2023 (7) TMI 821 - AT - Central Excise

Valuation - amount of subsidy received by the appellant from the State Government under the Rajasthan Investment Promotion Scheme, 2010 is includible in the assessable value of the goods cleared or not - section 4(3)(d) of the Central Excise Act, 1944 - period 2011-12 to 2015-16 - HELD THAT - The issue, stands settled by an order dated 21.03.2023 of the Tribunal while answering on the reference that had been made on account of difference of opinion between the two Members constituting the Division Bench in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR 2023 (3) TMI 1120 - CESTAT NEW DELHI where it was held that In the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act. 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 was considered in the aforesaid order and it was held that it would not be applicable in the facts of the present case. In view of the aforesaid answer to the reference made by the Division Bench, the order of the Commissioner (Appeals) deserves to be set aside and is set aside - appeal allowed.

Summary

Issues involved:
The issue in this case is whether the subsidy received by the appellant under the Rajasthan Investment Promotion Scheme, 2010 should be included in the assessable value of goods cleared during the period from 2011-12 to 2015-16, as per section 4(3)(d) of the Central Excise Act, 1944.

Comprehensive Details:

Issue 1: Inclusion of Subsidy in Assessable Value
The Commissioner (Appeals) upheld the recovery of Central Excise duty from the appellant based on the subsidy received, which was considered as an additional consideration collected from buyers but retained by the appellant.

Issue 2: Judicial Reference
A reference was made to the Tribunal on the difference of opinion between the Members of the Division Bench in a similar case, M/s Harit Polytech Pvt. Ltd. The Tribunal answered the reference by concluding that the subsidy under the promotion policy does not reduce the selling price and is not an additional consideration, differing from the decision in Commissioner of Central Excise Jaipur-II Vs. Super Synotex (India) Ltd.

Issue 3: Application of Legal Precedents
The Tribunal determined that the decision in Super Synotex India would not apply to the present case, as the subsidy did not affect the sales tax liability collected from customers, and thus, could not be included in the transaction value for central excise duty levy under section 4 of the Excise Act.

Issue 4: Set Aside of Commissioner's Order
Based on the Tribunal's decision on the reference, the order of the Commissioner (Appeals) was set aside, and the appeal by the appellant was allowed.

This judgment clarifies the treatment of subsidies received under specific schemes in the context of central excise duty assessment, emphasizing that such subsidies, which do not reduce the selling price or act as additional consideration, should not be included in the assessable value of goods. The decision underscores the importance of analyzing the specific circumstances of subsidy receipt and its impact on the overall transaction value in determining the tax liability.