2012 (3) TMI 349 - AT - Central Excise

Duty demand - Valuation of goods - Inclusion of 50% sales tax collected - benefit conferred under Haryana General Sales Tax Act 1973 - Held that - sales tax was being collected by the appellant from their buyers of the goods. The invoices issued by them indicated the entire amount of sales tax. However as consequence of benefit conferred under Haryana General Sales Tax Act 1973 the appellants were not required to deposit 50% of the amount of sales tax so collected - Following decision of Maruti Udyog Ltd. v. CCE Delhi-III 2004 (1) TMI 158 - CESTAT NEW DELHI - Decided in favour of assessee.

Summary

Issues involved:
Confirmation of duty demand and penalty imposition based on sales tax collected but not paid to the sales tax department.

Analysis:

1. Confirmation of duty demand and penalty imposition: The judgment confirms the demand of duty of Rs. 4,06,412/- against the appellant, along with the imposition of a penalty of an identical amount. The appellant had collected sales tax from buyers but retained 50% of it due to a benefit under the Haryana General Sales Tax Act, 1973. The Revenue contended that the retained 50% should be added to the assessable value of the goods. The lower authorities passed an order confirming the demand and penalty. However, the Tribunal found that the issue was covered by its decision in the case of Maruti Udyog Ltd. v. CCE, Delhi-III - 2004 (166) E.L.T. 360 (Tri.-Del.). The Tribunal observed that the 50% of sales tax retained by the appellant did not change the nature of the amount as sales tax payable, as it was adjusted between the assessee and the State Government for the release of capital subsidy. Therefore, the Tribunal allowed the appeal, relying on its previous decision.

2. Judicial Precedents and Interpretation: The Tribunal also considered the Revenue's argument regarding the admission of an appeal by the Hon. Supreme Court against the decision in Maruti Udyog case. Additionally, the Revenue pointed out a decision in the case of Andhra Oxygen Pvt. Ltd. v. CCE, Visakhapatnam - 2003 (156) E.L.T. 283 (Tri.-Kolkata), where it was held that sales tax collected but not paid to the sales tax department is liable to be included in the assessable value. However, the Tribunal distinguished this case from the current matter, noting that in the present case, the sales tax collected was deemed to be paid to the sales tax authority but adjusted against a subsidy to be paid by the State to the appellant. The Tribunal reiterated that the sales tax collected should be considered as sales tax payable within the meaning of transaction value as defined in Section 4 of the Central Excise Act, in line with its earlier decision in the Maruti Udyog case.

3. Conclusion: The Tribunal concluded that the issue was fully covered by its previous decision in the Maruti Udyog case and, therefore, allowed the appeal in favor of the appellant. The judgment highlights the importance of interpreting the nature of sales tax collected but not paid to the sales tax department in the context of applicable laws and precedents. The decision emphasizes consistency in legal interpretation based on established principles and previous rulings.

This detailed analysis provides a comprehensive understanding of the judgment, focusing on the issues involved and the Tribunal's reasoning based on legal provisions and precedents.