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2018 (9) TMI 1482 - AT - Central ExciseValuation - inclusion of VAT amounts paid by the assessee using VAT 37B Challans in assessable value - whether subsidy amounts are required to be included in the assessable value of the goods manufactured by the appellants, in terms of Section 4 of the Central Excise Act? Held that - For the initial period the assessees are required to remit the VAT recovered by them at the time of sale of the goods manufactured. A part of such VAT is given back to them in the form of subsidy in Challan 37 B. Such Challans are as good as cash but can be used only for payment of VAT in the subsequent period. In terms of the scheme of the Government of Rajasthan payment of VAT using such Challan are considered legal payments of tax - Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. 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.
Issues:
1. Whether subsidy amounts granted in form 37B by the Rajasthan Government are required to be included in the assessable value of goods for the purpose of Central Excise Act. 2. Interpretation of Section 4 of the Central Excise Act regarding deduction of VAT actually paid. 3. Application of the decision in the case of Super Synotex India Ltd by the Apex Court. 4. Comparison of decisions in the case of Welspun Corporation Ltd and the present case regarding inclusion of subsidy amounts in assessable value. 5. Justification for excluding VAT amounts paid using VAT 37B Challans from assessable value. Analysis: 1. The appeal challenged the inclusion of subsidy amounts granted by the Rajasthan Government in form 37B in the assessable value of goods. The appellants argued that the VAT paid through these subsidies represents actual payment of tax, as required by the Rajasthan Government's scheme, and should be deducted under Section 4(3)(d) of the Central Excise Act. 2. The Tribunal analyzed the concept of transaction value under Section 4 of the Central Excise Act, emphasizing that any VAT actually paid can be deducted from the transaction value for excise duty. The Revenue contended that VAT paid using 37B Challans does not constitute actual payment. However, the appellants argued that the Rajasthan Government's scheme mandates actual payment of VAT, making the deduction permissible under the law. 3. Reference was made to the decision of the Apex Court in the Super Synotex case, highlighting the requirement for actual payment of sales tax/VAT to avail benefits under Section 4(3)(d) post-01/07/2000. The Tribunal distinguished this decision based on the specific scheme of the Rajasthan Government, similar to the Gujarat VAT Act, 2003, as seen in the Welspun Corporation Ltd case. 4. Drawing parallels with the Welspun Corporation Ltd case, where subsidy amounts were not included in the assessable value, the Tribunal found no justification for including VAT amounts paid using VAT 37B Challans in the present case. The scheme's requirement for VAT payment and the nature of the subsidy supported the exclusion of these amounts from the assessable value. 5. Ultimately, the Tribunal set aside the impugned order, allowing the appeal based on the analysis of the Rajasthan Government's subsidy scheme, the legal interpretation of Section 4 of the Central Excise Act, and the precedents set by relevant court decisions and previous tribunal rulings.
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