2019 (1) TMI 970 - AT - Central Excise

Valuation - inclusion of investment subsidy received in assessable value - Held that - The matter is no longer res-integra as on the similar facts, various decisions have been passed by this Tribunal, wherein it has been held that there is no justification for inclusion of the subsidy used for the payment of VAT amount in the assessable value and accordingly the demand of central excise duty on this account has been dismissed - reliance placed in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR 2018 (1) TMI 915 - CESTAT NEW DELHI - amount need not be included in assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Central Excise duty demand on payment of VAT using investment subsidy under Rajasthan Investment Promotion Scheme, 2010.

Analysis:
The appellant, engaged in manufacturing SS Pipes, SS Circles, and Sheets, received investment subsidy under Rajasthan Investment Promotion Scheme, 2010, which was used to pay VAT/CST. The Department alleged contravention of Central Excise Act, 1944 by not including the subsidy amount in the assessable value, leading to short payment of central excise duty. Show cause notice was issued demanding central excise duty, penalty, and interest. The Assistant Commissioner confirmed the charges, upheld by the Commissioner (Appeals), prompting the appeal.

The Tribunal noted similar cases where inclusion of subsidy used for VAT payment in assessable value was dismissed. Referring to a specific case involving Shree Cement Ltd., the Tribunal emphasized that the subsidy was part of VAT payment, not an exemption, and thus deductible under Section 4(3)(d) of the Central Excise Act. The Rajasthan Government's scheme required VAT payment, with a portion refunded as subsidy via Challan Form 37B for subsequent VAT discharge. The crux was whether such subsidies should be part of assessable value.

Citing the Supreme Court's stance post-2000 that actual VAT payment is necessary for excise duty benefits, the Tribunal distinguished cases like Welspun Corporation Ltd., where subsidy amounts were not included in transaction value. In the present matter, the Tribunal found the subsidy through Challan 37B constituted legal tax payment, contrary to Revenue's view. Following the Welspun Corporation Ltd. case, it concluded no justification existed for including VAT amounts paid using Challans in the assessable value.

Therefore, the Tribunal, finding similarity with the precedent case, set aside the order-in-appeal, allowing the appeal due to lack of merit in maintaining the central excise duty demand related to VAT payment using investment subsidy under the Rajasthan Investment Promotion Scheme, 2010.