2020 (2) TMI 1056 - AT - Central Excise

Valuation - inclusion of VAT in assessable value - VAT amount, instead of paying in cash, the same is adjusted against the subsidy granted to them - when there is no actual payment of VAT, whether, the adjusted amount cannot be considered as payment of VAT and the same is not excludible from the transaction value? - HELD THAT - The issue involved herein is not res integra as the identical issue has been considered by this Tribunal 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 even though the VAT payment was adjusted against the subsidy received by the appellant, there is VAT payment and the same is excludible from the assessable value. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether adjusting VAT against subsidy constitutes actual payment of VAT for excise duty calculation.

Analysis:
The case involved the appellants, who manufactured excisable goods and cleared them by deducting the VAT paid from the value after adjusting it against the subsidy received for earlier transactions. The Department contended that since the VAT was adjusted against the subsidy, it did not constitute actual payment of VAT, leading to a demand for excise duty on the adjusted VAT amount. The adjudicating authority upheld the demand, prompting the appeal.

The appellant's counsel argued that adjusting VAT against subsidy was equivalent to cash payment, as the subsidy amount would have been received in cash if not adjusted. The counsel cited several judgments by the Tribunal, including Shree Cement Ltd. Vs. CCE, Alwar, highlighting that similar issues had been previously addressed. The Authorized Representative for the Revenue reiterated the findings of the impugned order.

Upon hearing both sides and examining the records, the Tribunal referred to the judgment in the case of Shree Cement, where it was established that the subsidy amounts adjusted against VAT using Challan 37B were considered legal payments of tax. Drawing from the Welspun Corporation Ltd. case, the Tribunal concluded that there was no justification for including VAT amounts paid using VAT 37B Challans in the assessable value. Consequently, the impugned orders were set aside, and the appeals were allowed.

In summary, the Tribunal held that adjusting VAT against subsidy constituted actual payment of VAT, making it excludible from the assessable value for excise duty calculation. The decision was based on precedents and interpretations of relevant legal provisions, ultimately favoring the appellant's position in the case.