2024 (12) TMI 731 - AT - Central Excise

Levy of Central Excise duty - amount of sales tax remitted to the appellants under Incentive Scheme 2001 for Economic Development of Kutch District - extended period of limitation. HELD THAT - The issue that whether under the Incentive Scheme-2001, on the Sales Tax remittance by the State Government, the said Sales Tax amount though collected from the buyer of the goods, is includable in the assessable value of the excisable goods for the purpose of charging Excise Duty has been consistently settled in Welspun Corporation Ltd 2017 (5) TMI 177 - CESTAT MUMBAI where it was held that ' In the instant case as already discussed above it is not that Sales Tax was not only payable but in fact it stood actually paid, as the remission was nothing but the incentive or capital subsidy which the State Government granted with respect to the investment made by the appellants in the earthquake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value.' The facts are absolutely identical that the assessee s units are located in Kutch District and they are availing the Incentive Scheme-2001, similarly like in the present case. Therefore, the facts and legal issues involving in the above cases are exactly identical, in the facts of the present case. Therefore, applying the ratio of the above judgment, the issue is no longer res-integra. Hence, the demand is not sustainable. The impugned orders are set aside. Appeals are allowed.

Summary

Issues Involved:

I. Whether Central Excise duty is payable on the amount of sales tax remitted to the appellants under Incentive Scheme 2001 for Economic Development of Kutch District?

II. Whether extended period of limitation can be invoked in the facts of the present case?

Issue I: Central Excise Duty on Remitted Sales Tax

The primary issue in this case is whether the Central Excise duty is applicable on the sales tax amount remitted under the Incentive Scheme 2001 for the Economic Development of Kutch District. The appellants argued that the issue is settled by previous judgments, notably in the cases of Welspun Corporation Ltd and PGP Glass Pvt. Ltd, where it was determined that the sales tax remitted under such incentive schemes is not includable in the assessable value for the purpose of Excise Duty.

The Tribunal examined the provisions under the Gujarat Value Added Tax Act, 2003, and noted that the remission of tax is directly related to capital investment in fixed assets. It was highlighted that the remission was not an exemption but a deferred payment, which was later remitted by the State Government. The Tribunal referred to Section 4 of the Central Excise Act, 1944, which defines "transaction value" and concluded that since sales tax was "actually payable" at the time of removal of goods, it should not be included in the transaction value for excise duty purposes.

The Tribunal also distinguished the current case from the Super Synotex case, where the Supreme Court dealt with an exemption scheme. In contrast, the present case involved remission, which meant that the sales tax was payable and later remitted, aligning with the precedent set in Welspun Corporation Ltd. The Tribunal concluded that the sales tax remitted as part of the incentive scheme was towards capital subsidy and thus not part of the transaction value for excise duty.

Issue II: Extended Period of Limitation

The second issue concerned the applicability of the extended period of limitation. The Tribunal found that the facts of the case did not warrant the invocation of the extended period of limitation. The Tribunal noted that the appellants had acted in accordance with the settled legal position and previous judgments, which clearly indicated that the sales tax remitted under the incentive scheme should not be included in the assessable value.

Conclusion:

Based on the analysis of the issues, the Tribunal upheld the view that the sales tax remitted under the Incentive Scheme 2001 is not includable in the assessable value for the purpose of Central Excise Duty. The Tribunal set aside the impugned orders and allowed the appeals, concluding that the demand was not sustainable. The Tribunal also dismissed the invocation of the extended period of limitation, reinforcing that the appellants' actions were consistent with established legal precedents.