2005 (8) TMI 267 - AT - Central Excise

Summary

Issues:
1. Exclusion of sales tax from assessable value for Central Excise duty.
2. Dispute over retention or deposit of sales tax amounts.
3. Interpretation of sales tax liability and eligibility for deduction.

Analysis:

Issue 1: Exclusion of sales tax from assessable value for Central Excise duty
The appellant, a steel products manufacturer, collected sales tax from buyers but did not include these amounts in the assessable value for Central Excise duty. The appellant argued that taxes "payable" were excluded under Section 4(4)(d)(2) proviso. However, the impugned orders denied this claim, stating that since the sales tax amounts were not deposited with the State Government, they were to be included in the assessable value for excise duty.

Issue 2: Dispute over retention or deposit of sales tax amounts
The appellant contended that the collected amounts were indeed sales tax, and the dispute revolved around whether the appellant could retain them under an incentive scheme or if they had to be deposited with the State Government. The appellant's counsel argued that regardless of retention or deposit, the amounts constituted sales tax and should be excluded while determining the assessable value. Reference was made to a previous decision in the appellant's favor to support this argument.

Issue 3: Interpretation of sales tax liability and eligibility for deduction
Upon review of the records and hearing the learned DR, it was established that the liability of the goods to sales tax was acknowledged, and the amounts were collected as sales tax, indicating that sales tax was indeed payable. State laws permitted manufacturers to retain sales tax collected as an incentive for industrial development. Despite this incentive, the nature of the collected amounts as sales tax payable remained unchanged. As a tax payable is eligible for deduction, the Tribunal ruled in favor of the appellant, citing a previous order that settled the issue similarly. Consequently, the appeal was allowed, and the impugned order was set aside.

This comprehensive analysis of the judgment highlights the key legal issues addressed by the Appellate Tribunal CESTAT, New Delhi regarding the exclusion of sales tax from the assessable value for Central Excise duty and the interpretation of sales tax liability and eligibility for deduction.