2024 (5) TMI 1129 - AT - Central Excise

Recovery of Central Excise duty - non-inclusion of investment subsidy in transaction value - HELD THAT - The issue was examined by the Tribunal in M/s. Harit Polytech Pvt. Ltd. vs. Commissioner Central Excise and CGST-Jaipur I 2023 (3) TMI 1120 - CESTAT NEW DELHI and it was observed 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. The order passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.

Summary

Issues:
1. Appeal against order for recovery of central excise duty, interest, and penalty.
2. Inclusion of investment subsidy in transaction value for levy of central excise duty.
3. Interpretation of promotion policy regarding subsidy adjustment for sales tax liability.

Analysis:
The appellant filed an appeal challenging the order passed by the Commissioner (Appeals) dismissing the appeal and confirming the demand for recovery of central excise duty, interest, and penalty. The issue revolved around the inclusion of an investment subsidy received by the appellant from the Government of Rajasthan in the transaction value for the purpose of levying central excise duty under the Central Excise Act. The Commissioner held that the appellant had not actually paid the tax collected from customers to the extent of the amount adjusted towards subsequent sales tax liability. This decision was based on the belief that the subsidy amount retained by the appellant should be included in the transaction value, as per section 4(3)(d) of the Excise Act.

The Tribunal examined a similar issue in a previous case and observed that the subsidy received by the appellant was utilized to cover a portion of the sales tax liability, with the balance amount paid in cash. The Tribunal clarified that under the promotion policy, the subsidy did not reduce the sales tax required to be paid by the appellant. It emphasized that the subsidy amount retained by the appellant should not be considered as additional consideration for including in the transaction value. The Tribunal highlighted that the subsidy amount was not directly or indirectly related to the sale of goods and should not be part of the transaction value for levying central excise duty.

The Tribunal concluded that based on the interpretation of the promotion policy and the previous decision, the order passed by the Commissioner could not be sustained. Therefore, the appeal was allowed, and the order was set aside. This decision reaffirmed that the subsidy amount received and retained by the appellant should not be included in the transaction value for the purpose of central excise duty levy.