They argued that the refunded VAT by the Rajasthan Government should be included in the assessable value.

3. The Tribunal found the issue covered by the precedent decision in the case of Shree Cement Ltd. & Shree Jaipur Cement Ltd., where it was established that the subsidy amounts disbursed back to the appellants in the form of vouchers need not be included in the assessable value of goods.

4. Both parties referenced the Super Synotex case, emphasizing the requirement for actual payment of VAT for excise duty benefit. However, the Tribunal in the Welspun Corporation Ltd. case distinguished the Apex Court's decision based on the Gujarat VAT Act, stating that subsidy amounts need not be included in the transaction value.

5. The Tribunal concluded that the VAT liability discharged using subsidy vouchers is considered legal payment of tax under the Rajasthan Government's scheme. Relying on the precedent decision in the Shree Cement Ltd. case, the Tribunal set aside the impugned orders and allowed the appeals, providing consequential benefits to the appellants.