2018 (11) TMI 964 - AT - Central Excise

Valuation - includibility of VAT in assessabla value - Revenue was of the view that the VAT liability discharged by utilizing 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 - 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. Condonation of delay due to illness of the person in charge of the appellant company.
2. Interpretation of whether subsidy amounts disbursed to the appellant in the form of VAT 37B challans should be included in the assessable value of goods for the purpose of Section 4 of the Central Excise Act.

Analysis:
1. The Tribunal allowed the condonation of delay of 23 days in filing the appeal due to the illness of the person in charge of the appellant company. The application for condonation of delay was accepted as a plausible reason was provided, and the appeal was taken up for disposal with the consent of both parties.

2. The appellant, operating under the Rajasthan Investment Promotion Scheme, was eligible for subsidies and required to deposit VAT/CST/SGST with the Government. The Revenue contended that the subsidy amounts disbursed to the appellant should be included in the value of goods cleared, leading to a demand for the difference of duty. The Tribunal reviewed the case in light of a similar precedent involving Shree Cements Ltd. and the decision of the Apex Court in Super Synotex India Ltd.

3. The Tribunal noted that the dispute revolved around whether the subsidy amounts should be considered as actual payment of VAT for the purpose of Section 4 of the Central Excise Act. Referring to the Welspun Corporation Ltd. case, where subsidy amounts were not included in the transaction value, the Tribunal concluded that the VAT amounts paid using VAT 37B challans should not be included in the assessable value of goods.

4. Relying on the Welspun Corporation Ltd. case, the Tribunal emphasized that the subsidy received by the appellant was directly related to capital investment and fulfilled the conditions of the remission scheme. Therefore, there was no justification for including the VAT amounts paid by the appellant using VAT 37B challans in the assessable value.

5. Consequently, the impugned orders were set aside, and the appeals were allowed, following the earlier decision and providing consequential relief. The Tribunal concluded that the VAT amounts paid by the appellant using VAT 37B challans should not be included in the assessable value, in line with the decision in the Welspun Corporation Ltd. case.