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2024 (6) TMI 1006 - AT - Central ExciseDetermination of assessable value - non-inclusion of 4% /5% of VAT on the impugned goods - whether the element of VAT that was not paid on the catalyst received from HMIL, is includible by the appellant for arriving at the transaction value of the finished goods for payment of Central Excise Duty at the time of its clearance, from their premises? - Extended period of limitation - penalty. HELD THAT - The liability to pay tax for the intermediate goods (catalyst) supplied by HMIL to the appellant, is on HMIL. The demand of VAT if any which was short paid by HMIL has to be realized from them by the concerned authorities, irrespective of their not passing the liability to their customer. There is no provision to include notional duties which have not been paid on the value of intermediate goods cleared by the supplier, onto the transaction value of the buyer who uses the goods in the further manufacture and clearance of finished goods. Secondly section 4(3)(d) of the Central Excise Act, 1944 at the relevant time clearly stated that transaction value does not include the amount of duty of excise, sales tax, and other taxes, if any, actually paid or actually payable on such goods. The impugned order does not explain why the exclusion of taxes from transaction value as stated in section 4(3)(d) of the Central Excise Act, 1944, is not relevant to this case. The Apex Courts judgment in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. 1999 (8) TMI 920 - SUPREME COURT would apply in the case of sales tax also as also with other statutory taxes. Hence the transaction value of the goods cleared by the appellant to HMIL need not need incorporate the notional sales tax element. Extended period of limitation - penalty - HELD THAT - It has not been shown that there was any role of the appellant in HMIL having not paid sales tax. Neither was any blame worthy act brought out indicating the intention of the appellant to evade duty. They hence cannot be held liable for any omission on the part of the seller. Thereby the question of invoking the extended time period, imposing penalty etc does not arise. The impugned order is hence set aside - the appeal is decided in favour of the appellant and against the department.
Issues: Determination of assessable value for payment of Central Excise Duty based on inclusion of VAT element on goods supplied by Principal Manufacturer.
Summary: The appellant, a manufacturer of Engine parts and Aluminum raw castings, received Catalyst from M/s Hyundai Motors India Ltd. for manufacturing components on job work basis. The appellant cleared finished goods without including VAT on the impugned goods, resulting in short payment of duty. The appellant contended that VAT should not be included in the assessable value as price is the sole consideration. They argued that inclusion of Central Excise duty in the cost of material supplied does not arise as they are availing CENVAT credit. The appellant also highlighted that the demand was time-barred and cited legal precedents to support their claim. The main issue was whether the element of VAT not paid on the catalyst should be included by the appellant for determining the transaction value of finished goods for Central Excise Duty payment. The Tribunal held that the liability to pay tax for the catalyst supplied by M/s HMIL rests with them, and there is no provision to include notional duties unpaid on intermediate goods onto the transaction value of the buyer. Additionally, section 4(3)(d) of the Central Excise Act excludes taxes from transaction value, which was not addressed in the impugned order. The Tribunal referred to the Commissioner (Appeals) order in the appellant's own case, which cited CBEC's Manual and legal precedent to support the exclusion of taxes from transaction value. It was clarified that the appellant cannot be held liable for HMIL's non-payment of sales tax, and hence, the appeal was allowed on merits. The impugned order was set aside, and the appellant was granted consequential relief.
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