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2025 (2) TMI 258 - AT - Central ExciseLevy of Central Excise duty - appellant retained 50% of the sales tax/VAT collected from its customers - invocation of extended period of limitation. Whether the amount which was paid to the appellant as sales tax by its customers but retained by the appellant on the strength of state government s deferment scheme merits inclusion in the transaction value for computing central excise duty under Section 4 of the Central Excise Act 1944 or not? - HELD THAT - This issue is no more res integra as the Tribunal in the case of M/S HONDA MOTORCYCLES SCOOTERS INDIA PVT. LTD. VERSUS CCE DELHI-III 2016 (9) TMI 533 - CESTAT CHANDIGARH has considered the issue of retention of 50% of the amount under tax concession scheme allowed by the Haryana State Government and has held the impugned order is correct in upholding the inclusion of that portion of Sales Tax/VAT in the assessable value collected by the appellants but not paid or payable to the State Government followed by the various decision of Hon ble Supreme Court. Extended period of limitation - HELD THAT - The learned Commissioner confirmed the demand by invoking the extended period but the department had not established anything on record to show that the appellant has suppressed the material facts with intent to evade the payment of duty. Further it is found that the issue involved in the present appeal relates to interpretation of the law and the Rules and finally the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE DELHI-III VERSUS M/S. MARUTI SUZUKI INDIA LTD. 2014 (9) TMI 229 - SUPREME COURT has settled the position of law therefore invoking extended period is not justified in the present case. Conclusion - i) The demand by invoking extended period of limitation is set aside. ii) The demand for the normal period is confirmed along with interest. iii) The appellant is entitled to benefit of cum-duty. iv) No penalty is imposable on the appellant. Appeal disposed off.
The judgment involves an appeal against an order confirming a demand for central excise duty on the amount retained by the appellant as sales tax/VAT, under a tax deferment scheme by the Haryana government. The core issues considered by the Appellate Tribunal were whether the retained sales tax amount should be included in the transaction value for excise duty computation and whether the extended period of limitation for demand was applicable.
1. Issues Presented and Considered: The primary issue was whether the amount of Rs.4,42,62,767/- retained by the appellant under a state government tax deferment scheme should be included in the transaction value for computing central excise duty under Section 4 of the Central Excise Act, 1944. Another issue was whether the extended period of limitation could be invoked for the demand. 2. Issue-wise Detailed Analysis: Inclusion of Retained Sales Tax in Transaction Value: - Legal Framework and Precedents: The case involved the interpretation of Section 4 of the Central Excise Act, 1944, concerning transaction value and the inclusion of amounts retained as sales tax. The Tribunal referred to precedents such as the Supreme Court's decision in Commissioner vs. Maruti Suzuki India Ltd, where it was held that amounts retained as sales tax should be included in the transaction value. - Court's Interpretation and Reasoning: The Tribunal reasoned that since the appellant retained 50% of the sales tax collected from customers and it was neither paid nor payable to the government, this amount should be included in the transaction value. The Tribunal emphasized that only the sales tax actually paid to the state government is excludable from the transaction value. - Key Evidence and Findings: The Tribunal found that the appellant collected sales tax but retained 50% under the deferment scheme, which was not actually paid to the state government. This retention was based on the entitlement certificate issued by the Haryana government. - Application of Law to Facts: The Tribunal applied the law by considering the retained sales tax as part of the transaction value, aligning with the Supreme Court's interpretation that only amounts actually paid to the state are excludable. - Treatment of Competing Arguments: The appellant argued that the retained amount was a capital subsidy and not part of the transaction value. However, the Tribunal rejected this argument, citing the Supreme Court's rulings that retention of sales tax amounts should be included in the transaction value. - Conclusions: The Tribunal concluded that the retained sales tax amount should be included in the transaction value for excise duty purposes. Extended Period of Limitation: - Legal Framework and Precedents: The extended period of limitation under Section 11A(1) of the Central Excise Act can be invoked in cases of fraud, collusion, or suppression of facts with intent to evade duty. - Court's Interpretation and Reasoning: The Tribunal found that the issue involved legal interpretation and there was no evidence of deliberate suppression of facts or intent to evade duty by the appellant. - Key Evidence and Findings: The Tribunal noted that the appellant had disclosed the retention of sales tax in invoices and there was no fraudulent intent. - Application of Law to Facts: The Tribunal applied the law by determining that the extended period of limitation was not applicable due to the absence of intent to evade duty. - Treatment of Competing Arguments: The department argued for the extended period due to suppression of facts, but the Tribunal found no evidence supporting this claim. - Conclusions: The Tribunal set aside the demand for the extended period, confirming the demand only for the normal period. 3. Significant Holdings: - The Tribunal held that the retained sales tax amount should be included in the transaction value for excise duty purposes, following the Supreme Court's decision in Maruti Suzuki India Ltd. - The Tribunal set aside the demand for the extended period of limitation due to lack of evidence of intent to evade duty. - The appellant was granted the benefit of cum-duty, meaning the differential duty should be calculated considering the retained amount as inclusive of excise duty. - No penalty was imposed on the appellant as the issue involved legal interpretation and there was no intent to evade duty. In summary, the Tribunal confirmed the demand for the normal period, set aside the demand for the extended period, and granted cum-duty benefit, while imposing no penalty on the appellant. The judgment aligns with the Supreme Court's interpretation of transaction value and the inclusion of retained sales tax amounts.
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