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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 ..... nvolved in Rs. OIO No. and Date Adjudicating authority Date of personal hearing 1 CE/JP/774/X/17 M/s. Harit Polytech Pvt Ltd., G-79 & E93, RIICO Industrial Area, Bagru Extension, Jaipur- 303007 C. Ex. Duty - Rs. 3,33,510/ Penalty - Rs. 1,66,755/ 17/Dem/2017 dt. 05.06.2017 Assistant Commissioner, Central Excise Division-II, Jaipur 29.01. 2019 and 15.02. 2019 2 CE/AL/219/V/18 M/s. Tirupati Balaji Furnaces Pvt. Ltd., Plot No. B-35 I & II, RIICO Industrial Area, Khushkhera, Bhiwadi 301019 Distt. - Alwar C. Ex. Duty - Rs. 10,73,474 /- and Rs. 1,84,320/ Penalty - Rs. 10,73,474/- 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 /- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63/- 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. Ltd., G1171 & 172, RIICO Industrial Area, Neemrana, Dist. Alwar C. Ex Duty - Rs.3,80,975/- 20/20 18 dated 10.05.2018 Assistant Commissioner, CGST Division-E, Behror 24.05.2019 1.3 Appeals filed by some of the Appellants against the order in appeal, have been decided by this tribunal earlier and at present we are concerned with the appeal of following appellants: Sr No Excise Appeal No Appellant Sr No in table above 1 51011/2019 Harit Polytech Pvt Ltd 1 of table 1 2 51251/2019 Ganpati Plastfab Ltd 8 of table 1 3 51252/2019 Apex Aluminium Extrusion Pvt Ltd 6 of table 1 4 52047/2019 Mahamaya Steels 4 of table 1 5 52066/2019 Tirupati Balaji Furnaces Pvt Ltd. 2 of table 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wage subsidy was credited by the State Government by way of issue of Entitlement Certificate under scheme of RIPS 2003/2010, and same was provided to them by way of 37B Challans issued. The appellants having paid the wages to their workmen utilized these Challans for discharging their VAT liability. * VAT was in no way exempted either in part or toto, but was discharged by utilization of these Challans. It was just like payment of duty from CENVAT credit account. * The schemes covered in the cited Supreme Court Judgements and the CBEC circular F. No. 06/08/2014-CX1 dt.17.09.2014 is drastically different from the impugned RIPS, 2010, in so far as that in the schemes covered under SC orders, the unit used to charge full VAT and pay only half. The units were allowed to retain 50% of VAT so collected from the Customer as a part of subsidy. They were only paying 50% in the returns also. They have paid all the VAT amount so collected. * The appellant was therefore within its legal rights to utilize the funds so received from the for any purposes. * The decision of the Hon'ble Apex Court in case of Super Synotex, Maruti Suzuki, National Engineers etc., are clearly distinguishable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a relation to the rate of duty of excise or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or" 5.4 Now we are concerned with seven appeals out of which five are those which have been disposed of by the Commissioner (Appeal) simultaneously along with the appeals of appellants as listed in para 5.2 and 5.3. 5.5 We note that vide order dated 25.08.2010, Government of Rajasthan introduced Rajasthan Investment Promotion Scheme, 2010. The salient features of the scheme relevant for our consideration of the issue are reproduced below: "4. SUBSIDY A. Subsidy shall consist of Investment Subsidy and Employment Generation Subsidy and shall be allowed, for a period of seven years, to all enterprises to which an Entitlement Certificate as prescribed under the Scheme has been issued. However for MSME located in the notified area the benefit of subsidy shall be for ten years B. The maximum amount of subsidy shall be 50% of the total amount of tax (es) that is VAT and CST or SGST (whenever introduced), which have become due and have been deposited into the government exchequer, however, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Modernization/ Expansion/ Diversification. 6. Procedure for Claim D. Claim of Subsidy: (a) The Enterprises making new investment or investment for Modernization/ Expansion/ Diversification or for revival of Sick Industrial Enterprise or setting up project for common social good under the Scheme, for availment of Şubsidy under the Scheme, shall submit duly completed application in Form - VI or Form - VII, appended to the Scheme, as the case may be, to the Member Secretary of the appropriate Screening Committee within 90 days of commencement of commercial production, Such application shall be accompanied by the following documents; 1. Copy of project report duly certified by Chartered Accountant; 2. Proof of investment; 3. Copies of Challan for the amount of contribution of EPF and/ or ESI deposited or copy of insurance policy obtained for medical treatment; 4. Proof of deposit of VAT/CST or SGST (whenever introduced), if deposited already; 5. An affidavit in support of the facts of the application; and 6. Certificate of valuation by Chartered Accountant in Form - XIII and Form - XIV appended to this Scheme, as the case may be. 7. An undertaking that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Certificate as prescribed under the Scheme has been issued shall apply quarterly in Form - IX, appended to the Scheme, to Assistant Commissioner/ Commercial Taxes Officer of the area where the enterprise is registered with the Commercial Taxes Department along with proof of deposit of tax and copy of Challan for the amount of contribution of EPF and/or ESI or copy of insurance policy obtained for medical treatment of employees. B. On receipt of the application, the officer concerned shall verify the facts mentioned in the application and shall pass an order for sanction cum disbursement of Subsidy in Form VAT-37B, within 15 days from the receipt of application, subject to availability of Budget provision. C. The said sanction in Form VAT-37B shall be forwarded to the concerned Treasury Officer for deposit of subsidy amount for the subsequent tax period(s) of the applicant by way of adjustment through treasury Book Transfer (BT). D. The Treasury Officer shall take necessary steps to pass adjustment order Book Transfer (BT) without any delay and shall forward two copies of duly adjusted Form VAT-37B to the Assistant Commissioner/ Commercial Taxes Officer. A copy of same shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ganization to reduce the cost of producing food, a product etc. and to help to keep prices low. Oxford A sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low. 5.7 From the above definition it is evident that the subsidies provided by the government as part of investment policy etc, tend to reduce the sale price of the goods. In terms of the principle of economics and accounting the subsidies granted would be reflected as income in the book of accounts for the purpose of expenditures to be incurred towards investment and wages. As such the subsidy tends to reduce the burden incurred by the beneficiary towards these expenditures which definitely get reflected on the sale price of the goods to the ultimate buyer. Thus the transaction value as per Section 4 of Central Excise Act, 1944 between the buyer and seller is depressed by the amount of subsidy so receive. Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 prescribes that - "Where the excisable goods are sold in the circumstances specified in clause (a) of sub section (1) of section 4 of the except the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Tribunal') taking the plea that 'additional consideration' under Section 4 of the Act refers only to the additional consideration flowing from the buyer to the assessee and in the present case no such additional consideration flew from the advance licence buyers of the 'deemed exports'. The Tribunal, in arriving at this conclusion, relied upon its own decision in the case of IFGL Refractories Ltd. v. Commissioner of Central Excise, Bhubaneswar-II - 2001 (134) E.L.T. 230 wherein it was held that statutory benefits allowed by statutory authorities cannot be considered as additional consideration flowing to a manufacturer from the buyer. In the opinion of the Tribunal, the drawback was received from the Government and not from the buyers and, therefore, such drawback could not be treated as additional consideration for the purpose of arriving at 'transaction value' as per the definition thereof under Section 4 of the Act. 3. Pertinently, the decision of the Tribunal in IFGL's case stands overruled by this Court in Commissioner of Central Excise, Bhubaneswar-II v. IFGL Refractories Ltd. - (2005) 6 SCC 713 = 2005 (186) E.L.T. 529 (S.C.). In the said case, this Court has held such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tage of policies of the Government and the benefits flowing therefrom, then such benefit cannot be said to be an "additional consideration". 4. In a matter like this, this Court could simply follow the aforesaid judgment and set aside the order of the Tribunal, allowing this appeal. However, Mr. V. Lakshmikumaran, learned counsel appearing for the assessee, made a fervent and passionate plea that the aforesaid judgment of this Court in IFGL's case needs reconsideration. He, thus, pleaded for referring the matter to a larger Bench. Detailed and elaborate submissions were made in this direction which were stoutly refuted by the learned counsel for the Revenue. We may immediately record that the assessee's counsel has not succeeded in persuading us to refer the matter to a larger Bench. Hereinafter, we record our reasons for taking this view. For this purpose, we may first state at this stage the mechanism that goes into getting the benefit of duty drawback in the kitty of the assessee. 5. As mentioned above, the assessee had been selling polyester staple fiber to two classes of domestic buyers, in addition to exporting the same in the international market. One of the category of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r will be given to the licence holder and copy thereof will be sent to the intermediate supplier as well as the licensing authority of the intermediate supplier. The licencee in such case has an option either to supply the intermediate product to holder of Advance Licence for physical exports/ deemed exports or to export directly." 8. The aforesaid narratives would demonstrate that the assessee could get the duty drawback and it could happen when advance licence holder category of buyers got their advance licences invalidated thereby surrendering the benefits accrued under such advance licence. Issue for consideration is as to whether it would constitute 'additional consideration' received by the assessee as per the definition of 'transaction value' contained in Section 4 of the Act read with Rule 6 of the Rules. We, therefore, shall reproduce the relevant portion of the provisions of Section 4 which existed at the material time, which read as under : "4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of any additional consideration flowing directly or indirectly from the buyer to the assessee. Explanation. - For removal of doubts, it is hereby clarified that the value, apportioned as appropriate, of the following goods and services, whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the price actually paid or payable, shall be treated to be the amount of money value of additional consideration flowing directly or indirectly from the buyer to the assessee in relation to sale of the goods being valued and aggregated accordingly, namely: (i) value of materials, components, parts and similar items relatable to such goods; (ii) value of tools, dies, moulds, drawings, blue prints, te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical 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 buyer. He conceded that it could happen only after buyers got their advance licences invalidated. But his explanation was that it was not necessary that such a licence could be issued to the assessee merely because the advance licence in favour of the buyer was invalidated. He emphasized that DGFT could still refuse to issue the advance licence for intermediate supply to the assessee. 12. This argument does not convince us at all. Fact remains that the issuance of advance licence for intermediate supply to the assessee was facilitated as a result of surrender of advance licence in favour or the buyer by the buyer. Thus, getting the licence invalidated for direct import of items in favour of the buyer was the trigger point for issuance of the advance licence for intermediate supply in favour of the assessee. Possibility of refusal on the part of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this category of buyers, namely, those who are/were the holders of advance licence, to be eligible for purchase at a discounted price was only a 'condition for sale of goods' put forth by the assessee. He submitted that 'it was not a consideration for sale of goods'. He, thus, drew distinction between condition for sale and consideration for sale of goods and in support of this submission referred to the celebrated and classic judgment of the English Court in Thomas v. Thomas - (1842) 2 QB 851. This judgment has been analysed by Chitty on Contracts (31st Edition - Volume I) and Mr. Lakshmikumaran made the said analysis as part of his submission. That was a case where a testator, shortly before his death, expressed a desire that his widow should, during her life, have the house in which he lived, or GBP100. After his death, his executors 'in consideration of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was requested as the price or exchange for the promise." In Thomas v. Thomas the executors had not requested the plaintiff to remain a widow; while in Re Soames a request by A that B should establish the school could be inferred from A's expressed intention to participate in its management. This distinction is further illustrated by Carlill v. Carbolic Smoke Ball Co. where the claimant provided consideration for the defendants' promise by using the smoke-ball; but her catching influenza was a condition of her entitlement to enforce that promise." 17. We are afraid, such a distinction between consideration and condition, as sought to be drawn by the learned counsel for the assessee, would not apply to the instant case. It was possible if the transaction between the buyers and the assessee was seen in isolation. However, in the present case, it needs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, 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 back of additional considerations from the buyer of the said goods to the seller, which is the assessee. 19. On the facts of this case, we are of the opinion that the Commissioner has rightly come to the conclusion with regard to the fact that additional monetary consideration, in addition to the price being paid for the goods, i.e. transfer of advance import licence in favour of the seller by the buyer enabling the seller of the goods to effect duty free import of the raw materials and bringing down the cost of production/procurement, is a consideration, the monetary value of which has to be considered under the provisions of the Rules, i.e. Rule 6 thereof. 20. Thus, we do not see any reason to deviate from the decision rendered by this Court in IFGL's case. 21. Before we part with, one more aspect to which our attention was drawn by Mr. Lakshmikumaran ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition, 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 State exchequer by way of deposit. The rest of the amount has been retained by the assessee. That has to be treated as the price of the goods under the basic fundamental conception of "transaction value" as substituted with effect from 1-7-2000. Therefore, the assessee is bound to pay the excise duty on the said sum after the amended provision had brought on the statute book i) Further, the revenue's case of Commissioner of Central Excise, Delhi-III Vs. Maruti Suzuki India Limited reported in 2014 (307) ELT 625 (SC) is also not applicable to the case of the appellant; inasmuch as, in that case, the sales tax collected by the assessee was never deposited to the sales tax department but the assessee in that case was allowed to retain the same. In that case, under the relevant Sales Tax statue, such collected tax was not deposited in the modes prescribed for the payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the amendment in Section 4 with effect form 1-7-2000 and in arriving "the transaction value" the amount of 75% which was retained by the assessee, will be included. As per the aforesaid decision, the assessee/respondent herein will not be liable to pay any excise duty on the sales tax amount which was retained under the Incentive Scheme up to 30th June, 2000. However, this component of sales tax which was retained by the assessee after 1-7-2000 shall be includible in arriving at the transaction value and sales tax shall be paid thereon. 5. Insofar as the question of extended period of limitation is concerned, we have gone through the order of the Commissioner and are of the opinion that he has rightly held that the extended period of limitation as per the proviso of Section 11A(1) of the Central Excise Act, 1944 would be applicable in the given circumstances." C. Maruti Suzuki. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was made clear that if tax is paid at a concessional rate, that amount may be deducted from the transaction value. But, where the tax is not paid at the time of the transaction, but is paid subsequently, as for example, sales tax payable under a deferment scheme, then too the benefit of exclusion would be allowed since the amount would be actually payable. The relevant paragraphs of the circular, namely, paragraphs 10 and 11 read as follows :- "10. As regards exclusion of taxes while working out assessable value, the definition of transaction value itself mentions that whatever amount is actually paid or actually payable to the Government or the relevant statutory authority by way of excise, sale tax and other taxes, such amount shall be excluded from the transaction value. In other words, if any excise duty or other tax is paid at a concessional rate for a particular transaction, the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 arriving 'transaction value' said sales tax benefit which was retained by the assessee, would be included while fixing the 'transaction value'. Counsel for both the parties would not dispute that the matter is covered by the aforesaid judgment. 2. In these appeals the period involved is from 1st April, 1998 to 31st March, 2002. Thus, insofar as the period up to 1-7-2000 is concerned, case has to be decided in favour of the assessee and for the period from 1-7-2000 the benefit availed under the sales tax has to be included while arriving at the transaction value." 5.11 Though we observe that Hon'ble Apex Court has constantly maintained that the amounts collected by the appellants as sales tax/ VAT, and retained by them in terms of any incentive/ investment promotion scheme cannot be claimed as deduction from the transaction value for arriving at assessable value in terms of Section 4 of Central Excise Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the Decision of Hon'ble Apex Court in the case of Super Synotex: A. In the case Jayaswal Neco Industries Ltd. [2016 (344) E.L.T. 578 (Tri. - Del.)] tribunal Delhi Bench has held as follows: "6. We have considered the submissions from both the sides and perused the records. On merits, the question as to whether the VAT which was exempt and which the appellant have collected from the customers and retained in terms of a Scheme of the State Government, is to be included in the assessable value or not, stands decided against the appellant by the Apex Court's judgment in the case of Super Synotex (India) Ltd. (supra). Therefore, we hold that the appellant during the period of dispute were liable to pay duty on the assessable value including amount of VAT collected by them from their customers and retained by them and since the VAT amount was not included in the assessable value, there has been short payment of duty. However, the duty demand for the 2006-07 period has been issued only on 28-4-2011 by invoking extended period of five years under proviso to Section 11A(1) and this demand would survive only if it can be proved that the appellant had not acted under bona fide belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is that if the assessee charged and collected amount towards sales tax but not paid the said full amount to the State, the amount retained under whatever name shall not be eligible for exclusion in terms of Section 4(3)(d)." C. While considering the similar issue in respect of West Bengal Incentive Scheme 2009, Kolkata Bench in the case of Haldia Petrochemical Ltd. [2020-TIOL-552-CESTAT-KOL] took note of the decision of the Mumbai Bench in case of Welspun Corporation, and decided the matter following the decision in case of Super Synotex, stating as follow: "8. We note that this judgment was not confined to any particular law of a particular state or a particular scheme but has laid down the law. Review Petitions filed against this judgment were also dismissed by the Hon'ble Apex Court. There is nothing on record to show that a larger Bench of Supreme Court has taken any contrary view. We therefore, find this judgment is binding on us and leaves us with no option but to hold that the assessee in the present case is bound to pay Excise Duty on the amounts collected as representing VAT but which were not paid to the government under the scheme. Ld. Counsel would argue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants have been issued with an Entitlement Certificate on 20-10-2003 by the Haryana VAT authorities. The appellants collected an amount of Rs. 73,12,73,423/- as VAT from their customers during the periods 2003-04 to 2008-09 and this amount has not been paid to the VAT authorities. The said amount has been retained by the appellants in terms of the applicable regulations of the VAT Rules. Section 61(2)(d) of Haryana Value Added Tax Act, 2003 stipulates that, tax concessions to the industrial units in terms of Haryana General Sales Tax Act, 1973 shall remain in force with certain modifications. Sub-clause (i) states that, an industrial unit availing the benefit of exemption from the payment of tax may, in the prescribed manner, change-over to deferment of payment of tax for the remaining period. Sub-clause (iii) stipulates that, an industrial unit availing benefit of deferment of payment of tax may, in lieu of making payment of the deferred tax after five years, pay half of the amount of the deferred tax upfront along with the returns and on making payment in this manner, the tax due, according to the returns, shall be deemed to have been paid in full. As stated earlier, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, deeming fiction of a particular Act cannot be extended to the excise law automatically. Further, the purpose and reason behind the legal fiction, when examining the context, will clearly show that such deeming fiction has limited application to the enactment which contains the same. In the present case, it is the appellants' plea that when they pay 50% of VAT (out of 100% collected from the clients) they have fulfilled their VAT liability in full. Hence, full VAT liability should be available for abatement for Central Excise. In this connection, we find that the Hon'ble Supreme Court examined the issue of retention of collected Sales Tax and its treatment in ascertaining the transaction value for excise purpose. In Commissioner of Central Excise, DelhiIII v. Maruti Suzuki India Ltd., 2014 (307) E.L.T. 625 (S.C.), it has been clearly held that 50% of the Sales Tax collected was retained by the assessee and was not actually paid to the exchequer nor was it actually payable since the HPC permitted the assessee to retain the said amount. The Hon'ble Supreme Court observed, therefore, whichever way the issue is looked at, the fact remains that the assessee retained with it 50% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deliberate suppression of fact with intent to evade payment of Central Excise duty invoking the extended period for demand, is not legally sustainable. Accordingly, we hold that the appellants will be liable to different duty of Central Excise during the normal period of demand as confirmed by the lower authority. The demand for extended period as well as penalties are set aside. The appellants pleaded that differential duty, if any, payable should be arrived at taking the additional consideration as inclusive of excise duty as they have not collected any excise duty on such value from the customers. We find that in view of the facts discussed in the order, the appellants are eligible for such calculation of duty liability. The appeal is disposed of in the above terms." C. In case of Indian Oil Corporation Ltd. [2017 (357) ELT 197 (T-Bang)], Bangalore Bench has held as follows: "6.9 We take support for our conclusions made above from the Hon'ble Supreme Court's decisions in the case of Commissioner of Central Excise, Jaipur-II v. Super Synotex (India) Ltd. [2014 (301) E.L.T. 273 (S.C.)] and in the case of Commissioner of C. Ex., Jaipur v. Shree Rajasthan Syntex Ltd. [2015 (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions to be fulfilled. After applying to the Commissioner of Sales Tax/VAT, the eligible units were issued entitlement certificate and Form 110 to make them entitle to the benefit of tax deferment or tax remission as the case may be. The subsidy in the form of remission of sales tax was in fact percentage of capital investment. The intention of the State Government was, thus, instead of granting the capital subsidy to the units setting up their manufacturing facility, the subsidy be granted by remitting sales tax amount. 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of above Section 4, the duty is chargeable on excisable goods on its value which is to be determined at the time and place of removal. Thus whatever transaction value of the goods prevailing at the time of its removal shall be liable to excise duty, which however shall not include the amount of duty of excise, sales tax and other taxes, if any, "actually paid" or "actually payable" on such goods. In the present case we find that the "sales tax" is "actually payable" to the Government at the time of removal of goods from the "place of removal". The liability to pay the sales tax/VAT is not extinguished at the time of removal of goods since it is not exempted from sales tax/VAT. It is only after the assessment of the sales tax officer and subject to the condition that the Respondent's liability to the Sales Tax is "remitted". Thus when the sales tax/VAT is payable at the time of removal in that case in terms of Section 4(d) of the Central Excise Act, the same is not includible in the transaction value. Further the sales tax amount was adjusted against the remission granted by the sales tax authority under an assessment. 5.4 The learned AR during hearing has relied upon the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31S) E.L.T. 626 (S.C.) the Hon'ble Supreme Court was seized of the Sales Tax Incentive Scheme, [1989] issued by the State of Rajasthan where full incidence of Sales Tax was allowed to be collected from the buyer, 75% thereof was retained by the respondent and the remaining 25% was paid to the State Government. Since the Incentive Scheme availed by the appellants was not of retention of sales tax but comprised of incentive equal to capital invested to be availed in any of 3 different ways as outlined at para 10.3 above. One of which i.e. its sub para (ii) is to avail incentive by way of remission of tax by retaining the amount of VAT collected and adjustment thereof as capital subsidy specified in the Eligibility Certificate equivalent to the capital investment made in fixed assets. This was further subject to the condition of re-investment of 50% of total incentive i.e. (i) to (ii) of para 10.3 above and not only (ii) incentive received in projects in State of Gujarat within a period of 10 years of the commencement of production. This is thus not an exemption of tax as was the issue before the Hon'ble Supreme Court in the above case, I find that the ratio laid down in this judgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transaction value. 5.7 The respondents have argued that in similar situation in case of manufacturers of fertilizers, where the subsidy was being received by such manufacturers from the Department of Fertilizers the C.B.E. & C. vide Circular No. 983/7/2014-CX., dated 10-72014 has clarified that subsidy is not any additional consideration flowing directly or indirectly from the buyer to the seller and hence, is not required to be included in the assessable value. Applying the same analogy to the facts of the present case and agreeing with the contentions of the respondents, we are of the view that since in the present case the remission is incentive for setting up the unit is Kutch area, the same would not form part of transaction value. 5.8 The Respondent has cited the order of Tribunal in case of CCE v. Uttam Galva Steels Ltd. 2015-TIOL-2242- CESTAT-MUM = 2016 (331) E.L.T. 261 (Tri.-Mum.). We find that the fact of that case is different from the facts in the present case, therefore, we do not incline to take any inference from the said decision of this Tribunal. 5.9 We find that even sub-section (7A) of Section 11 of the Gujarat Value Added Tax Act, 2003 states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value. Hence for this reason also the sales tax remitted by the Government towards incentive of Capital investment cannot be a part of the transaction value." B. In case of Shree Cement Ltd [2019 (365) ELT 900 (TDel)], following has been held: "7. We have heard both sides at length and perused the appeal record. As outlined 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. Out of such VAT credited to the Government, a certain portion is disbursed back to them in the form of subsidies. Such disbursement happens in the form of VAT 37B, challan which can be utilized in subsequent periods to discharge VAT liability. The crux of the dispute in the present case is whether such s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme 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-in-Appeal." 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." C. Utratech Cement Ltd [2018-TIOL-727-CESTAT-DEL] follows the decision rendered in the case of Shree Cement Ltd. D. Maihar Cement [2018-TIOL-1490-CESTAT-DEL] "6. The department has raised demands for payment of differential excise duty by including the amount received by the appellant from the State Govt. of MP under the MPIIPAS, 2004 Scheme. The demand has been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we note that the Tribunal in the case of CCE v. Welspun Corporation Ltd. - 2017-TIOL-1287-CESTAT-MUM. = 2017 (358) E.L.T. 630 (Tri. - Mumbai) has distinguished the decision of the Apex Court in the light of Gujarat VAT Act, 2003. In the Welspun Corporation Ltd. (supra) 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. 5. In the present case, it is evident 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. 6. It is pertinent to reproduce the observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han Government, the appellants are required to discharge their VAT liability by making payment of the same. Out of such VAT credited to the Government, a certain portion is disbursed back to them in the form of subsidies. Such disbursement happens in the form of VAT 37 B, challan which can be utilized in subsequent periods to discharge VAT liability. The crux of the dispute in the present case is whether such subsidy amounts are required to be included in the assessable value of the goods manufactured by the appellants, in terms of Section 4 of the Central Excise Act. As per the concept of transaction value outlined in Section 4, with effect from 01/07/2000, any sales tax/VAT actually paid can be deducted from the transaction value for payment of excise duty. Revenue has taken the view that payment of VAT using 37B Challans cannot be considered as actual payment of VAT. 8. Both sides have referred to the decision of the Apex Court in the case of Super Synotex India Ltd. In the above decision the Apex Court has categorically held that after 01/07/2000, unless the sales tax/VAT is actually paid to the good, no benefit towards excise duty can be given in terms of Section 4(3)(d). Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee using VAT 37B Challans". 11. The Tribunal in M/s Maihar Cement followed the aforesaid decision rendered in M/s Shree Cement Ltd. as basically both the Scheme of the Rajasthan Government and Madhya Pradesh Government were identical. 12. In the present case, as noticed above, the Appellants in terms of the Scheme had deposited the entire amount of VAT collected. It is this amount that is used as a measure for granting financial assistance to be subsequently provided. 13. The judgment of the Tribunal in M/s Maihar Cement and M/s Shree Cement Ltd. would, therefore, apply and the financial assistance granted to the Appellants cannot be included in the Transaction value for payment of excise duty. 14. The learned Authorised Representative has, however, placed reliance on the decision of the Tribunal in Jayaswal Neco & ors. Industries Ltd. vs Commissioner of Central Excise & Service Tax, Raipur, reported in 2016 (344) ELT 578 (Tri.-Del.) and Honda Motorcycles & Scooters India P. Ltd. vs Commissioner of Central Excise, Delhi-III, reported in 2017 (357) ELT 828 (Tri.-Chan.), to contend that the "Subsidy" should be included in the "Transaction Value". 15. It needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessable value of the goods manufactured by the appellants, in terms of Section 4 of the Central Excise Act. As per the concept of transaction value outlined in Section 4, with effect from 1-7-2000, any sales tax/VAT actually paid can be deducted from the transaction value for payment of excise duty. Revenue has taken the view that payment of VAT using 37B Challans cannot be considered as actual payment of VAT. 8. Both sides have referred to the decision of the Apex Court in the case of Super Synotex India Ltd. In the above decision the Apex Court has categorically held that after 1-7-2000, unless the sales tax/VAT is actually paid to the good, no benefit towards excise duty can be given in terms of Section 4(3)(d). However, we note that the Tribunal in the case of Welspun Corporation Ltd. (Supra) has 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 the included in the transaction value. 9. In the present case we k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "6. After hearing both the parties, we observe that the appellant was availing the benefit of Rajasthan Investment Promotion Scheme, 2010 (RIPS) notified by State Government of Rajasthan with a view to promote investments thereby entitling the appellant to a subsidy up to certain percentage of the VAT paid by the appellant. It is an admitted fact that the said subsidy is credited to the sales tax account of the appellant which he receives by way of VAT 37B Challans. It is also an apparently admitted fact that the appellant was paying total VAT charged at applicable rates on sale of goods to the State Exchequer and was filing the VAT returns. The VAT 37B Challans, the appellant was utilising to discharge the output VAT liability for the subsequent period. The Department has treated the said discharge of VAT liability vide the said VAT Challans as retention of sales tax by the appellant holding same, while levying/confirming the impugned demand to have been included in the transaction value. The authorities below have held that utilising the VAT Challans does not amounts to the actual payment. Accordingly, the value thereof is liable to be included in assessable value and is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." 9. In terms of the aforesaid definition, it is clear that the transaction value includes all the payments made by the buyer to the assessee. However, in the instant case, the subsidy has been paid to it by the State Government. Only the mode of payment is by way of crediting the sales tax head under VAT challan in favour of the appellant. Thus, it could not be said that the amount is in the nature of additional consideration. 10. We also draw our support from the case Shree Cement Ltd. v. C.C.E., Alwar - 2018 (Vol-I) TMI 915-CESTAT-Mum = 2019 (366) E.L.T. 900 (Tri.-Mumbai) wherein it was held that where assesses are required to remit the VAT recovered by them at the time of sale of goods manufacture and a part of such VAT is given back to them in the form of subsidy in VAT 37B Challans, such Challans are as good as cash but for the limited purpose of being used for the payment of VAT in the subsequent period. The Tribunal has clarified that in terms of the scheme of Government of Rajasthan payment of VAT using such Challans are the legal payments of tax. 11. Though Department has giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purchase, shall collect on the sale of any goods any sum by way of tax from any other person. (2) No registered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act. (3) No dealer shall collect any sum by way of tax in respect of sale of any goods on which, by virtue of section 8, no tax is payable. (4) Dealer opting for payment of lump sum amount in lieu of tax under section 5, or who is covered by sub-section (2) of section 3 shall not collect tax or any sum in lieu of tax." Further Rule 39 (3) of the Rajasthan VAT Rules, 2003 reads as follows: (3) The subsidy, if any, disbursed under the Rajasthan Investment Promotion Scheme-2010 or under any customized package by the State Government, and disbursed by the Commercial Taxes Department of the State Government, shall be adjusted against the tax payable through a challan in Form VAT-37B. The date of deposit shall be deemed to be the date on which adjustment has been made by the treasury. These rules when read with the observations made by the Hon'ble Apex Court in Super Synotex, para 19, we are of the view that the scheme under consideration is nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons referred should receive consideration of a Larger Bench for which purpose the connected papers may now be placed before the Hon'ble the Chief Justice of India for appropriate directions." 5.15 In view of the above and divergent views expressed by the coordinate benches in the matter we are inclined to refer the matter to President, to constitute a larger bench to reconsider the following question of laws: a. Whether the amounts retained by the appellants from the amount collected by them from their customers in terms of the RIPS-2003/ 2010 and accounted by way of 37B Challans, are in nature of incentive or investment subsidy/ wage subsidy, for the purpose of determination of Value in terms of Section 4 of the Central Excise Act, 1944 for payment of Central Excise duty.? b. Whether the amounts so retained are additional consideration in terms of Rule 6 of the Central Excise Valuation Rules, 2000? c. When the similar schemes for promotion/ incentivizing the investment in the state are issue by the State Government, then can any difference be made in the same, on the basis of some difference in manner of disbursement of the same to the beneficiaries. Will making such distin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration Subsidy, the qualifying amount is 20% of the Sales/VAT taxes, which became due and has been deposited by the enterprise. 9. Further, it is evident from a plain reading of the scheme, which has been reproduced in para 5.5 hereinabove, wherein the procedure of claim has also been prescribed. Such scheme of subsidy is wholly dependent on the amount of investment made and the amount of wages paid by the enterprise to the eligible employees. Further, such subsidy claim has been restricted to the % age amount of VAT/CST paid by the enterprises. Further, once the application for subsidy is found to be in order by the appropriate Screening Committee, then Entitlement Certificate is issued in Form-VIII appended to the scheme. Further, instead of disbursing the capital/wage subsidy in cash, the mode of disbursement has been provided by issue of VAT-37 B Challan. The enterprise/appellant is entitled to deposit their sales tax liability (of subsequent period) both in cash as well as by using the said Form VAT-37 B (adjustment by Treasury) to the extent of the amount mentioned therein. Payment of tax/VAT by using VAT-37B challan is also permitted or authorised under Rule 39 of RVAT Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such facts are not obtaining in the present case, as mandated under Section 9 of the Rajasthan VAT Act, 2003. 15. The ratio laid in the ruling of the Apex Court in Super Synotex India Ltd. (supra) is - after 01.07.2000, unless the Sales Tax/VAT is actually paid to the Government no benefit towards excise duty can be given in terms of Section 4(3)(d) of Central Excise Act. This ruling is not applicable in the instant appeals, as admittedly all the appellants have deposited tax or discharged the sales tax liability under the scheme of RVAT Act and the rules thereunder. 16. Thus, I find that the show cause notice issued in this matter is mis-conceived. Accordingly, following the precedent ruling of this Tribunal in the case of Shree Cement and Others and also in other appeals, I allow these appeals and set aside the impugned orders. The appellant shall be entitled to consequential benefits in accordance with law. 17. Further, so far the ground of extended period of limitation has been invoked, I find that there is no suppression of any facts and circumstances by the appellant/assessee. Further, I find that the show cause notice is based on the interpretation of statutes. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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