2018 (8) TMI 164 - AT - Central Excise

Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by utilising the investment subsidy granted in Form 37B cannot be considered as VAT actually paid, for the purpose of Section 4 of the Central Excise Act, 1944 - Held that - The identical issue has come up before the Tribunal in the case of Shree Cements Ltd. V/s CCE 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:
Interpretation of investment subsidy scheme under Rajasthan Government for VAT liability discharge and its impact on assessable value calculation under Section 4 of Central Excise Act, 1944.

Analysis:

The appellants established factories in Rajasthan under the Investment Promotion Scheme, eligible for subsidies requiring VAT/CST/SGST payments, with subsidy disbursement in Form 37B. Revenue disputed considering subsidy as VAT actually paid for Section 4 purposes, demanding duty difference, interest, and penalty. Tribunal referred to a similar case involving Shree Cements Ltd., highlighting the dispute's crux regarding inclusion of subsidy amounts in assessable value under Section 4.

The Tribunal analyzed the Apex Court's decision in Super Synotex India Ltd., emphasizing actual payment requirement for VAT benefits post-01/07/2000. However, a precedent case involving Welspun Corporation Ltd. distinguished the Apex Court's decision based on the Gujarat VAT Act, 2003, stating that certain subsidy amounts need not be included in transaction value. In the present case, the Tribunal noted that VAT payment using subsidy challans was legal under the Rajasthan Government's scheme, thus rejecting Revenue's stance on non-consideration of VAT as actually paid.

Referring to the Welspun Corporation Ltd. case, the Tribunal concluded that VAT amounts paid using VAT 37B Challans should not be included in the assessable value. Consequently, the impugned orders were set aside, and the appeals were allowed, following the Tribunal's earlier decision for consequential relief.

In summary, the judgment addressed the dispute over subsidy inclusion in assessable value under the Investment Promotion Scheme, emphasizing legal VAT payment using subsidy challans and rejecting Revenue's stance. The decision aligned with the Welspun Corporation Ltd. case, setting aside the impugned orders and allowing the appeals based on the Tribunal's precedent.