2015 (2) TMI 423 - AT - Central Excise

Valuation of goods - whether the amount of sales tax collected by the appellant from the customers and retained with them is includible in the assessable value or not - Held that - Appellant during the period of dispute were collecting full amount of sales tax from the customers and were paying only 50% of the same to the State Government and were retaining 50% of the tax as per the State Governments Scheme in lieu of capital subsidy. - Though, the reasoning given by the Commissioner in the impugned order for confirming the demand is confusing, the fact remains that this issue now stands decided against the appellant by the Apex Court Judgment in the case of Super Synotex (India) Ltd (2014 (3) TMI 42 - SUPREME COURT). However since on this very issue there were a series of the judgment of the Tribunal which were in the favour of the assessee, the invoking of longer limitation period under proviso to Section 11(A)(1) would not be justified, in view of Apex Court Judgment in the case of continental joint venture vs. CCE, reported in 2007 (216) ELT 177 (SC) the Ld. Counsel for the appellant states that out of the total duty demand of ₹ 72,23,683/-, the duty demand of about ₹ 32 Lakhs is within time. In view this the appellant are directed to deposit an amount of 32 Lakhs (Thirty Two Lakhs) within a period of 8 weeks - Partial stay granted.

Summary

Issues:
1. Inclusion of retained sales tax in assessable value.
2. Permissibility of deduction for determining transaction value.
3. Applicability of previous Tribunal judgments.
4. Validity of Commissioner's order.
5. Requirement of pre-deposit for appeal.

Analysis:
1. The appellant, engaged in manufacturing Automobile Accessories, enjoyed partial sales tax exemption under a State scheme, retaining 50% of the tax collected as capital subsidy. The Department contended that the retained sales tax should be included in the assessable value of goods. A Show Cause Notice was issued for demand of differential duty, interest, and penalty. The Commissioner confirmed the duty demand and imposed penalties. The appellant challenged this order.

2. The appellant argued that the retained sales tax was in lieu of capital subsidy and should be deductible for determining assessable value, citing previous Tribunal judgments and a Board instruction. They claimed a strong prima facie case in their favor, seeking a waiver of pre-deposit for the appeal.

3. The Department opposed the stay application, emphasizing the duty demand based on the appellant's collection of sales tax from customers without payment. They referenced an Apex Court judgment that did not distinguish if the tax retention was for capital subsidy. The Department argued against waiving the pre-deposit requirement.

4. The Tribunal considered both sides' submissions and examined the facts. While the Commissioner's reasoning was confusing, the issue was decided against the appellant by an Apex Court judgment. However, due to previous Tribunal judgments favoring the assessee and the limitation period, the Tribunal directed the appellant to deposit a portion of the duty demand within a specified time. Compliance would result in waiving the pre-deposit requirement for the remaining amount.

This detailed analysis covers the issues of inclusion of retained sales tax in assessable value, permissibility of deduction, relevance of previous judgments, validity of the Commissioner's order, and the requirement of pre-deposit for the appeal, providing a comprehensive overview of the legal judgment.