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TMI Blog2012 (6) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... te order and the authority Remarks, if any. 1 2 3 4 5 6 7 8 9 10 11 1 E/1983/06 Kinetic Engineering Ltd. , Pune 1-7-1997 to 31-12-2000 14-10-2005 10,12,48,116/- 4,04,52,370/- Pre-paid in March July, 2003 6,07,95,746/- 97,27,319/- 15-2-2006, CCE (Adjn.), Pune III Sales Tax Incentive 1988 Scheme 2 E/149/07 Ballarpur Industries Ltd., Ballarpur April 02 to March 05 24-5-06 3914.40 lakhs 444.70 lakhs Pre-paid in 2004-05 3469.69 lakhs 559.34 lakhs 31-10-2006, CCE, Nagpur 1993 Package Incentive Scheme 3 E/79/08 EPCOS India Pvt. Ltd., Satpur, Nashik 1992 to September, 2003 18-1-2006 - - 2,04,85,452 32,77,672/- 26-10-2007, CCE, Nashik 1993 Package Incentive Scheme 4 E/628/08 Ace Glass Containers Ltd., Malegaon, Nashik 1-4-2001 to 31-10-2005 21-3-2006 16,85,34,751/- 4,66,28,628/- Pre-paid during March 03, 2003 -04, 2004 -05 & Apr. to Nov. 05 12,19,06,123/- 1,95,80,334/- 11-3-2008, CCE, Nashik 1993 Package Incentive Scheme 5 E/324/09 EPCOS India Pvt. Ltd., Satpur, Nashik 2004-05 7-9-2007 2,43,50,711/- 69,08,526/-Pre-paid in Oct.04 and Jan.06 1,40,19,000/- 22,87,900/- 24-12-2008 CCE (Appeals), Nashik 1993 Package I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the contrary contained in the Act or in the rules or in any of the Package Scheme of Incentives or in the Power Generation Promotion Policy, 1998 the Eligible Unit to whom an Entitlement Certificate has been granted for availing of the incentives by way of deferment of sales tax, purchase tax, additional tax, turnover tax or surcharge, as the case may be, may in respect of any of the periods during which the said certificate is valid, at its option, prematurely pay in place of the amount of tax deferred by it an amount, equal to the net present value of the deferred tax as may be prescribed, and on making such payments, in the public interest, the deferred tax shall be deemed to have been paid. 2.2 Thus, an option was given to the eligible unit to whom the entitlement certificate was issued for availing of the inventive by way of deferment of sales tax, etc, to prematurely pay in place of the deferred tax amount, an amount equal to the net present value (NPV) of the deferred tax. On making payment of the NPV, the deferred tax shall be deemed to have been paid. Rules were also framed for calculating the NPV of deferred tax for the purpose of making payment by the eligible un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the factory gate at the time of removal to the buyers, who are not related persons and the prices were the sole consideration for sale. The only question that needs to be decided is whether for the purpose of transaction value, the amount of sales tax collected but abated under the deferment scheme should be included in the assessable value for the purpose of payment of central excise duty or not. 3.1 The definition of transaction value under Section 4 (3) (d) of the Central Excise Act, 1944 specifically provides that the transaction value does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. The advocate points out that the appellants have been availing the sales tax deferment scheme and rates of sales tax did not vary for the reason that the appellants have availed the deferment scheme. Therefore, the sales tax actually payable is at the rates specified in the invoice and this amount of sales tax indicated in the invoice is not includable in the transaction value. The amount of sales tax shown in the invoices issued to the customers indicate the amount actually payable under the Bombay Sales Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Government to the sales tax assesses. In a subsequent Circular No.671/62/2002-CX dated 09/10/2002 a similar issue was considered and the Board had clarified that only that amount of sales tax is permissible as deduction under Section 4 as is equal to the amount legally permissible under the local sales tax laws to be charged/billed from the customer/buyer. This circular was issued in context of the valuation provisions which came into effect from 01/07/2000 and makes it abundantly clear that if under the laws of the State Government sales tax is allowed to be charged or billed from the customer, the said amount should be allowed as a deduction irrespective of the fact whether the amount paid was by the assessee to the State authorities or not. 3.4 The Ld. Advocate also points out that even for the purposes of Income Tax Act, which allows deduction towards taxes paid for determination of income under Section 43B of the Income Tax Act, 1961, the Central Board of Direct Taxes vide Circular No.496 dated 25/09/1987 has clarified that the sales tax deferred under the sales tax deferral scheme shall be treated as actually paid and the same position was reiterated in Circular No.674 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 401 (T). Further, it has been held by this Tribunal in CCE, Indore Vs. Panchsheel Organics, 2002 (139) ELT 319 (T) that when the Supreme Court had given a interpretation to the statutory provisions, such interpretation cannot be ignored on the basis of a contrary interpretation given in the circular issued by the Board. In Ratan Melting & Wire Industries, a constitution of Bench of the apex Court held that a circular which is contrary to the statutory provisions has no existence in law. The learned Special Counsel has further submitted that in Board circular No.643/34/2002-CX dated 01/07/2002 the Board had clarified that as per definition of transaction value, taxes are deductible only on actual basis either paid or payable by the assessee. 4.3 The Ld. Consultant for the department further points out that as regards the contention of the appellants that part of the demand is time barred, in CCE Vs. Mehta & Co., the honble apex Court had held that the cause of action i.e., the date of knowledge by the department of the frauds committed by the assessee is relevant for computing the period of limitation of five years and in the instant cases, if that date is taken into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise & Customs, New Delhi Subject: Determination of assessable value for levy of excise duty where an incentive is provided by the State Govt. in the form of retention of Sales-tax by the manufacturers - Regarding. The undersigned is directed to refer to Boards Circular No. 4/85 (F.No. 6/ 15/85-CX.I), dated 14-3-1985 regarding addition and exclusion of Sales-tax in the assessable value. The trade has raised a doubt about the deductions given in respect of sales tax leviable by State Government, while determining the Assessable value. The following three situations arise as a result of incentive schemes formulated by some of the State Governments for ensuring rapid industrialisation in the backward areas of the States :- i) Exemption from payment of sales tax for a particular period; ii) Deferment of payment of sales tax for a particular period; iii) Grant of incentive equivalent to sales tax payable by the units. 2. The matter regarding the above three situations has been examined by the Board in consultation with Ministry of Law. 3. In category of cases mentioned in Para 1(i) sales tax is not deductible as no sales tax is payable by the assessee in accordance with the La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, clarified that all local taxes such as sales tax, octroi, etc. should be excluded in determining the value for assessment. 5.4 When the provisions of new Section 4 was brought into force with effect from 01/07/2000, the Board had issued instructions vide Circular No.354/81/00-TRU dated 30/06/2000 explaining the provisions of new Section 4 which would come into force from 01/07/2000. In the said instructions in paras 10 & 11, it was clarified 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 excise duty or tax actually paid at the concessional rate shall only be allowed to be deducted from price. The assessee cannot claim that the excise duty or tax payable at the "normal rate" should be allowed to be deducted. The words "actually paid" have, therefore, been used t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch manner as may be prescribed. (2) .. (3) . (4) For the purposes of this section, - (a) assesseemeans the person who is liable to pay the duty of excise under this Act and includes his agent; (b) place of removal means (i) a factory o 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 and, ] from where such goods are removed; (ba) time or removal, in respect of goods removed from the place of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory:] (c) . (d) value, in relation to any excisable goods, - (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee. Explanation, - (ii) does not include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; (cc) time of removal, in respect of the excisable goods removed from the place of removal referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory; (d) transaction valuemeans 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 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. Rule 7 of the Central Excise (Valuation) Rules, 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the law that the value has to be determined at the time and place of removal of the goods. In the instant case, the appellants claimed deduction towards sales tax as per the liability at the time of removal of the goods. Subsequently if that liability got altered due to changes in law or for any other reason, such alteration cannot have any impact or effect on the assessable value of the goods, which were cleared much earlier. A perusal of the table listed in the opening paragraph of this order clearly shows that the period of dispute involved was from 1992 to 2007-2008. In other words, the goods were cleared during this period. In all these cases, the sales tax liability applicable at the time of removal of the goods was deferred and the said liability was allowed to be discharged at the net present value of the deferred tax in terms of the changes in sales tax law introduced in November, 2002 in public interest This change in the liability has nothing to do with the abatement towards sales tax permissible under the central excise law at the time of removal of the goods. All the boards instructions cited supra also clearly points to this fact. The provision for payment of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 983, with effect from 1-4-1984 provides inter alia, that a deduction in respect of any sum payable by the assessee by way of tax or duty under any law for the time being in force shall be allowed from the income of the previous year in which such sum is actually paid irrespective of the previous year in which the liability to pay such sum was incurred. Since the introduction of this provision, assesses who collect sales tax, but do not pay the amounts to the Government during the previous year, under the deferral schemes provided by the State Governments are not entitled to the benefit of deduction from their income. 3. Representations have been received from various State Governments and others that cases of deferred sales tax payments should be excluded from the purview of section 43B as the operation of this provision has the effect of diluting the incentive offered by the deferral schemes. 4. The matter has been examined in consultation with the Ministry of Law and the various State Governments. The Ministry of Law has opined that if the State Governments make an amendment in the Sales Tax Act to the effect that the sales tax deferred under the scheme shall be treated as actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not, in any way, affect the admissibility of deduction towards sales tax while determining the value for the purposes of Central Excise levy. We are in respectful agreement with the interpretation of law made in these judgements. On the other hand, the citations relied upon by the Revenue also do not support the Revenues case. In the Adhunik Detergents Ltd., case relied upon by the Revenue there was a sales tax exemption available and no sales tax was payable on the goods and, therefore, it was held that deduction as contemplated in Section 4 (4) (d) (ii) would not be permissible. The Mewar Textile Mills case relied upon by the Revenue also deals with a case where sales tax exemption was granted. The Bata (India) case referred to by the Revenue dealt with a situation were the tax was not part of the price and, therefore, exclusion of tax was not permitted. In the case under consideration before us, there is no exemption from sales tax. Sales tax is liable to be paid on a deferred basis. An option has been given to the assessee to discharge the entire liability by paying a sum/amount equal to NPV of the deferred tax liability and on such payment the entire deferred tax liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by itself, without anything more, would not entitle the appellant to claim a refund on the price differential unless it is shown that there was some agreement in this behalf with the Government and the latter had agreed to refund the excise duty to the extent of the reduced price. Again in the case of Shri Bhagwati SSK Ltd. Vs. CCE, Pune, reported in 2000 (115) ELT 120 (Tri) this Tribunal held that fluctuations in price of excisable goods subsequent to clearance of goods would not affect assessable value and liability of excise duty already accrued. In the case of Triveni Engineering & Industries Vs. CCE, Meerut, reported in 2002 (148) ELT 1041 (Tri-Del), this Tribunal considered a case where sugar was cleared at prices fixed by the Government for levy quota sugar and the prices were subsequently revised by the Government. In that case it was held that assessable value of sugar would be the price at which the sugar was cleared and subsequent revision of price by the Government was held as not an additional consideration so as to form a part of the price. An appeal by the Revenue before the honble apex Court against the said decision was dismissed by the honble apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions contained in the circulars issued by the board. The honble apex Court in Paper Products Ltd., Vs. CCE reported in 1999(112) ELT 765 (SC) held that the circulars issued by the CBEC are binding on the department and the department is precluded from challenging the correctness of the circulars even on the basis that the same is inconsistent with the statutory provision. A similar view was held by the honble apex Court in CCE Vs. Dhiren Chemicals 2002(143) ELT 19 (SC). Similarly in the case of Commissioner of Customs, Calcutta & Others Vs. Indian Oil Corporation Ltd. & Anr.5., reported in 4 (2002) 2 SCC 1275, it was held that the circulars issued by the Board will be binding on the departmental authorities to maintain uniformity in the levy of tax/duty throughout the country. The stand adopted by the Revenue before us is in complete disregard of the clarifications given by the CBEC. Neither is the Revenue able to show to us any contrary interpretation of the statute either by this Tribunal or by any higher Court. In view of this position, the arguments put forth by the Revenue have to be negated and rejected. 5.12 Since we have considered the issue on merits, we do not consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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