2023 (8) TMI 611 - AT - Central Excise

Valuation of goods - Includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - extended period of limitation - penalty - applicability of Circular No. 1063/2/2018-CX dated 16.02.2018 - HELD THAT - The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS 2014 (3) TMI 42 - SUPREME COURT , has held that the sales tax concession retained by the assesses is required to be added in the assessable value for the purpose of levy of Central Excise duty - the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty. Extended period of limitation - penalty - HELD THAT - The Appellant has not suppressed any information from the department. There were decisions of the Tribunals that the sales tax concession retained by the assesses is not required to be added in the assessable value for the purpose of levy of Central Excise duty. Thus, the appellant cannot be faulted for not including the same in the assessable value. In the present case, we observe that the Adjudicating Authority and the Appellate Authority has failed to show any positive act of suppression on the part of the Appellant. The remission of 99% of AVAT is after collection of AVAT in the Invoice. There is no tampering of invoices. The Appellant has to charge full amount of AVAT and it cannot charge 1% in the invoices as per the provision of AVAT Act, 2003. The same was reflected in the audited Profit Loss account and balance sheet of the impugned periods - extended period of limitation as provided under section 11A(4) of the Central Excise Act, 1944 cannot be invoked for recovery of the short paid duties. The Circular issued by the Board also supports this view. The demand, if any, is sustainable for the normal period, along with interest. The demand of duty along with interest and penalty by invoking the extended period is set aside - Appeal allowed in part.

Summary

Issues Involved:
1. Includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty.
2. Applicability of the extended period of limitation for recovery of short-paid duties and imposition of penalties.

Summary of Judgment:

Issue 1: Includability of Sales Tax Concession in Assessable Value
The primary issue in the appeal was whether the sales tax concession retained by the Appellant should be included in the assessable value for the purpose of Central Excise duty. The Appellant was authorized under the Assam Industries (Tax Exemption) Scheme, 2009, to retain 99% of the Assam Value Added Tax (AVAT) collected. The Hon'ble Supreme Court in the case of Super Synotex (India) Ltd. Vs CCE, Jaipur held that the sales tax concession retained by the assessee must be added to the assessable value for the levy of Central Excise duty. The Tribunal relied on this precedent and concluded that the sales tax concession retained by the Appellant is required to be included in the assessable value for Central Excise duty purposes.

Issue 2: Applicability of Extended Period of Limitation and Penalty
The Appellant argued that there was no suppression of information and that the department was aware of the VAT remission scheme. They contended that the extended period of limitation should not be invoked and penalties should not be imposed. The Tribunal found merit in the Appellant's argument, noting that the Appellant had not suppressed any information and had acted in accordance with the Assam Industries (Tax Exemption) Scheme, 2009. The Tribunal observed that the Board's Circular No. 1063/2/2018-CX dated 16.02.2018 clarified that the extended period of limitation would not apply in such cases. Consequently, the Tribunal held that the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944, could not be invoked for the recovery of short-paid duties, and penalties were not imposable.

Conclusion:
The Tribunal held that the demand for duty is sustainable only for the normal period, along with interest. The demand of duty along with interest and penalty by invoking the extended period was set aside. The appeal was disposed of on these terms.