2015 (5) TMI 448 - SC - Central Excise

Valuation - inclusion of sales tax amount - sales tax was paid at concessional rates under the sales tax incentive scheme - Held that - Assessee would be entitled to claim deductions towards sales tax from the assessable value of the sales tax which is retained by the assessee. This position had changed after the amendment in Section 4 w.e.f . 1.7.2000 and in arriving transaction value said sales tax benefit which was retained by the assessee would be included while fixing the transaction value . - Thus insofar as the period up to 1.7.2000 is concerned case has to be decided in favour of the assessee and for the period from 1.7.2000 the benefit availed under the sales tax has to be included while arriving at the transaction value. - Decided aagainst Revenue.

Summary

Issues:
1. Whether the benefit of sales tax availed by the respondent should be included in fixing the value of the product for excise duty payment.
2. Determination of the period for which the benefit of sales tax should be considered in arriving at the transaction value.
3. Applicability of penalty based on the judgment and facts presented.

Analysis:
1. The respondent, engaged in manufacturing bearings, availed sales tax benefits under a scheme by the State of Rajasthan. The question was whether this benefit should be considered in determining the product's value for excise duty payment. The Supreme Court referred to a previous judgment in Commissioner of Central Excise, Jaipur-II vs Super Synotex India Limited, where it was held that an assessee could claim deductions towards sales tax from the assessable value of the product. The Court noted that after an amendment in Section 4, the sales tax benefit retained by the assessee should be included in the 'transaction value' for fixing it. Both parties agreed that the matter was covered by the earlier judgment.

2. The period under consideration in the appeals was from April 1, 1998, to March 31, 2002. It was decided that for the period up to July 1, 2000, the case favored the assessee, and from July 1, 2000, the benefit of sales tax should be included in determining the transaction value. The Court directed the assessing authority to compute the transaction value accordingly.

3. Regarding the penalty, the Court, considering the facts and the precedent set by the Super Synotax case, set aside the penalty imposed. The decision was in line with the judgment's ratio, ensuring consistency in the application of penalties based on the specific circumstances and legal principles involved in the case.

In conclusion, the Supreme Court's judgment clarified the inclusion of sales tax benefits in determining the transaction value for excise duty payment, specified the relevant period for considering such benefits, and addressed the penalty issue based on established legal principles and the facts presented in the case.