2022 (4) TMI 1102 - AT - Central Excise

Valuation - Determination of Excise Duty - amount of Assam VAT adjusted by the Appellant against the VAT remission granted under Assam Industries (Tax Exemption) Scheme, 2009 - demand on the ground that the Assam VAT collected by the Appellant was not paid to the Government exchequer and should have formed part of the assessable value of the goods removed during the period under dispute - extended period of limitation - HELD THAT - The Appellant manufactured and cleared excisable goods, the value of which are assessed under Section 4(1)(a) of the Central Excise Act, 1944. The Appellant has availed VAT remission under Assam Industries (Tax Exemption) Order, 2005 w.e.f. March 2011. As per terms of the above remission scheme the Appellant charged and collected 100% of the VAT payable from their buyers, retained 99% of the same and paid only 1% to the State Government. Department alleged that the as per Section 4(3)(d) of the Central Excise Act, 1944, the aforesaid amount of 99% of the VAT collected from buyers, which was not paid to the State Government is not excludible and should have formed part of Assessable Value for the purpose of payment of Central Excise duty. Extended period of limitation - HELD THAT - On perusal of Circular No.1063/2/2018-CX dated 16.02.2018 and decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS 2014 (3) TMI 42 - SUPREME COURT , it can be held that the differential duty, if any, is to be held as payable only for the period falling within the normal time limit. The extended period of limitation will not be available to the Department to raise such demand. The matter is remitted to the Ld.Adjudicating authority only for the limited purpose of re-quantifying the demand falling within the normal period of limitation - appeal allowed by way of remand.

Summary

Issues:
Dispute over excise duty on VAT remission under Area Based Exemption scheme; Extended period of limitation invoked; Inclusion of VAT remission in assessable value; Applicability of judicial pronouncements on limitation.

Analysis:
1. Excise Duty Dispute on VAT Remission: The case involved a manufacturer of MS Billets, Rods, Coils claiming Area Based Exemption under a specific notification. The dispute centered around the excise duty demand on VAT remission utilized as subsidy by the manufacturer. The contention was that the Assam VAT collected was not paid to the government exchequer, leading to demands for excise duty and Cess.

2. Extended Period of Limitation: The Adjudicating authority invoked the extended period of limitation due to the nature of the dispute. The Appellant argued that conflicting judgments on the issue in different forums rendered the extended period unsustainable. Reference was made to judicial pronouncements like CCE vs. Kolay Gum Industries and Commissioner of Central Excise vs. Microtek Forgings to support the limitation defense.

3. Inclusion of VAT Remission in Assessable Value: The Appellant challenged the inclusion of retained VAT amounts in the assessable value, citing a Supreme Court judgment against them. However, they contended that the demand resulting from such inclusion should be limited to the normal time limit, as per Circular No.1063/2/2018-CX, which restricted the demand to the normal time limit based on relevant judicial decisions.

4. Judicial Pronouncements on Limitation: The Tribunal considered the Supreme Court's decision and the Gauhati High Court's ruling on the issue of limitation. It concluded that the differential duty, if any, should only be payable within the normal time limit, disallowing the extended period for raising demands. The penalties imposed were set aside, and the matter was remanded for re-quantifying the demand within the normal period.

5. Final Decision: The Tribunal partly allowed the Appeals, directing the Adjudicating authority to re-quantify the demand within the normal time limit. The decision emphasized the restriction of demands to the normal period, based on relevant judicial interpretations and Circulars, while setting aside penalties imposed.

In conclusion, the judgment addressed the excise duty dispute, limitation issues, inclusion of VAT remission in assessable value, and the applicability of judicial pronouncements to determine the demand period, providing clarity on the legal aspects of the case.