2018 (6) TMI 871 - AT - Central Excise

Valuation - inclusion of additional consideration of sales tax collected from the buyers and retained by them to the extent of sales tax liability - Held that - Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR 2018 (1) TMI 915 - CESTAT NEW DELHI , where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged non-payment of central excise duty on additional consideration of sales tax collected and retained, contravention of Section 4 of Central Excise Act, confirmation of duty and imposition of penalty by Commissioner (Appeals).

Analysis:
The appellant, engaged in manufacturing PP bags, was accused of not paying central excise duty on additional consideration of sales tax collected and retained, resulting in short payment of duty amounting to ?1,60,229. The Commissioner (Appeals) confirmed the duty and imposed a penalty. The Tribunal noted a similar issue in a previous case involving an Investment Promotion Scheme of the Rajasthan Government, where the Tribunal held that VAT amounts paid using subsidy challans need not be included in the assessable value. The Tribunal referred to a Supreme Court decision and a previous Tribunal case to support its conclusion. The Tribunal emphasized that the subsidy amounts were considered legal payments of tax under the Rajasthan Government scheme, and therefore, the Revenue's view that such payments cannot be considered as VAT actually paid was incorrect.

The Tribunal cited a previous case involving a "Remission of Tax Scheme" where the Tribunal concluded that VAT amounts paid using subsidy challans should not be included in the assessable value. By following the decision in that case, the Tribunal set aside the impugned order and allowed the appeal. The Tribunal emphasized that the VAT amounts paid using subsidy challans were considered legal payments of tax under the Rajasthan Government scheme, and therefore, should not be included in the assessable value. The Tribunal concluded that there was no justification for including such VAT amounts in the assessable value, and therefore, set aside the impugned order and allowed the appeal.