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2023 (12) TMI 476 - AT - Central ExciseValuation - inclusion of incentive/industrial subsidy of 75% of Sales Tax/VAT/CST paid on the sale of goods, received from the Government of Madhya Pradesh under the Industrial Promotion Policy, 2010 in the transaction value under section 4 of the Central Excise Act, 1944 or not - whether the same to be treated as an additional consideration flowing directly or indirectly from the buyers to the assessee or not - HELD THAT - This issue was considered in favour of the appellant in the interim order in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR 2023 (3) TMI 1120 - CESTAT NEW DELHI on a difference of opinion having arisen between two learned Members of the Division Bench of the Tribunal, where it was held that The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act. Thus, the contention of the learned counsel for the appellant that incentive/capital subsidy received from the State Government cannot be included in the transaction value has to be accepted - the order dated 31.12.2018 passed by the Principal Commissioner, therefore, deserves to be set aside and is set aside. Appeal allowed.
Issues involved:
The issue involved in this appeal is whether the incentive/industrial subsidy received from the Government of Madhya Pradesh under the Industrial Promotion Policy, 2010 would be includable in the transaction value under section 4 of the Central Excise Act, 1944 by treating the same as an additional consideration flowing directly or indirectly from the buyers to the assessee. Details of the Judgment: 1. The appellant sought the quashing of the order confirming the levy of central excise duty with interest and penalty. 2. The appellant established a new unit in Mandideep, Madhya Pradesh, for manufacturing parts of transformers under the Industrial Promotion Policy. 3. The Industrial Promotion Policy provided for investment promotion assistance equivalent to 75% of VAT/CST paid for 10 years for investments above Rs. 10 crores. 4. The appellant claimed assistance for the period 03.03.2010 to 02.03.2020, with 75% of VAT/CST paid being remitted as subsidy by the Industrial Department. 5. The State Government allowed the subsidy to be adjusted against subsequent years' tax liability, not as an exemption or refund of VAT/CST. 6. A show cause notice was issued, treating the subsidy as additional consideration under the Central Excise Act, resulting in a demand for central excise duty. 7. The appellant contended that since VAT/CST was paid to the State exchequer, the subsidy should not be included in the transaction value. 8. An interim order in a similar case favored the appellant, stating that the subsidy does not reduce the selling price and is not an additional consideration affecting the selling price of goods. 9. The Tribunal held that the subsidy under the promotion policy does not impact the selling price and cannot be included in the transaction value for levy of central excise duty. 10. The order confirming the demand was set aside, and the appeal was allowed in favor of the appellant.
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