2018 (8) TMI 309 - AT - Central Excise

Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - 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:
1. Interpretation of investment promotion schemes under Rajasthan Government.
2. Treatment of subsidies received by the appellant in the form of VAT 37B challans.
3. Inclusion of subsidy amounts in the assessable value of goods under Section 4 of the Central Excise Act.
4. Comparison with relevant legal precedents regarding the treatment of subsidies in VAT payments.

Analysis:
1. The appellant established a factory in Rajasthan under the Rajasthan Investment Promotion Scheme. The scheme required the appellant to deposit VAT/CST/SGST with the government and entitled the appellant to subsidies disbursed in Form 37B. The Revenue contended that the subsidy amounts should be included in the value of goods cleared by the appellant. The Tribunal referred to a similar case involving Shree Cements Ltd. and analyzed the issue in detail.

2. The Tribunal noted that the subsidy received by the appellant in the form of VAT 37B challans was considered as legal payment of tax under the Rajasthan Government scheme. The Tribunal distinguished between the actual payment of VAT and the utilization of subsidy challans for VAT liability. Referring to the Welspun Corporation Ltd. case, the Tribunal concluded that the subsidy amounts received by the appellant need not be included in the assessable value of goods.

3. The Tribunal discussed the concept of transaction value under Section 4 of the Central Excise Act. It compared the decision of the Apex Court in Super Synotex India Ltd. case, emphasizing that actual payment of VAT is necessary to avail benefits under Section 4(3)(d). The Tribunal highlighted the distinction made in the Welspun Corporation Ltd. case regarding the treatment of subsidy amounts in transaction value calculation.

4. By following the decision in the Welspun Corporation Ltd. case, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief. The Tribunal emphasized that the VAT amounts paid by the appellant using VAT 37B challans should not be included in the assessable value. The judgment clarified the legal position regarding the treatment of subsidies in VAT payments under the Rajasthan Government scheme.