2013 (12) TMI 513 - AT - Central Excise

Extra consideration received Amount not included in the Transaction value of goods Held that - Following Kinetic Engineering vs. CCE 2012 (6) TMI 168 - CESTAT, MUMBAI - changes in sales tax liability cannot be a cause for re-determination of assessable value determined in accordance with law of Central Excise as it stood at time of removal of goods, to saddled assessee with tax liability, abatement of sales tax allowed in terms of sales tax liability at time of clearance of goods, cannot be subsequently restricted to net present value of sales tax subsequently paid in complete discharge of such liability - It is permissible to be deducted in respect of sales tax whether it was paid immediately or deferred basis whether incentives were provided by the state government towards sales tax in any manner - the appellant is not liable to pay on the discount received for deferred payment of sales tax - Decided in favour of assessee.

Summary

Issues involved:
Demand confirmed on extra consideration not included in transaction value of goods, applicability of Rule 6 of Central Excised (Valuation) Rules, 2000, interpretation of Central Excise law regarding deferred sales tax, applicability of Kinetic Engineering case decision.

Analysis:

1. Demand on Extra Consideration: The appellant appealed against the order confirming demand due to extra consideration received but not included in the transaction value of the goods. The appellant, a manufacturer of conveyor parts, received an amount as a discount for pre-payment of deferred sales tax. The amount was not paid to the sales tax department as the appellant opted for a scheme for pre-payment of deferred sales tax introduced by the government of Maharashtra. The issue was whether this additional consideration was dutiable under Rule 6 of the Central Excised (Valuation) Rules, 2000 read with Section 4 of the Central Excise Act, 1944.

2. Legal Proceedings: A show-cause notice was issued proposing duty demand on the extra consideration, along with interest and penalty under Section 11AC of the Central Excise Act. The proposal was confirmed during adjudication and by the Commissioner (Appeals). The appellant challenged this order before the tribunal.

3. Applicability of Kinetic Engineering Case: The tribunal considered the issue in light of the decision in the Kinetic Engineering case. The tribunal noted that the Kinetic Engineering case held that changes in sales tax liability could not be a cause for reassessment of assessable value determined at the time of goods removal. The case clarified that deductions for sales tax under a deferral scheme were permissible regardless of immediate or deferred payment, aligning with the interpretation of the Central Excise law.

4. Decision: The tribunal found that the issue in the present case was squarely covered by the decision in the Kinetic Engineering case. The tribunal set aside the impugned order, allowing the appeal with any consequential relief. The tribunal held that the appellant was not liable to pay duty on the discount received for deferred payment of sales tax from the state of Maharashtra.

In conclusion, the tribunal's decision was based on the interpretation of the Central Excise law regarding deferred sales tax and the applicability of the Kinetic Engineering case, which clarified the treatment of deductions for sales tax under deferral schemes. The tribunal ruled in favor of the appellant, setting aside the demand on extra consideration not included in the transaction value of the goods.