2024 (5) TMI 1050 - AT - Central Excise

Valuation - inclusion of investment subsidy received by the appellant from the Government of Rajasthan under the Rajasthan Investment Promotion Policy 2010 in the assessable value - Recovery of central excise duty with interest and penalty - HELD THAT - The issue was examined by the Tribunal 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 and it was observed that 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 order dated 10.05.2019 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.

Summary

Issues:
- Appeal against order dismissing appeal for recovery of central excise duty under Central Excise Act.
- Inclusion of investment subsidy in transaction value for levy of central excise duty.
- Interpretation of promotion policy regarding subsidy adjustment for sales tax liability.
- Whether subsidy amount should be included in transaction value for levy of central excise duty.

Analysis:
The appellant filed an appeal challenging the order passed by the Commissioner (Appeals) dismissing the appeal for recovery of central excise duty under the Central Excise Act. The issue revolved around the inclusion of an investment subsidy received by the appellant from the Government of Rajasthan in the transaction value for the levy of central excise duty. The Commissioner held that the appellant had not actually paid the tax collected from customers to the extent of the amount adjusted towards subsequent sales tax liability through challans. The Tribunal examined a similar issue in a previous case and observed that the subsidy received by the appellant was adjusted towards payment of VAT, and the entire sales tax collected from customers was required to be paid, with a portion covered by subsidy and the balance in cash.

The Tribunal analyzed the promotion policy under which the subsidy was granted and concluded that the subsidy amount retained by the appellant should not be included in the transaction value for the levy of central excise duty. It was emphasized that the subsidy did not reduce the sales tax required to be paid by the appellant, as the entire amount collected from customers had to be paid, with a portion covered by subsidy and the balance in cash. The Tribunal distinguished a previous case where a different scenario existed, highlighting that in the present case, the subsidy did not reduce the sales tax liability to be paid by the appellant.

The Tribunal further clarified that the subsidy amount, being a fixed or percentage-based amount related to tax paid, should not be considered as additional consideration for inclusion in the transaction value. It was emphasized that the subsidy amount was not directly or indirectly related to the sale of goods and should not impact the consideration received by the appellant. Referring to the Supreme Court decision in Super Synotex India, the Tribunal concluded that the subsidy amount should not be included in the transaction value for the levy of central excise duty. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal, based on the interpretation of the promotion policy and the treatment of the subsidy amount in the transaction value for central excise duty levy.