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2019 (5) TMI 1226 - AT - Central ExciseValuation - inclusion of subsidy in the assessable value - disbursement of the sales tax amount as Subsidy - section 4 of CEA - HELD THAT - In the present case, the Appellants in terms of the Scheme had deposited the entire amount of VAT collected. It is this amount that is used as a measure for granting financial assistance to be subsequently provided. The learned Authorised Representative has, however, placed reliance on the decision of the Tribunal in CCE ST, RAIPUR VERSUS. M/S. JAYASWAL NECO INDUSTRIES LTD. 2015 (8) TMI 963 - CESTAT NEW DELHI and M/S HONDA MOTORCYCLES SCOOTERS INDIA PVT. LTD. VERSUS CCE, DELHI-III 2016 (9) TMI 533 - CESTAT CHANDIGARH , to contend that the Subsidy should be included in the Transaction Value . It needs to be noted that these two decisions are not connected with the Scheme under consideration in these appeals, but relate to Remission Schemes and the decision of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS 2014 (3) TMI 42 - SUPREME COURT has been relied upon. The nature of Scheme in the present Appeals are entirely different as Subsidy and not remission has been provided to the Appellants under the Scheme. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Inclusion of subsidy in the 'Transaction Value' for Central Excise Duty. 2. Applicability of the Supreme Court decision in Commissioner of Central Excise vs Super Synotex (India) Limited. 3. Interpretation of the Rajasthan Investment Promotion Scheme – 2010. 4. Distinction between 'Subsidy' and 'Remission' under various schemes. Issue-Wise Detailed Analysis: 1. Inclusion of Subsidy in the 'Transaction Value' for Central Excise Duty: The primary issue in these appeals was whether the subsidy received under the Rajasthan Investment Promotion Scheme – 2010 should be included in the 'Transaction Value' for the purpose of calculating Central Excise Duty. The Appellants had received subsidies that were adjusted towards payment of VAT and CST but did not pay Central Excise Duty on the amount retained. The Adjudicating Authorities confirmed the demand for Central Excise Duty, along with interest and penalties, which was upheld by the Commissioner (Appeals). 2. Applicability of the Supreme Court Decision in Commissioner of Central Excise vs Super Synotex (India) Limited: The Appellants contended that the Scheme under consideration was different from the one in Super Synotex (India) Limited, where the Supreme Court had ruled that only the sales tax actually paid could be deducted from the transaction value. The Commissioner (Appeals) rejected this contention, stating that the Appellants had collected the full amount of sales tax from buyers but retained a portion of it, which should be included in the transaction value. 3. Interpretation of the Rajasthan Investment Promotion Scheme – 2010: The Scheme aimed to promote investment and employment in Rajasthan, offering subsidies as financial assistance. The Appellants argued that the subsidy should not be included in the transaction value since it was a financial assistance provided after the entire VAT amount was deposited. The Tribunal examined the provisions of the Scheme, including the procedure for disbursement of subsidy, and found that the subsidy was a financial assistance rather than a remission of tax. 4. Distinction Between 'Subsidy' and 'Remission' Under Various Schemes: The Tribunal distinguished the present Scheme from the one considered in Super Synotex (India) Limited and other cases involving remission schemes. It noted that in the present case, the entire VAT amount was deposited, and the subsidy was provided as financial assistance, unlike remission schemes where a portion of the tax was retained by the assessee. The Tribunal referred to its earlier decisions in Shree Cement Ltd. and Maihar Cement, which had similar schemes and concluded that the subsidy should not be included in the transaction value. Conclusion: The Tribunal set aside the impugned order, ruling that the financial assistance granted under the Rajasthan Investment Promotion Scheme – 2010 could not be included in the transaction value for the purpose of calculating Central Excise Duty. The Appeals were allowed, and the Tribunal emphasized that the nature of the Scheme, which provided subsidy and not remission, was crucial in distinguishing it from other cases.
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