2018 (9) TMI 1483 – CESTAT NEW DELHI – TMI – Valuation – inclusion of VAT amounts paid by the assessee using VAT 37B Challans in assessable value – whether 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?
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Held 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 37 B. 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 – Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid.
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There is no justification for inclusion in the assessable value, the VAT
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ious schemes applicable to the assessees, they were required to deposit VAT/CST/SGST at the applicable rate with the Government and in terms of the scheme notified, will be entitled to disbursement of subsidy by the appropriate authorities. The subsidy concerned is sanctioned and disbursed in form 37B and such challan in the form VAT 37B can be utilized for discharge of the VAT liability of the appellant for subsequent periods. Revenue was of the view that the VAT liability discharged by utilizing the investment subsidy granted in form 37B cannot be considered as VAT actually paid, for the purpose of Section 4 of the Central Excise Act, 1944. Accordingly, Revenue proceeded to include such subsidy amounts in the value of the goods cleared by the appellants and demanded the differential duty. The impugned orders also charged interest and penalties on such differential duty. Aggrieved by the impugned orders, present appeals have been filed. 3. With the above background we heard Ms. Sukrit
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and hence the impugned orders are not sustainable. 5. He relied upon the decision of the Tribunal in the case of Commissioner of Central Excise v/s Welspun Corporation Ltd. (2017 TIOL 1287 CESTAT MUM). He submitted that the Tribunal in the above case has distinguished the decision of the Hon ble Supreme Court in the case of Super Synotex India Limited reported as 2014-301-ELT- 273 (SC). 6. The Ld. DR justified the impugned orders. He relied on the decision of the Apex Court in the Super Synotex case (Supra). He argued that with effect from 1/7/2000 assessee was bound to pay excise duty on the amount retained by them out of what was collected by them as VAT. He also added that in the present case the Rajasthan Government has refunded to the appellants a part of the VAT paid which is required to be included in the assessable value. 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
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e 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 on 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 assesse 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 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 37 B. Such Challans are as good as cash but can be used on
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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 and also Shree Cement (Tri.-DB), 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 order is set aside and the appeal is allowed. [Dictated & pronounced in the open Court] – Case laws – Decisions – Judgements – Orders – Tax Management India – taxmanagementindia – taxmanagement – taxmanagementindia.com – TMI
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