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TMI Blog2011 (7) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... pter 87 of Central Excise Tariff Act, 1985, and sell motor vehicles to buyers located in various parts of India.The vehicles manufactured are sold through depots. While clearing the goods from the factory, valuation in respect of goods sold through depot has to be done under Rule 7 of the Central Excise (Valuation) Rules, 2000 and the assessable value has to be determined on the basis of the price at which the goods are sold from the depot at the time of removal of goods from the factory. 2.2 The case of the department is that in respect of vehicles sold from the depots situated in the State of Tamilnadu, the assessee has collected Turn Over Tax (TOT) from the buyers even though in the invoices issued to the buyers, the column against the turnover tax is left blank. The assessee has claimed deduction towards turn over tax while arriving at the assessable value. Section 2 (2) of the Tamilnadu Additional Sales Tax Act, 1970 specifically provides that the dealers are not entitled to collect the turn over tax levied under said act from the customers. It is the contention of the department that the assessee, even though has shown the column against the turn over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be considered as an additional consideration received from the consumer over and above the price declared to the department and, therefore, excise duty is leviable on the amount collected by way of turn over tax and, accordingly, the Ld. Adjudicating authority confirmed the duty demand of Rs. 53,11,983/- for the period from 2002-2003 to 31/12/2006. In the impugned order, the Ld. Adjudicating authority also confirmed the demand for interest under Section 11AB of the Act and also imposed an equivalent penalty under Section 11AC ibid. While the revenue is in appeal against the order dated 30/5/07 of the Commissioner, Nasik, the assessee is in appeal against the order dated 28/9/07 passed by the Commissioner, Mumbai. 3. The Ld. Special consultant appearing for the Revenue made the following submissions: 3.1 The turn over tax levied and collected under the provisions of Tamil Nadu Additional Sales Tax Act, 1970 is on the basis of turn over of the dealer. Section 2 (2) of the said act, specifically provides that no dealer shall be entitled to collect the additional tax (turn over tax) payable under the said act. Since the turn over tax cannot be recovered from the custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be deducted. This is an erroneous approach. Turnover tax and octroi which were made irrecoverable would not have been collected but the assessee paid these taxes and dues to the authorities concerned. If these amounts had not been collected from the buyers, assessee would have paid the same only from the price collected from the buyers. Therefore, amount of turnover tax and octroi paid by the assessee has to be deducted from the price in order to arrive at the assessable value, in cases where the assessee did not collect these dues from the buyers. In fact the question of deduction would arise only in cases where the appellant did not collect these dues over and above the price. Where it is collected over and above the price, the question of deducting these dues from the price would not arise and nor would the question of addition of these dues to the price to arrive at the assessable value would arise. (emphasis supplied) The lower authorities were, therefore in error in disallowing deduction. Inasmuch as the assessee has collected the turn over tax from the buyers over and above the price, the question of deducting these dues from the price would not arise and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied therein that turnover tax should be allowed to be deducted from the sale price in order to arrive at the assessable value. The only condition is that the assessee should prove that turn over tax has been paid. In view of the above, the provision in the West Bengal Sales?2. Tax Act, 1954 that no dealer shall realise from his purchaser the turn over tax payable by him will not have any relevance. Irrespective of whether the turnover tax can be passed on to the consumer or not, the court has ordered that it should be allowed to be deducted from the sale price in order to arrive at the assessable value. Apart from the above, section 4(4)(b) also clarified that value?3. in relation to any excisable goods does not include the amount of the duty of excise, sales tax and other taxes, if any payable on such goods. The Central Excise and Salt Act does not stipulate that the taxes which are not to be included in the value are those which will be passed on to the consumer." Basic Manual of Departmental Instructions on Excisable Manufactured Products (3rd Edition pages 102 & 103 Sd/- P.K. Varma Jt. Secretary & Legal Advisor F. No. 6/28/84-CX., dated 14-8-84. 4.1 The above circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Sales Tax, Surcharge on Sales Tax, and Turnover Tax should be allowed to be deducted from the sale price in order to arrive at the assessable value, and also octroi where payable/paid by the manufacturer. These taxes if proved to have been paid, should be allowed even if they are paid periodically to the relevant taxing authorities in accordance with the relevant provisions of taxing statutes/rules." Therefore, it is clear that turn over tax is a permissible deduction. 6.2 As regards the contention of the Ld. Special Consultant for the department that as per the decision in the Geep Industrial Syndicate Ltd. case, turn over tax can be deducted only if it is not collected from the customers, this argument has no basis. A reading of the said judgement clearly indicates that only if the turn over tax collected over and above the price, the same will not be a permissible deduction; if it is collected as part of the price, then there is no prohibition in claiming it as a deduction for the purpose of excise levy. The Tribunal in the said case held as follows:- "From this, it was inferred that the turnover tax and octroi had not been collected by the appellant from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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