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TMI Blog2022 (6) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... ional sales consideration, as held by the Member (Judicial). OR The amount of subsidy under dispute is not an independent amount received by the appellant. Rather it is computed with reference to the sales tax paid and thus, is an additional consideration for sales, as held by the Member (Technical). (C) The facts in this appeal are similar to the facts in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT ], as held by the Member (Technical) OR The facts in the present case are difference and hence, ruling of the Apex Court in the case of Super Synotex India Ltd. is not applicable. (D) Under the facts and circumstances, the appellant have received VAT subsidy (directly affecting the selling price of the goods), as held by the Member (Technical) OR It is not a case of VAT subsidy, affecting or depressing the selling price of the goods, as held by the Member (Judicial). (E) The provisions of Section 9 of Rajasthan VAT Act has not been considered in the case of Shree Cement Ltd. [ 2018 (1) TMI 915 - CESTAT NEW DELHI ] leading to erroneous judgment in the said case, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73,474/- and Rs. 1,84,320 / 5758/CE/BH D D/201718 dt. 28.02.2018 Assistant Commissioner, CGST Division D, Bhiwadi 19.12.2018 3 CE/AL/266/V/18 M/s. Jai Bharat Furnace Pvt. Ltd., F-225, 226 227, RIICO Industrial Area, Khushkhera, Bhiwadi C. Ex. Duty - Rs. 21,19,301/- and Rs. 3,28,397/- Penalty - Rs. 21,19,301/- and Rs. 3,28,397/- 5152/CE/BH D D/17-18 dt. 27.02.2018 Assistant Commissioner, CGST Division D, Bhiwadi 20.12.2018 4 CE/AL/261/V/18 M/s. Maha Maya Steels, G-1/106-107, RIICO Industrial Area, Khushkhera, Bhiwadi 301019 Distt. - Alwar C. Ex. Duty - Rs. 6,29,402/- Penalty - Rs. 6,29,402 /- 71/CE/BH D D/201718 dt. 28.03.2018 Assistant Commissioner, CGST Division D, Bhiwadi 03.01.2019 5 CE/AL/248/V/18 M/s. FCC India Manufacturing Pvt. Ltd., Plot No. SPL-2(H), Honda Complex, RICO Industrial Area, Tapukara, Bhiwadi, Distt. Alwar C. Ex. Duty - Rs. 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below: Table 2 Sr No Appeal No. Name and address of the appellant Amount involved in Rs. OIO No. and Date Adjudicating authority Date of personal hearing 1 CE/AL/333/VII/18 M/s. Trans ANCR Solutions Pvt. Ltd., G-19, 20, 31 32, RIICO Industrial Area, Majarkath, Neemrana, Distt. Alwar C. Ex. Duty Rs.3,50,263/- Penalty Rs.35,000/- 19/20 18 dated 10.05.2018 Assistant Commissioner, CGST Division-E, Behror 03.06.2019 2 CE/AL/369/IX/18 M/s. Nisin Brake India Pvt. Ltd., SP-1-33 and SP-1-34-35, New Industrial Area, Majarkath, Neemrana, Distt. Alwar C. Ex. Duty - Rs. 25,45,708 /- and Rs. 25,45,708/ - 31/20 18 dated 13.07. 2018 Assistant Commissioner, CGST Division-E, Behror 20.05.2019 3 CE/AL/370/IX/18 Asstt. Commissioner, CGST Division-E, Behror in the case of M/s. Frystal Pet Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned orders, confirmed the demand of Central Excise Duty and ordered for recovery of the same along with interest under Section 11A and 11AA/11AB of the Central Excise Act 1944 and imposed penalties under Central Excise Act 1944. 3. Being aggrieved with the impugned orders, the appellants have filed these appeals mainly on the following grounds: The salient feature of scheme as per RIPS-2003/2010, is that it consists of two parts Capital Investment (Investment Subsidy) and Employment (Wage subsidy). Appellants were availing Capital Investment subsidy (Wages component) under which 30% of the total wage/ salary being paid by the investor with respect to such workers for whom, the employer and employee are contributing towards approved Provident Fund., was to be paid back into the account of the investor by the State Government subject to maximum of 50% of the ST/CST/VAT payable. The subsidy extended by the Government of Rajasthan, is wage subsidy for fresh employment generation, it is linked with the payment of Provident Fund as well as VAT payable. The scheme categorically states that the said amount of subsidy on account of wage component shall be credited to the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t four appeals filed by M/s FCC Clutch India Pvt Ltd [E/50910/2019], Adpro Ceramics India (Pvt) Ltd [E/51060/2019], ST Woven Bags Pvt Ltd [E/51061/2019] and Jai Bharat Furnace Pvt Ltd [E/51197/2019] were allowed by the coordinate bench by following the decision in case of tribunal in case Shree Cements Ltd., vide Final Order No 51505-51508/2019 dated 07.11.2019. The bench also relied upon the decision in case of HOne India Pvt Ltd [Final Order No. 50675-50680/2019 dated 30.04.2019]. 5.3 Lastly appeal No E/52679/2019 filed by Shivangi Polysack Ltd were considered by Single Member Bench and disposed of vide Final Order No 50114/2020 dated 17.01.2020, following the decision in case of Shree Cements. However we would observe that since the issue involved in the matter is in respect of valuation for the purpose of levy of duty, the disposal of appeal by Single Member is contrary to the provisions of Section 35D(3)(a) providing as follows: Section 35D. Procedure of Appellate Tribunal . - (3) The President or any other member of the Appellate Tribunal authorised in this behalf by the President may, sitting singly, dispose of any case which has been allotted to the Bench of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the enterprise, subject to sub-clause E below. D. Investment Subsidy shall be allowed to all eligible enterprise on the basis of tax deposited by the enterprise subject to condition that the total amount of subsidy (Investment Subsidy + Employment Generation Subsidy) shall not exceed 50% of the amount of tax (es) which have become due and have been deposited by the enterprise. However for Women/ SC/ ST/ Person with disability (PwD) entrepreneur, total amount of subsidy including Additional Investment subsidy shall not exceed 60% of the amount of tax (es) which have become due and have been deposited by the enterprise. E. The maximum limit of Employment Generation Subsidy shall be as mentioned in column number 5 of Table 3, and shall be allowed to the eligible enterprise at the rate as mentioned in column number 4, according to the category of enterprise and employee as mentioned in column number 2 and 3 respectively of Table-3 given below. 5 Exemptions A. The Enterprise to which an Entitlement Certificate as prescribed under the Scheme has been issued shall be eligible to claim the exemption(s) from the taxes/duties/charges, to the extent and for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate Screening Committee having been satisfied with the genuineness of cause of delay for more than 180 days, may condone the delay in filing of the application. In such cases, the total period of benefit regarding the extent of time shall be calculated from the date of the commencement of commercial production/ operation, but the flow of benefit shall take place from date of issuance of Entitlement Certificate. (d) In case the Committee approves the entitlement of the enterprise for the benefit, the Member Secretary shall issue Entitlement Certificate in Form - VIII, appended to the Scheme, and shall forward the copies to all concerned immediately but not later than fifteen days from the date of decision taken by the Committee in its meeting, unless specifically extended for reasons to be recorded in writing. (e) Where the Committee is of the opinion that the enterprise is not eligible to avail the benefit of the Scheme, it shall provide an opportunity of being heard to the enterprise and shall record the reasons of rejection. The decision of the Committee shall be communicated in Form - XII, appended to the Scheme, by the Member Secretary of the appropriate committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available in dictionaries. These definitions as referred above are reproduced below: Wikipedia A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from government, the term subsidy can relate to any type of support - for example from NGOs or as implicit subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates). Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical. The most common forms of subsidies are those to the producer or the consumer. Producer/production subsidies ensure producers are better off by either supplying market price support, direct support, or payments to factors of production. Consumer/consumption subsidies commonly reduce the price of goods and services to the consumer. For example, in the US at one time it was cheaper to buy gasoline than bottled water. Investopedia A subsidy is a benefit given to an individual, business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last case. 2. We would narrate the details of purported additional consideration at a later point of time at an appropriate stage. However, we may point out here that on surrender of advance licence with the aforesaid buyers, the assessee could receive drawback from the Government/Director General of Foreign Trade (DGFT) as per the Export-Import (EXIM) Policy and this was stated to be the additional consideration. Suffice it to point out at this juncture that the Revenue issued five separate show cause notices asking the assessee to pay the differential duty as the said additional consideration was to be included while arriving at the transaction value of the said goods in terms of Section 4 of the Central Excise Act, 1944 (hereinafter referred to as the Act ) read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the Rules ). The assessee challenged the stand of the Revenue by filing replies. After examining the matter, the Commissioner took the view that price was not the sole consideration flowing from the buyer to the assessee. Not only such buyers, who were sold the goods at a lower pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the respondents that the respondents could offer lower prices. The surrendering of licences by M/s. Visakhapatnam Steel Plant and as a result thereof the respondents getting the licences had nothing to do with any Import and Export Policy. It was directly a matter of contract between the two parties. This resulted in additional consideration by way of advance intermediate licence flowing from M/s. Visakhapatnam Steel Plant to the respondents. The value received therefrom is includible in the price. The Tribunal was wrong in stating that such an arrangement can never be placed upon the platform of additional consideration. In so stating the Tribunal has ignored and/or lost sight of the fact that it was in pursuance of the contract of sale between the respondents and M/s. Visakhapatnam Steel Plant that the licences were made available to the respondents. The Export and Import Policy had nothing to do with the arrangements/contract under which the licences flowed from the buyer to the seller. At the cost of repetition it must be mentioned that had the respondents had advance intermediate licence on their own i.e. without M/s. Visakhapatnam Steel Plant having to surrend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials from indigenous source in lieu of direct import had the option to source them against advance release orders denominated in foreign exchange/Indian rupees. In such a case, the licence was to be invalidated for direct import and permission in the form of ARO was to be issued entitling the supplier of the goods the benefits of deemed export. Para 10.2 of the EXIM Policy laid down the categories of supply which would be recorded as deemed exports under the policy. The first such clause (a) was supply of goods against advance licence/DFRC under the duty exemption/ remission scheme. Under para 10.3, benefits for deemed exports were specified. Advance licence for intermediate supply/deemed export was specified as one of the benefits for deemed exports. 7. The advance licence holder category buyers got their licences invalidated/surrendered. Thereafter, DGFT issued licence in favour of the assessee herein permitting it to procure the goods duty free from indigenous manufacturers and on the supply of this material to such buyers, treating the same as deemed exports , thereby earning the benefits of duty drawback. Para 7.11 of the EXIM Policy facilitated this process and it r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. 9. As is clear from the reading of the aforesaid provision, the duty of excise is chargeable on the excisable goods with reference to the value of such goods. Generally, the price of the goods, i.e. the price at which such goods are ordinarily sold by the assessee to a buyer is to be the value of the goods. This value is called the transaction value . The Central Government has also framed the Rules which, inter alia, lay down the provisions for determination of value. Rule 6 thereof, with which we are specifically concerned, reads as under: RULE 6. Where the excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry value thereof is to be included while arriving at the transaction value. It is not necessary that such an additional consideration is to flow directly and even indirect consideration is includible. It is in this context we have to examine as to whether the consideration in the form of drawback, which accrued in favour of the assessee, could be connected with the buyer. To put it otherwise, though the immediate source of the duty drawback is the Government, whether its flow can be traced back to the buyer? If it is so, it may become a case of indirect consideration coming from the buyer and can be added to the transaction value. 11. In the case of IFGL, this Court has given the answer in the affirmative to the aforesaid issue. It is also conceded by the learned counsel appearing for the assessee that the said judgment was rendered on almost identical fact situation. That is why the endeavour of Mr. Lakshmikumaran is to impress upon us to take a different view. He sought to discredit the opinion of the Court in the said case by arguing that the advance licence for intermediate supply was granted by the DGFT to the assessee under the EXIM Policy and it had nothing to do with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted price to an ultimate exporter holding advance licence. Therefore, the additional discount offered to a customer, who is the exporter, is never an additional consideration. 14. The aforesaid argument of the learned counsel for the assessee may appear to be impressive, when taken in isolation i.e. without having regard to all the attending facts. However, when the argument is tested keeping in view the entirety of the circumstances, as already taken note of above, the hollowness of this argument stands exposed, inasmuch as, this argument glosses over the fundamental fact that the assessee had been able to get the benefit of Notification No. 31/1997-CUS based on licence issued by DGFT in its favour and the raison d etre for issuance of said licence by the DGFT to the assessee was invalidation of the advance licence by the buyers. Therefore, the source or gangotri from where the benefit has ultimately reached the assessee is the advance licences which were held by the buyers and their act of invalidation made it possible to flow down the benefit so as to reach the stream of the assessee. 15. Yet another argument which was raised by Mr. Lakshmikumaran was that carving out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invented) always a motive for promising; but a motive for making a promise is not necessarily consideration for it in law. Thus the testator s desire in Thomas v. Thomas was a motive for the executors promise but not part of the consideration for it. The widow s promise to pay and repair was another motive for the executors promise and did constitute the consideration for that promise. 16. From this very judgment, Chitty also explains the distinction between consideration and condition. According to him, the plaintiff s remaining a widow was not part of the consideration but a condition of her entitlement to enforce the executor s promise. This case is contrasted with another judgment in Re Soames - (1897) 13 TLR 439. The discussion in this behalf reads as under : On the other hand, in Re Soames A promised 3,000 to B if B would set up a school in the running of which A was to have an active part. It was held that, by establishing the school, B had provided consideration for A s promise. It seems that the distinction between consideration and condition depends, in such cases, on whether a reasonable man would or would not understand that the performance of the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. (b) Therefore, they were related persons in terms of provisions of the erstwhile Section 4(4)(c), presently Section 4(3)(b)(iv) of the Act. (c) It is observed that para 7.7 of the EXIM Policy on Advance Release Order speaks of mutuality of interest as the assessee had procured duty free imported raw materials against invalidation of advance licence of the consignees and in turn it sold the finished goods to the said consignees at lower prices as compared to other normal buyers. Thus, the price was not the only consideration. (d) Once the advance licence is invalidated, the said clearance to the buyers who were earlier holding the said licences need not be treated as deemed export and rightly the assessee had cleared the said goods to such buyers on payment of excise duty, but at lower value than the clearance made to the normal buyers. Thus, the assessee appeared to have derived double benefits in these transactions, i.e. (i) enhanced sale and paid less duty on lower value; and (ii) imported duty free raw materials. (e) In this case, the right to procure duty free imported raw material is being transferred to supplier by the buyer. This indicates the flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n received. In the present case the appellants collects the full amount of sales tax/ VAT from their customers and would deposit a part of the same with the exchequer retaining the remaining amount with himself as subsidy as per the provisions of RIPS-2010. Hence the amount so received is nothing but additional consideration received by the appellant from their customer and needs to be added to the transaction value. The appellant at the time of entering into agreement for sale/ contract o sale are fully aware of the entitlement they have in terms of the RIPS-2010, hence will determine the tax to be paid accordingly. 5.10 In light of above we examine reproduce below the decisions of the Apex Court which have been rendered in terms of the same/ similar schemes: Decisions of Hon ble Apex Court on the issue A. Super Synotex 23. In view of the aforesaid legal position, unless the sales tax is actually paid to the Sales Tar Department of the State Government, no benefit towards excise duty can be given under the concept of transaction value under Section 4(4)(d). for it is not excludible. As is seen from the facts, 25% of the sales tax collected has been paid to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and set aside the order of the Tribunal dated 16th January, 2004, we set aside the penalty imposed on the assessee. B. Shree Rajasthan Syntex Ltd [2015 (318) ELT 626 (SC)] 4. We may state here that the period involved is November 1996 to July, 2001. Show cause notice in this behalf, as noted above, was issued on 26-11-2001. The valuation of the excisable goods has to be in terms of Section 4 of the Central Excise Act, 1944. The said Section was amended in the year 2000 which amendment came into effect on 1-7-2000. The legal position relating to identical sales tax incentives Scheme which would prevail in view of the unamended provision as well as amended provision, came up for consideration before this Court in Commissioner of Central Excise, Jaipur-II v. Super Syncotex (India Ltd.) - 2014 (301) E.L.T. 273 (S.C.). This Court took the view, after analysing the provision of Section 4 which provided prior to the amendment, that the assessee would be entitled to claim deductions towards sales tax from the assessable value and sales tax incentive which is retained by the assessee namely 75% sales tax amount in this case. The Court also held that this position changed after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the HPC or the entitlement certificate to indicate that 50% of the sales tax retained by the assessee on the sale of its vehicles was liable to be adjusted against any capital subsidy entitlement of the assessee. 24. Learned Additional Solicitor General contended that Section 13B of the Act which relates to the power to exempt certain class of industries from payment of tax is also relevant. We are not inclined to consider this submission since the very basis on which the Tribunal has proceeded namely the application of Rule 28C(5)(a) is not only incorrect but the Tribunal has overlooked the decision of the HPC and the entitlement certificate apart from overlooking Rule 28C(5)(b). 25. Finally, our attention was drawn to a Circular dated 30th June, 2000 issued by the Central Board of Excise and Customs. This circular was issued in view of the coming into force of Section 4 of the Excise Act (as amended) from 1st July, 2000. 26. The circular brought to the notice of all concerned that in view of the amended Section 4 of the Excise Act, any amount actually paid or actually payable by way of excise, sales tax and other taxes shall be excluded from the transaction value. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal in favour of the assessee and, therefore, the order of the Tribunal is set aside. D. National Engineering Industries [2015 (320) ELT 27 (SC)] The respondent-assessee is engaged in the manufacture of Ball and Taper-Rollers Bearings falling under Chapter Heading No. 84.82 of the Schedule to the Central Excise Tariff Act, 1985. It had availed sales tax benefits in the sense that the sales tax was paid at concessional rates under the sales tax incentive scheme which was floated by the State of Rajasthan. The question arose as to whether the benefit of sales tax which was availed by the respondent would be included while fixing the value of the product for the purpose of payment of Excise duty. This issue squarely stands covered by the judgment of this Court in Commissioner of Central Excise, Jaipur-II v. Super Synotex India Limited - 2014 (301) E.L.T. 273 (S.C.). In that case this Court has taken the view that assessee would be entitled to claim deductions towards sales tax from the assessable value of the sales tax which is retained by the assessee. The Court also pointed out that this position had changed after the amendment in Section 4 w.e.f. 1-7-2000 and in arrivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT reflected in the invoice and retaining a portion as cash subsidy. The unit were paying full VAT as reflected in the invoice. Nothing was retained. 6 Returns reflected -part payment of VAT and retention of the other part Return reflected complete payment of VAT 7 The excess collected portion was never paid by assessee or the State Govt, under the VAT to the Commercial Taxes Department. The subsidy portion already the utilized against wage subsidy and thereby credited by the GOVT to the account of the appellant. The appellant in all discharged the complete tax payment as collected. 8 Its entitlement certificate did not give any indication of deferment of tax or capital subsidy. The entitlement certificate clearly mentions it as wage subsidy. 9 The subsidy was never received by the state Govt in their account in real value terms. The subsidy was received by the in unit from the State Govt in their account. As the subsidy was received subsequently to disburse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the sides and examined the appeal records. The short point for decision in this appeal is the correctness of the claim made by the appellant regarding the correct quantum of exclusion towards sales tax from the transaction value for Central Excise purpose. We find that the Hon ble Supreme Court in CCE, Jaipur-II v. Super Synotex (India) Ltd. (supra) examined the scope of the abatement available under Section 4(3)(d) and held that any amount collected towards sales tax if not paid to the State and retained by the Assessee shall form part of a transaction value. The Hon ble Supreme Court held that after 1-7-2000, the assessees shall only be entitled to the benefit of the amount actually paid to the Department . We find that the appellant s plea that they have paid sales tax on inputs and such amount is being adjusted to arrive at the tax payable on the final products and as such it should be treated, when taken together, they have discharged full sales tax on the final product. We find that this submission is not factually or legally admissible. The Central excise valuation is being done for the final product and the sales tax actually payable or paid on such final product only c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps either party from raising the same case again and again. In Central Excise Duty, each individual consignment is an assessment by itself and a mistake made in one assessment by either party and not challenged by the other, does not mean that the other party is bound by such decision contrary to law for all subsequent periods. Such a view will lead us to absurd conclusions. For instance, Service Tax was paid by many assessees on Works Contract Service prior to 01/06/2007 although subsequently, it was held by the Hon'ble Apex Court that no such tax is payable. Merely because assesses had paid Service Tax wrongly for an earlier period, it does not mean that they are bound to pay Service Tax for subsequent periods also on the principle of res judicata. In this particular case, when there is a clear ruling by the Hon'ble Apex Court, the assessee cannot be get away from tax liability on the ground that a wrong decision was taken for some earlier period by the Commissioner which was not challenged for that period by the Revenue. B. In the case of Honda Motorcycles and Scooters India Pvt Ltd [2017 (357) ELT 828 (T-Chand)], Chandigarh Bench has held as follows: 5. The main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case the concession extended to the appellants by the State Sales Tax authorities is by way of an exemption. The said exemption was converted into the scheme of deferring payment of tax upon introduction of Haryana Value Added Tax Act, 2003. In fact, it is apparent that we are dealing with an exemption scheme where the mode of payment has been modified by the Act of 2003. This is relevant in view of the reliance placed by the appellants on the decision of the Tribunal in Uttam Galva Steels Ltd. (supra). There the Tribunal was dealing with a scheme under Maharashtra Value Added Tax Act, 2002. Section 94 of the said Act provides for deferred payment of Sales Tax. No reference has been made to any exemption of Sales Tax in the said provision. One of the points considered by the Tribunal in Uttam Galva Steels Ltd. (supra) is that, as per the incentive scheme of the Maharashtra Government there is no exemption from payment of Sales Tax, whereas in the present case we find that the exemption scheme of 1973 Act is continued in 2003 Act by the Haryana Government. 7. As correctly noted by the original authority, the implication of deeming provision in a VAT enactment for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Tribunal s order in Emsons Organics Pvt. Ltd., 2011 (267) E.L.T. 263 (Tri.-Del.). On perusal of the said order, we find that the same is passed while disposing a stay application and that is only an interim order. We find that there is nothing in the impugned order which examined the party s submissions against longer period demand. We note that in the present case the correct valuation for Central Excise purpose is in dispute. The dispute is directly relatable to Sales Tax amount paid/payable by the appellants to the State authorities. The Sales Tax amounts collected were all reflected in the invoices issued to the clients. Out of this amount, the appellants retained 50% based on a scheme announced by the State Government. In this factual matrix, we find that the allegation of fraudulent intent or suppression of fact against the appellants is not sustainable. It is also a fact that the issue involved has been subject matter of various Circulars before/after the introduction of new provisions for valuation w.e.f. 1-7-2000 and also matter of decision by this Tribunal in various cases including Maruti Suzuki India Ltd. (supra). This last mentioned case was taken up on appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee respondents to the manufacturer, which in aggregation has to be treated as the value on which duty liability has to be discharged as per Rule 6 of the Central Excise Valuation Rules, 2000 (supra) read with Section 4(1) of the Central Excise Act, 1944. The Tribunal s Larger Bench decision in the case of ONGC Ltd. (supra) also makes it clear that the price actually paid or payable for the goods, when sold, in addition includes any additional consideration which is being received by seller or assessee on behalf of the buyer, by reason of, or in connection with, the sale. In the present case, additional consideration which is being received by the assessee by reason of or in connection with the sale is the reimbursement money being received from Oil Pool Account. 5.13 Decisions of Tribunal rendered distinguishing the case of Super Synotex: A. Welspun Corporation Ltd. [2017 (358) ELT 630 (T-Mum)] 5.1 We have gone through the relevant clauses of Chapter IV-A of the Gujarat Value Added Tax Act, 2003. We find that the Government of Gujarat had declared Incentive Scheme 2001 wherein benefits provided under Economic Development of Kutch District, Government of Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm remission from sales tax itself means that the sales tax was actually payable at the time of clearance of goods but was remitted at a later date by passing of assessment orders by the Sales Tax authorities. We find that Section 4(c) and (d) of the Central Excise Act, defines transaction value and Place of removal as under :- place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed; Transaction Value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction value. However, the adjudicating authority overlooked the fact that Apex Court in this case was dealing with the Rajasthan Sales Tax Incentive Scheme of 1989. This incentive scheme was in the nature of an exemption from the levy of Sales Tax III excess of 25% of the Sales Tax leviable, and consequently the balance 75% of Sales Tax was neither paid nor was payable. In the said case before the Hon ble Supreme Court the issue concerned collection and retention of Sales Tax or deferred payment of Sales Tax where the tax initially collected was retained with the assessee for a certain period of years. As per the scheme of the State Government a lump-sum payment of a certain percentage of this amount of. Sales Tax collected during the years was assumed to be sufficient discharge of the entire amount so collected, thus allowing the differential amount of Sales Tax to accrue to the benefit of the assessee. Hence, I find that the ratio of this ruling would not be applicable to the case of the appellants. The Instruction F. No. 6/S/2014-CX.1, Dated 17-9-2014 issued by the Board based on the ruling of Hon ble Supreme Court in the case of Super Synotex India Ltd (supra) also wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 5.6 In the case in hand it is very much clear that from the Scheme as well as from the Eligibility Certificate, that the amount of Sales Tax allowed to be remitted to the respondent was towards capital subsidy. Even the requirement to re-invest 50% of the incentive in projects in the State of Gujarat further emphasizes the point that the amount of Sales Tax retained was only as capital subsidy. We further find from the facts narrated in the impugned order that the incentive receivable as capital subsidy by the appellants was from the Department of Industries, whereas the Sales Tax amount collected was payable to the Department of Sales Tax but allowed to be retained and adjusted against such incentive by their very department which also granted refund of tax paid on raw materials and CST paid. This scheme was thus operated by Department of Sales Tax and accordingly Commercial tax officer has necessarily to pass order for each tax period. It implies that the State Government of Gujarat under which both the departments fall, would have put in place some mechanism whereby the incentive paid to the appellants by way of retention of Sales Tax collected from their customers and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and exemption was separately considered by the Govt. of Gujarat. While, Section 5 of the Gujarat Value Added Tax Act, 2003 provides in sub-Section (1) thereto that sales and purchase of goods specified in Schedule I shall be exempt from tax, sub-Section (2) empowers the State Government by a notification in the official gazette to exempt any specified class of sales or purchase or sales or purchases by any specified dealer or specified class of dealers from payment of the whole or part of the sales tax. On the other hand, the scheme of remission provided for under Section 41 of the Gujarat Value Added Tax Act, 2003, contemplates that the State Government/Commissioner of Sales Tax may remit the whole or any part of the tax payable in respect of any dealer or class of dealers. It is clear from reading of Section 5(2) as also Section 41 of the Act that while Section 5 grants exemption from the levy/payment of sales tax, remission under Section 41 is granted in respect of any part of the tax payable by a dealer. In case of exemption no tax is actually paid or actually payable, whereas in the case of remission, tax is actually payable and paid which is allowed to be remitted by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinguished the decision of the Apex Court in the light of Gujarat VAT Act, 2003. In the Welspun Corporation Ltd. case, the assessee had opted for remission of tax scheme under which a portion of the VAT paid was remitted back to the assessee. The Tribunal held that such subsidy amounts are not required to [be] included in the transaction value. 9. In the present case we know that for the initial period the assessees are required to remit the VAT recovered by them at the time of sale of the goods manufactured. A part of such VAT is given back to them in the form of subsidy in Challan 37B. Such challans are as good as cash but can be used only for payment of VAT in the subsequent period. In terms of the scheme of the Government of Rajasthan payment of VAT using such challan are considered legal payments of tax. In view of the above, Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. 10. It is pertinent to reproduce the observations of the Tribunal in the Welspun Corporation Ltd. case 5.1 The Respondent company opted for Remission of Tax Scheme and was thus eligible for the Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited and paid in favour of Commercial Tax Office. Such amount is to be considered as advanced tax deposited by the assesee and the balance is required to be paid by the assessee. 8. We find that a similar issue has come up before the Tribunal in the case of Shree Cement Ltd V/s Commissioner decided by the Tribunal vide Final Order No. 50189-50191/2018 dated 18/01/2018 = 2018-TIOL-748-CESTAT-DEL in which the Tribunal observed as follows:- . 11. By following the decision of the Tribunal in the Welspun Corporation Ltd. case we conclude that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. 12. In the result, the impugned orders are set aside and the appeals are allowed. 9. The facts of the present case are similar. In the case of the Schemes under the Rajasthan Government, the subsidy amount is paid in the form of VAT Challan whereas in the case of the Scheme of the MP Government, the same is allowed by way of book adjustment against the VAT payable for the subsequent period. E. FCC Clutch India Pvt Ltd. [2019 (365) ELT 539 (TDel)]: 4. During the course of arguments, both sides hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the fixed assets. The condition of the remission amongst others included to remain in production, employment of certain percentage of persons in assessee unit, and numerous other conditions as brought out in Para 9 of the impugned Order-inAppeal. 7. The Tribunal in the Welspun Corporation Ltd. (supra) case has concluded that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. F. In the case of H-One India Pvt Ltd [Final Order No. 50675-50680/2019 dated 30.04.2019] 9. The Commissioner (Appeals) has placed reliance on the decision of the Supreme Court in Super Synotex (India) Ltd. This decision of the Supreme Court in Super Synotex (India) Ltd. was considered by Division Benches of the Tribunal in Welspun Corp. Ltd., Shree Cement Ltd. and M/s Maihar Cement and distinguished for the reason that the Supreme Court was examining a scheme under which only 25% of VAT was required to be deposited and the remaining 75% was to be retained by the assessee, whereas under the 2004 Scheme, the entire amount collected by the assessee was required to be deposited with the State authorities. 10. It would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of VAT using such Challan are considered legal payments of tax. In view of the above, Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. 10. It is pertinent to reproduce the observations of the Tribunal in the Welspun Corporation Ltd. case 5.1 The Respondent company opted for Remission of Tax Scheme and was thus eligible for the Capital subsidy in the form of remission of Sales Tax subject to the conditions to be fulfilled . The subsidy in the form of remission of sales tax was in fact a percentage of capital investment Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax. The quantum of remission was based upon the investment made in the fixed assets. The condition of the remission amongst others included to remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. It is evident that the VAT/CST paid by the appellant is credited into the State Exchequer. 8. We have gone through the case laws relied upon by the appellant and we find that Tribunal consistently is taking the view, that subsidy amount cannot be included in the transaction value of the product for the purpose of payment of duty. In particular, in the case of Ultratech Cement Ltd. (supra) Tribunal has considered a similar issue pertaining to the Rajasthan State Government where subsidy was paid to the assessee by way of credit in the form VAT 37B. In the present case, we find that subsidy is sanctioned and credited to the bank account of the appellant. We find that the decision of the Tribunal is specifically applicable to the facts in the present case. The observations of the Tribunal in Shree Cement Ltd. case (supra) are reproduced below : 7. We have heard both sides at length and perused the appeal record. As out lined above, the appellants are covered by the Investment Promotion Schemes of the Rajasthan Government. In terms of the various schemes of the Rajasthan Government, the appellants are required to discharge their VAT liability by making payment of the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remission of Sales Tax subject to the conditions to be fulfilled.... The subsidy in the form of remission of sales tax was in fact a percentage of capital investment... Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax. The quantum of remission was based upon the investment made in the fixed assets. The condition of the remission amongst others included to remain in production, employment of certain percentage of persons in assessee unit, and numerous other conditions as brought out in Para 9 of the impugned Order-inAppeal. 11. By following the decision of the Tribunal in the Welspun Corporation Ltd. case we conclude that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. 12. In the result, the impugned orders are set aside and the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sales tax to have been paid, condition of Section 4(3)(d) of Central Excise Act, 1944 stands fulfilled. We are also of the opinion that there is a difference between remission and exemption. As while in case of exemption, the levy itself is statutorily exhausted and no sales tax is paid or payable by the assessee whereas in case of remission, the sales tax is payable as there is no exemption from levy and/or payment of sales tax at the time of clearance and the same has to be statutorily discharged. 8. In the present case, the remission is in the nature of subsidy which the appellant was receiving from the State Government in the form of VAT 37B Challans and not from the buyers of the appellant. The said remission was not only as good as cash but can also not be considered as an additional consideration. The definition of transaction value under Section 4(3)(d) of Central Excise Act becomes relevant at this stage which reads as follows:- Transaction value means the price actually paid or payable for the goods, when sold and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitially retained by the appellant. Thus, the facts of present case are absolutely different from the case decided by the Hon ble Apex Court. 5.13 From the above referred decisions it is observed that all the decision have been rendered by the tribunal distinguishing the Super Synotex of Hon ble Supreme Court relying on the decision in the case Welspun Corporation. Interestingly in this case tribunal has not dealt with argument based on the decision of Hon ble Apex Court in the case of Super Synotex, and have brushed aside the same as is evident from para 5.5 of that order. Further Tribunal also did not found the decisions rendered in the case of Uttam Galva Steels [2016 (331) E.L.T. 261 (Tri.-Mum.)], relevant and distinguished the same saying that decision was rendered in facts of that case. We observe that all the subsequent decisions rendered by the Delhi Bench listed above follow Welspun Corporation and not Uttam Galva Steels decision. Kolkata bench has refused to agree that in Welspun Corporation case, the bench has distinguished the decision of Hon ble Supreme Court in case of Super Synotex (refer para 8). While all the decisions of Delhi Bench say that Welspun Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le nor payable and if still an assessee collects any amount on the head of sales tax, that would become the price of the goods. Therefore, an incentive scheme of the present nature has to be treated on a different footing because the sales tax is collected and a part of it is retained by the assessee towards incentive which is subject to assessment under the local sales tax law and, as a matter of fact, assessments have been accordingly framed. In this factual backdrop, it has to be held that circular entitles an assessee to claim deduction towards sales tax from the assessable value. The fact situation in Modipon Fibre Company (supra), as is manifest, was different. In our considered opinion what has been stated in Modipon Fibre Company (supra) cannot not be extended to include the situation (iii). We are inclined to think so as the definition of term value under Section 4(4)(d) was slightly differently worded and the C.B.E. C. had clarified the same in the circular dated 12-3-1998 and benefits were granted. 5.14 Hon ble Apex Court has in case of Grasim Industries [2016 (334) ELT 385 (SC)] has taking note of the conflicting decisions of co-ordinate benches, observed as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as framed in para 5.15,supra. (Order pronounced in the open court on _______.2022) (Anil Choudhary) Member (Judicial) (Sanjiv Srivastava) Member (Technical) ANIL CHOUDHARY: 7. I got the advantage to go through the order recorded by my ld. Brother, Shri Sanjiv Srivastava, Member (Technical), but, however, I am unable to agree with the same. I am writing my separate order as follows:- 8. It is evident from a plain reading of the Rajasthan Investment Promotion Scheme 2003-2010, that it provides for grant of Capital Investment Subsidy (interest subsidy) and Employment Generation (Wage Subsidy). The appellants herein are located in the state of Rajasthan and were availing Capital Investment Subsidy and Wage (Employment) Generation Subsidy, which was available for a period of 7 years to all the eligible enterprises, to which, an Entitlement Certificate, as prescribed under the Scheme has been issued. Further, as per the Scheme, the maximum amount of subsidy is restricted to 50% of the total amount of sales tax/VAT plus CST, which became due and has been deposited in the Government exchequer. It is further provided, in case of modernizatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an additional consideration (on sale of goods) by any stretch of imagination. Rather it is the amount of subsidy, which is not related to the selling price of the appellant nor flowing directly or indirectly from the Government to the appellant enterprise, by way of price subsidy. 11. Further, in the facts and circumstances of the present case, I find that the capital/wage subsidy has not reduced the selling price of the goods. Thus, there is no case of transfer value being depressed, which may amount to indirect flow from the buyer to the seller/appellant. 12. So far the ruling of the Apex Court in Indo Rama Synthetic (supra), the fact was that the selling price or consideration was at a lower price and the difference was being received by Indo Rama Synthetic (supra), through Advance Authorization issued by the DGFT against cancelled advance licence of buyer, in favour of Indo Rama Synthetic (supra). I find that the capital investment/wage subsidy received by the appellant is on the basis of the capital investment and employment generated (wages payment supported by the ESI/EPF records). Further, the qualifying amount of subsidy is not calculated with reference to the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment on the basis of the capital investment and employment generation/wages paid and thus, is not an additional sales consideration, as held by the Member (Judicial). OR The amount of subsidy under dispute is not an independent amount received by the appellant. Rather it is computed with reference to the sales tax paid and thus, is an additional consideration for sales, as held by the Member (Technical). (C) The facts in this appeal are similar to the facts in the case of Super Synotex India Ltd. (supra), as held by the Member (Technical) OR The facts in the present case are difference and hence, ruling of the Apex Court in the case of Super Synotex India Ltd. (supra) is not applicable. (D) Under the facts and circumstances, the appellant have received VAT subsidy (directly affecting the selling price of the goods), as held by the Member (Technical) OR It is not a case of VAT subsidy, affecting or depressing the selling price of the goods, as held by the Member (Judicial). (E) The provisions of Section 9 of Rajasthan VAT Act has not been considered in the case of Shree Cement Ltd. (supra) leading to erroneous judgment in the said case, as held by the Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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