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2015 (10) TMI 1727 - CESTAT MUMBAI

2015 (10) TMI 1727 - CESTAT MUMBAI - 2016 (331) E.L.T. 261 (Tri. - Mumbai) - Valuation - Determination of transaction value - sales tax Incentive scheme - Difference between the sales tax payable and actual sales tax (equal to NPV) paid - manufacturer-assessees are of the view that the sales tax amount payable was as per the sales tax rate applicable on the goods or the deferred amount of sales tax and thus they are liable to pay excise duty on the price excluding the deferred sales tax payable. .....

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excluded. But both the normal value and the transaction value are at the time of removal. A combined reading of the definition of time of removal, place of removal and normal value or transaction value would indicate that the normal value or transaction value is required to be determined keeping in view the situation/factors prevailing at the time and place of removal.

When the goods are being cleared (i.e. time of removal) actual sales tax paid is nil but sales tax actually payable i .....

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along been of the view that under the deferment scheme of sales tax, the sales tax is payable though after a long period of time and since the sales tax is payable, the same will stand excluded from the normal value or the transaction value. -

Difference between the sales tax payable and actual sales tax (equal to NPV) paid - Held that:- As far as the Sales Tax Act authorities are concerned, whole of the deferred sales tax amount payable has been paid by the assessee/dealer. The fact .....

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e of pre-payment.

Demand set aside - Decided in favour of assessee. - APPEAL No. E/85253/14-Mum, APPEAL No. E/85251/14-Mum, APPEAL No. E/85252/14-Mum, E/CO/91039/14-Mum, APPEAL No. E/85799/15-Mum, APPEAL No. E/85201/13-Mum - Final Order Nos. A/3339-3344/2015-WZB/EB - Dated:- 6-10-2015 - Hon ble Mr. P.K. Jain, Member (Technical) And Hon ble Mr. S.S. Garg, Member (Judicial) For the Appellant : Shri Hitesh Shah, Commissioner (AR) For the Respondent : Shri V.S. Nankani, Senior Advocate, S .....

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the Central Excise Act, 1944. All the five manufacturer-assessees availed sales tax incentive scheme known as Package Scheme of Incentives 1993 declared by Government of Maharashtra. The scheme is Sales Tax Incentives by way of Deferral. Under the said incentive scheme, the manufacturer-assessees are entitled to collect sales tax at the normal rate applicable to the goods manufactured from its customers and pay the same to the Sales Tax Authorities after a period of time say from 11th to 15th y .....

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t provided an option to prematurely pay in place of the deferred tax amount, an amount equal to the NPV of the deferred tax. This option could be exercised anytime between the normal due date for payment of sales tax to the final deferred date. NPV amount will, of course, vary with the date of payment as also the final deferred date. On making payment of NPV, the deferred tax is deemed to have been paid. 2. All the manufacturer-assessees in these appeals have availed benefit of deferred sales ta .....

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ojected sales tax amount payable, the Revenue is of the view that the manufacturer-assessees are eligible only to deduct the NPV amount from the selling price. Thus the differential between the deferred sale tax payable and NPV paid would form part of the assessable value and the demands have been raised on the said amount. The manufacturer-assessees, on the other hand, are of the view that the sales tax amount payable was as per the sales tax rate applicable on the goods or the deferred amount .....

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/14 Uttam Galva Steels Ltd. The case was extensively heard. Learned senior counsel, Shri V.S. Nankani, appeared on behalf of the respondent-assessee and made various submissions which in brief are,- (i) The transaction value at which duty is paid by them is correct as the amount retained after payment made at NPV under the Sales Tax deferral Scheme cannot form part of Transaction value as the same under Section 38(4) of the Bombay Sales Tax Act 1959 is treated as deemed payment of Sales Tax; (ii .....

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orrect transaction value, learned senior counsel submitted that for determining Transaction value, amount of sales tax actually paid or payable on the goods is not includable. It is not in dispute that sales tax actually payable is to be allowed as deduction under Section 4 of the Act. The amount of sales tax shown in the invoices raised on the customer is the amount actually payable and the same is not paid due to an incentive given by the State Government. Under the said Incentive Scheme, ther .....

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say, ₹ 100/-, however, the NPV of the said ₹ 100/- to be paid after 15 years as on a day, is ₹ 25/-. Hence, upon payment of ₹ 25/- now, the entire ₹ 100/- which is supposed to be paid after15 years, is deemed to be paid. Proviso to Section 38 of Bombay Sales Tax Act 1959, clearly states that upon payment of sales tax payable on NPV, the assessee would be discharged from the entire sales tax liability. In other words, the assessee is entitled to retain the balance am .....

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dgement of the Hon ble Supreme Court in the matter of Industrial Supplies Pvt. Ltd. Vs. UOI 1980 4 SCC 341, wherein it was held that after ascertaining the purpose, full effect must be given to the statutory fiction and it should be carried to its logical conclusion. Learned senior counsel further submitted that there cannot be two separate yardsticks for levy of Sales Tax and Levy of Central Excise and further the Legislature never intends to give from one hand and take from the other. Hence, b .....

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ation of assessable value for levy of excise duty where an incentive is provided by the State Government in the form of retention of sales tax by the manufacturers was considered by the CBEC in consultation with the Ministry of Law and vide Circular No. 378/11/98-CX dated 12/03/98 and it was clarified that sales tax is deductible from the wholesale price for determination of assessable value for levy of Central Excise Duty in the case of deferment of payment of sales tax for a particular period .....

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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, sales 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 .....

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r taxes is not paid at the time of transaction but paid subsequently, for example, sales tax payable under a deferment scheme. 5.4 Similarly, the issue of abatement in respect of set-off on sales tax was again considered by the CBEC and the Board vide Circular No.671/62/2002-CX dated 09/10/2002, after taking into consideration the new Section 4, inter alia, clarified as follows: 6. Therefore, since the set-off scheme of sales tax does not change the rate of sales tax payable/chargeable on the fi .....

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that the consistent stand and understanding of the Revenue has always been that the amount of sales tax paid or payable is permissible to be deducted. 5.5 The next submission of the learned senior counsel was that the transaction value declared at the time of removal is relevant. A careful reading of Section 4 clearly indicates that the value for the purposes of levy of excise duty has to be determined at the time and place of removal for delivery. It was submitted that while determining the val .....

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ary dictionary meaning. Liable to be paid means liability in accordance with the law. Therefore, what is permissible to be abated in respect of sales tax is the sales tax, actually paid or actually payable in accordance with the law at the time of removal of the goods. Transaction value determined by the Respondent is therefore correct and proper in law as at the time of clearance of goods the sales tax was payable under the deferment scheme and the question of making payment of any differential .....

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ales Tax (Amendment) Act, 1987, made the amendment accordingly and the statutory liability is treated to have been discharged for the purposes of section 43B of the Act. The aforesaid issue was also the subject matter of dispute and consideration in the case of Sulzer (India) Ltd. Vs. Jt. CIT reported in 2010-TIOL-670-ITAT-MUM-SB which has been upheld by the Hon ble Bombay High Court in Income Tax Appeal No. 450 of 2013. The said Judgment laid down the principle that the fact of payment of tax o .....

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ncentive Scheme which is a completely different scheme than the Sales Tax deferment scheme of Maharashtra. It was submitted that under the scheme impugned before the Supreme Court the assessee was entitled to retain with it 75% of the sales tax collected and pay only 25% to the Government. So the Hon ble Supreme Court treated 75% of the sales tax collected as Sales Tax, neither paid nor payable. Whereas in the present case there is no exemption from payment of sales tax. By immediately paying sa .....

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otex (supra), the assessee was specifically aware of the quantum of the amount to be retained and the balance to be paid. Whereas in the present case, the Respondent was not aware of the amount to be paid and retained but was subject to the calculation of NPV of the deferred tax. The respondent had actually collected the sales tax for paying it to the Government after a period as specified in the scheme. This amount had become actually payable after a specified term. However, due to the subseque .....

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the Hon ble Supreme Court passed in the case of Maruti Suzuki India Limited (supra) cannot be made applicable to the facts of the present case. In Maruti Suzuki India Limited (supra) the Hon ble Supreme Court dealt with the provisions of Haryana General Sales Tax Rules and held that the entitlement certificate granted to the assessee does not give any indication of deferment of Tax or capital subsidy and infact the same permitted the Assessee to retain the 50% Sales Tax Collected which was neith .....

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ases are different. In any event the Hon ble Supreme Court has not discussed the deferment scheme and the same is evident from the text of the order itself. 5.8 Learned senior counsel submitted that a case is only an authority for what it actually decides and not what may seem to follow logically from it. Further, a decision is a precedent on its own facts and is an authority only for what it actually decides. The real essence in a decision is its ratio and not every observation found therein no .....

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241 (Del)- para 19 & 20 * Haryana Financial Corporation Vs. Jagdamba Oil Mills (2002) 3 SCC 496- Para 19-22 5.9 The judgment of the Hon ble Supreme Court in the matter of Super Syncotex (supra) does not discuss about the deferment/ incentive scheme introduced by the state of Maharashtra and the said case is sub-silentio in respect of the Maharashtra Incentive Scheme. It was submitted that a decision in which a particular matter is not discussed upon is said to be passed sub-silentio in resp .....

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ntroducing the Sales Tax Incentive Scheme is not grant exemption from payment of sales tax. By immediately paying sales tax collected, on the NPV, the assessee is deemed to have paid the entire amount of sales tax collected by it. The said amount is in a form of subsidy flowing from the State Government and not from the customers and as such the same is not includible in assessable value for the purpose of payment of excise duty. The judgement of the Hon ble Supreme court in the case of Commissi .....

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t the matter ought to be remanded back to the Commissioner to decide the issue of limitation as the same was not decided by him, as he held in favour of respondent on merit itself. 6. Appeal No. E/85251/14 Bhushan Steel Ltd. Ms. Padmavati Patil appeared on behalf of this respondent assessee. The learned counsel made the submissions which were broadly in line with what was submitted by the learned senior counsel, Shri V.S. Nankani. The learned counsel explained why the judgment of the Hon ble Sup .....

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emphasis was given on the limitation point. It was submitted that the issue of limitation has not been discussed in the order of the Commissioner and also in the memorandum of appeal. The same has not been raised and in view of the Hon ble Supreme Court s judgment in the case of SACI Allied Products vs. CCE reported in 2005 (183) ELT 225 (SC), the same cannot be taken up at this stage and would required to be remanded to the Commissioner. It was also submitted that if for some reason the Tribun .....

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here is no provision either under ER-1 return to inform the department specifically of availment of any sales tax deferral scheme. (v) The Hon ble Supreme Court s decision in the case of Super Synotex (India) Ltd. (supra) was delivered on 28.2.2014 and in such a situation, it cannot be said that there was wilful intention to evade duty. Before that, there were number of judgments of the Tribunal in favour of the assessee. (vi) In any case, the whole issue is relating to interpretation of law and .....

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ferral scheme which was to be paid after the expiry of a specified period could be excluded from the transaction value, has specifically been considered and dealt with by the Hon ble Apex Court in the case of CCE v Maruti Udyog Ltd reported in 2014 (307) ELT 625 (SC). A perusal of the said decision would make it clear that even as per the Revenue, in a case of deferment, deduction was available in respect of the deferred sales tax from the transaction value. In support of the said contention, at .....

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Section 13B dealt with grant of exemption. Section 25A on the other hand provided for that if the state government was satisfied, it may defer the payment of tax for such class of industries, for such period, either prospectively or retrospectively, and subject to such conditions as may be prescribed. Learned counsel further submitted that the Apex Court observed that the CESTAT had proceeded on the premise that Maruti was working under the deferral scheme under Section 25A read with sub-rule ( .....

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ns filed by the unit, without taking into account the rebate admissible under Section 15A or the rules framed under the Act, at the scale, subject to the time limit and the extent related to the fixed capital investment (FCI) and the unit shall be required to pay only the balance of tax after deducting the rebate and the capital subsidy plus any purchase tax payable at its hands but no refunds of any amount of tax paid shall accrue to the unit by operation of these provisions. Explanation. I - x .....

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further provided that a prestigious unit shall not, as a matter of right, be entitled to benefits available to other units. The Hon ble Apex Court therefore held that since 50% of the sales tax collected was retained by Maruti and was not actually paid to the exchequer, nor was it actually payable since the High Powered Committed permitted the assesse to retain the said amount, it was not eligible for the deduction of the same from the transaction value. (ii) Learned counsel submitted that in p .....

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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 an .....

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n value to reflect the legislative intention as explained above. 11. The words actually payable in the context of the amount of duty of excise, sales tax and other taxes would normally come into play only in those situations where the amount of excise, sales tax or other taxes is not paid at the time of transaction but paid subsequently, for example, sales tax payable under a deferment scheme. With reference to the ratio laid down in the case of Maruti, it was submitted by the learned counsel th .....

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yable under a deferral scheme was not available as deduction from the assessable value, it would not have taken the pains of dealing with the entire sales tax incentive scheme of Haryana and pointing out that Maruti was not covered under the deferral Scheme as envisaged in Section 25A read with Rule 28C(5)(a) of the relevant sales tax rules. Learned counsel submitted that after coming to the conclusion that Maruti was not covered by the said deferral scheme, it was held that to the extent of sal .....

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alized vide Notification No. F. 4(35) FD/Gr. IV/87-38 dated 06.07.1989 which was issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954, which provides that notwithstanding anything contained in the Act, where the State Government is of the opinion that it is necessary so to do in public interest, it may by Notification in the official gazette exempt, fully or partially, from the tax, the sale or purchase of any goods or class of goods or any person or class of person, without any condit .....

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Shree Rajasthan Syntex taken note of this fact, while recording the facts in the following terms: the Respondent herein are engaged in the manufacture of yarn and waste of manmade fiber. It was availing sales tax exemption under the sales tax incentive scheme of 1989 on the yarn and waste, as issued by the State of Rajasthan. Under this incentive scheme, thought the Respondent was collecting the full incidence of sales tax from its buyer, 75% thereof was retained by the Respondent and only 25% .....

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ed and dealt with by the Apex Court in the case of Voltas v State of Andhra Pradesh reported at 2004 (11) SCC 569 wherein it was held that concession of deferral does not mean that payment has not become due. Payment became due with the filing of the return. The deferral was granted as the payment had become due. Thus, unlike an exemption where the sales tax is exempted and not payable at the threshold, under the deferral scheme the sales tax payment is statutorily due but is deferred by way of .....

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1989 of Rajasthan, have to be read in the context of the facts of that scheme as applicable in the State of Rajasthan and cannot be applied to a deferral scheme in which, sales tax on clearance of goods, though not actually paid at the time of such clearance, is actually payable, albeit on a future date. The definition of transaction value in Section 4 of the Central Excise Act, 1944 clearly provides for exclusion of the sales tax actually paid or actually payable from the transaction value. (v .....

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also actually paid. (ix) It was further submitted that payment on the NPV basis did not have the effect of altering the actual sales tax payable, or for that matter what was actually paid, and that if the stand taken by the Revenue was taken to its logical conclusion, it would result in the entire machinery provision of Section 4 of the Central Excise Act, 1944 being rendered unworkable, as then, in no case of a unit working on a deferral scheme, could the transaction value ever be determined, a .....

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ation. Reliance in this regard is placed on the judgment of the Apex Court in the case of CIT v B.C. Srinavasa Shetty reported at (1981) 2 SCC 460. (x) The aspect of limitation had not been considered or dealt with by the adjudicating authority and that if for any reason on merits the assessee s contention did not find favour, the matter would have to be remitted back for a decision on the aspect of limitation. In support of this contention, reliance is being placed upon the decision of the Apex .....

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rt of the demand is for period prior to 2000 when the new Section 4 was introduced. Learned counsel submitted that even the Hon ble Supreme Court in the case of Super Synotex (India) Ltd. has held that demands are not sustainable for period prior to 1.7.2000. In view of the said position, approximately 2/3rd of the demand is not sustainable on merits itself. It was also submitted that the scheme of pre-payment or deferred tax was introduced by the Government of Maharashtra in December 2002 and t .....

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period of limitation and on this ground also, the appeal is required to be allowed. It was further submitted that sales tax deemed to have been paid is to be excluded from the transaction value for the purpose of calculation of the central excise duty. Another submission was that the buyer and seller are not related. Therefore, this is not an additional consideration flowing from buyer to seller. The decision of the apex court in the case of Super Synotex (India) Ltd. (supra) is distinguishable .....

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erest can be levied under Section 11AA of the Act. 9. Appeal No. E/85201/13 Essel Propack Ltd. Learned senior advocate, Shri V. Sridharan appeared on behalf of the above appellant and made the following submissions:- (i) Explanation to Section 4(1) of the Central Excise Act, 1944 added by Finance Act, 2003 has no bearing on the issue involved in the present matter. (ii) Section 4 as introduced in 1944 and Section 4 as amended by Finance Act, 1955 did not provide for exclusion of sales tax. Still .....

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Law laid down by Bombay High Court in Bata case - (1965) 53 STC 132 following Anand Swarup s case (supra). (v) Since the appellants are registered dealer under relevant provision of sales tax law, it has collected sales tax from buyer as a distinct and separate item. Hence, sales tax is not even part of price. Hence, there is no need to rely on exclusion contained in the definition of transaction value. (vi) Exclusion clause in definition of transaction value relevant where price charged from b .....

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hereto, of Bombay Sales Tax Act, 1959, the appellants has indeed satisfied the condition of actually paid . (x) Circular dated 25.09.1987 issued by the Central Government in the context of section 43B of Income Tax Act, 1961 cover the present dispute. (xi) There is no machinery in the Central Excise Act including Section 11A of the Central Excise Act, 1944 to cover situation of the present case. (xii) Relevant date cannot be calculated from date of NPV payment of sales tax. Proviso to Section 11 .....

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ands discharged. If creditor accepts lesser sum of money from the debtor, debt payable to creditor continues to be same sum. Debt is not wiped out. It is only unenforceable. Provisions of Contract Act are in nature of general principles of law, hence the same will apply to all the taxing statutes. (xv) No suppression by the appellants in the present matter Declarations duly filed by the appellants as required under Rule 173C of the Central Excise Rules, 1944. (xvi) Disintegration of the definiti .....

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n value providing for non-inclusion of sales tax, excise duty or other taxes actually paid or payable by the buyer to the seller from the price for sale of goods by the seller to buyer. From perusal of last portion also there is no doubt that the money is to flow from buyer to seller only. The exclusion clause also in transaction value also deals with transaction between buyer and seller only. (xviii) The amount of sales tax collected by the appellants under the Bombay Sales Tax Act from the buy .....

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T Act, 2002 involved in the present Appeals were considered by the CESTAT in Kinetic Engineering Vs CCE 2012 (283) E.L.T. 229 (T). The Department had appealed to the Hon ble Supreme Court and the Civil Appeals no. 8095-8103 of 2013 were allowed as reported at CCE Vs. Super Syncotex Ltd. 2014 (301) E.L.T. 273 (S.C.) Similar is the position in the case of Gala Precision Techh Pvt. Ltd. F.O. no. A/261/12/EB/C II in Appeal no. E/1056/11-Mum. In view of the fact that Hon ble Supreme Court has already .....

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expressions: - price actually paid or payable - any amount the buyer is liable to pay - whether payable at the time of sale or at any other time - any amount charged for or to make provision for - actually paid or actually payable Learned Commissioner (AR) submitted that the legislature has while making inclusions in the concept of transaction value included amounts which may not have been actually paid by the buyer to the assessee but while making exclusions therein only excluded amount of sal .....

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in fact payable and is actually paid up. (iv) Regarding the claim of the appellants that Section 38 of the Bombay Sales Tax Act, 1959 (Section 94 of the MVAT Act 2002) and similar provisions provide that in case the Sales Tax payable, which is deferred, is partially paid under the Package Scheme of Incentives, it shall be deemed to be full discharge of the Sales Tax liability and hence, the Sales tax should be deemed to have been actually paid, learned Commissioner (AR) submitted that a non obst .....

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the definition of transaction value and actually paid in the Explanation to Section 4(1) of the CEA 1944, forbid us from applying this deeming provision while arriving at the assessable value under Section 4 of the CEA 1944. (v) Regarding the claim that premature payment of the deferred Sales Tax at Net Present Value (NPV) is a full discharge of the whole debt of the assessee to the Sales Tax Department in view of Section 63 of the Contract Act, 1872, learned Commissioner (AR) submitted that ta .....

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ales Tax and nothing more. If the entire amount collected as Sales Tax is not actually paid as Sales Tax to the Sales Tax Authority, the amount not so paid shall form part of the assessable value for the levy of Central Excise duty under Section 4. The arrangement between the Sales Tax Authority and the assessee by virtue of the deeming proviso to the said Section 38 of the BST Act, 1959 (Section 94 of the MVAT Act 2002) or accord and satisfaction of the these two parties for discharge of debt/f .....

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Vs. UOI 1997 (89) ELT 247 (SC) at para 68 held that The Central Excise Act 1944 is a comprehensive, self contained statute and provides for levy, assessment and collection of tax and all ancillary provisions. The provisions of the Contract Act, 1872 and other general laws shall not apply for its interpretation or enforcement or for other matters relating to Central Excise duty. (viii) The amount of money collected as tax by the assessee from his buyer, is a cost to the purchaser and the purpose .....

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not applicable to the period from 1.7.2000, after Section 4 was substituted. There is no relief from the rigour of actually paying the entire amount collected as Sales Tax to the sales tax authority. Even if the amount collected as sales tax and retained by the assessee, is deemed as payment of sales tax under the State Act or such partial payment is considered as full discharge of debt under Section 63 of the Contract Act, such amount collected but not paid as tax shall not be excludible from .....

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rms of the Contract Act it may be a full discharge of the debt of the buyer to the assessee. However, the satisfaction of such contract between the assesse and his buyer cannot in anyway affect the assessable value of the goods under the CEA 1944. Liability to pay tax is governed by statute and not by terms of any contract. In case a contract is assumed to exist for payment of sales tax, a contract should also be assumed to exist for payment of Central Excise duty. In that case, the contract whi .....

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tax from the assessee is of no relevance for the purpose of the said Section 4. All that is required to be seen is whether the full amount of money claimed as deduction on account of Sales Tax/VAT is actually paid tax or not. If not actually paid, it shall be part of transaction value. (x) The Supreme Court in its decision in the case of Super Syncotex at para 19 to 23 held that: On perusal of the assessment orders brought on record, it is quite clear that in pursuance of the Scheme 75% of the s .....

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ount towards industrial incentive, grants incentive in the form of retention of 75% sales tax amount by the assessee. In a case of exemption, sales tax is neither collectable 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 .....

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In view of the aforesaid legal position, unless the sales tax is actually paid to the Sales Tax 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 basi .....

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mount is collected as Sales Tax/VAT and retained by the assessee, such retained amount shall be part of the transaction value and chargeable to Central Excise duty w.e.f. 1.7.2000. (xi) Learned Commissioner (AR) submitted that various courts have consistently held that the term duty payable means the duty actually paid: UOI Vs Alembic Glass Industries 1992(61) ELT 193 (kar) TELCO 1990(48) ELT 182 (Bom)/1997 (94) ELT A141 (SC) Someshwar SSK Ltd. Vs UOI 1988 (34) E.L.T. 522 (Bom.) Pravara Pulp and .....

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d the following judgments to support his contention of actual payment. (1) Modipon Fiber Co. Vs. CCE 2007 (218) ELT 8(SC) (2) CCE Vs. Sujata Textile Mills Ltd. 2005 (181) ELT 379 (SC). (xiii) It has been submitted by the Appellant that in case the amount of Sales Tax is shown separately in the invoice then such amount does not form part of the price and hence the question of its exclusion or inclusion in the assessable value does not arise. Reliance has been placed on the decision in Anand Swaru .....

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rity. Moreover, the decision in Anand Swarup s case has been distinguished by a Constitution Bench of the Supreme Court in the case of McDowell and Co. Ltd. Vs. CTO AIR 1986 SC 649. The definition of the term turnover in the Andhra Pradesh General Sales Tax Act, 1957, considered in that case, was similar to the definition of transaction value . The Court held that turnover , for the purpose of Sales Tax, shall include the Excise Duty paid under the Andhra Pradesh Excise Act, 1968, even if such E .....

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e (supra) and was upheld by its Larger Bench in the case of SAIL Vs. CCE 2000 (119) E.L.T. 249 (Tribunal - LB). Both, the decision of the Division and the Larger Bench of CESTAT, were overruled by the Supreme Court in Tata Iron & Steel Co. Ltd. Vs. CCE 2002 (146) E.L.T. 3 (S.C.). The Supreme Court held at para 25 of the said decision that: Principles on which income is to be determined under the Income-tax Act cannot apply when determining value for purposes of Excise Duty. Under the Income- .....

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udgment also turned on the reason that Sections 37,46 & 63 of the BST Act, 1959 would be rendered otiose in case it was held that the term sale price included the sales Tax paid. In any case the said decision relies heavily on the decision in the case of Anand Swarup (supra). (xv) It is submitted by the Appellant in the case of Essel Propack that, deferred payment of Sales Tax is covered by the 3rd proviso to Sec 38 (4) of the BST Act, 1959 and repayment at NPV under the 4th proviso thereof. .....

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tate Government under the Incentive Scheme. The CESTAT allowed their appeal relying on para 4 of CBEC Circular dt. 12.3.1998 wherein it was said that in case, the tax collected and retained by the assesse, is accounted and adjusted as a cash incentive by the State to the assessee in the accounts of the State then the entire amount of tax collected is deductible from the price to arrive at the assessable value. The Supreme Court held that such deduction is allowable only uptil 1.7.2000 and not af .....

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Act, 2003 w.e.f. 14.5.2003. The Explanation clarifies that transaction value is the price actually paid and excluding sales tax and other taxes, if any, actually paid . The reference to actually payable in the dictionary clause of transaction value is limited by this Explanation. The demands in the impugned Appeals are for the period after 14.5.2003. (xvii) CBEC Circular M.F.(D.R.) F. No. 354/81/2000-TRU dt. 30.6.2000 which clarified the position after insertion of the amended Section 4 w.e.f 1. .....

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the Circular/letter cannot control the plain meaning of the said Explanation when read as a part of Section 4(1). (xix) The extended period of limitation is invocable because: The goods are removed from the factory under an invoice as per the provisions of Rule 11 (2) of the CER 2002 which prescribes inter alia that value is to be mentioned. The value to be mentioned is the value as defined in Section 4 and duty is to be paid thereon. Only the amount of sales tax and other taxes actually paid at .....

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ted as sales tax and not paying the same to the sales tax authority. On the other hand they have willfully misstated that they shall pay the amounts collected as sales tax to the sales tax authority. In their periodical ER1 returns they have mentioned the Value of goods after deducting the entire amount collected as sales tax/ not included the entire amount collected as sales tax. They have not mentioned the amounts collected as sales tax. They have not informed the Department about the deductio .....

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post 1.7.2000: CCE Vs. Super Syncotex(India) Ltd. 2014 (301) ELT 273(SC). CCE Vs Shree Rajasthan Syntex 2015 (318) ELT 626 (SC) Maruti Suzuki Ind 2014 (307) ELT 625 (SC) Modipon Fiber Co. Vs. CCE 2007 (218) ELT 8(SC) CCE Vs Pepsi Foods (2007) 213 ELT 321(SC) CCE Vs National Engg. Industries Ltd. 2015 TIOL 108-SC-CX (xxi) In the case of Bharat Roll Industries 2008 (229) ELT 107 (T), the CESTAT had confirmed the invocation of extended period because the assessee had collected CST and not paid it t .....

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4(310) ELT 872 (Raj) -Syncom Foundations (India) Ltd. 2008 (221) ELT 206 (T) -Burn Standard Co. Ltd. 2000 (119) ELT 650 (T) -Dewas Metal Sections Ltd. 2015 (319) ELT 104 (T) -Concept Pharmaceuticals Ltd. 2015 (310) ELT 129 (T). (xxii) In the decision of CCE Vs Shree Rajasthan Syntex 2015 (318) ELT 626 (SC), at para 5 thereof, the Court states that it has 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 provis .....

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the CER 2002 that the value is the correct and true value and that there is no additional consideration. The assessee has made a solemn declaration that the sales tax/VAT is paid or shall be paid. The assessee has in their ER1 Returns, submitted to the Department, declared as Value of clearances, an amount excluding the entire amount collected as Sales Tax, whereas they have not paid this entire amount to the Sales Tax Authority. Hence, there is wilfull misstatement of facts and suppression the .....

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ing on the invoice (not submitted to the Department) that such amount is/ shall be actually paid. Hence, as per the assessees averment there was no short levy or non levy or short payment or non payment of Central Excise duty at that instant. The liability to pay duty arose at the point in time when it was found that they had not actually paid the amount collected and claimed as deduction on account of Sales Tax. In such cases, the provisions of Section 11A do not apply and demands can be made o .....

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mbay Sales Tax Act, 1959 and Maharashtra Value Added Tax Act, 2002 involved in the present appeals and the arguments made by the assessees were considered by the CESTAT in nine appeals decided by a common judgment reported at Kinetic Engineering Ltd. vs. CCE 2012 (283) ELT 229 (T). It was submitted by the learned Commissioner (AR) that the department has appealed to the Hon ble Supreme Court and the Hon ble Supreme Court in the case of Super Synotex (supra) has allowed all the appeals and hence .....

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case of Super Synotex, even though the said decision of the Hon ble Supreme Court disposes of the Revenue s appeal in the case of Kinetic Engineering Ltd. (supra). 13. Learned senior counsel, Shri V.S. Nankani, has also submitted that even if it is presumed that the Hon ble Supreme Court has disposed of the appeals of the Revenue relating to Kinetic Engineering Ltd. but that is only by way of remand and Tribunal has to decide it keeping in view principles laid down by Hon ble Supreme Court. Mor .....

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manufacturer will form part of the transaction value for determination of excise duty or not. Thus the issue was that the law permits ₹ 100/- to be collected as sales tax which was collected by the manufacturer but law also provided that ₹ 75/- will be retained by the manufacturer and only ₹ 25/- will be paid to the Government. The question was whether ₹ 75/- will form part of the transaction value or not. The issue in all the appeals here is not this but a different. He .....

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et present value (on the date of prepayment) of the amount of sales tax to be paid at the end of deferral period. We also note that there is no discussion about such a scheme in the Super Synotex judgment of the Hon ble Supreme Court. The obvious conclusion is that none of the parties who were appearing before the Hon ble Supreme Court pointed out to the Hon ble Supreme Court that the issue involved in other appeals is different. It also appears to us that none of such affected appellants/respon .....

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d their pleas and passed the said judgment. We also note that the Hon ble Supreme Court has not finally allowed the appeal of the Revenue but has set aside all the orders passed by the original authority as also the Tribunal and remanded the matter to this Tribunal to decide the issues keeping in view the principles laid down in the said order. In view of the above factual position, we are of the considered view that the issue involved in the present appeals is not decided by the Hon ble Supreme .....

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lowed the judgment of Super Synotex. Another case cited is that of Maruti Suzuki. We find that in this case scheme is under Haryana Sales Tax Act and the scheme is different from the scheme of Super Synotex or the deferral scheme which is the subject matter of the present set of appeals. In the case of Maruti Suzuki, the manufacturer assessee was permitted under the law to collect the normal sales tax applicable on the vehicles manufactured by it but was allowed to retain the sales tax amount up .....

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ally paid or actually payable to the State Government that can be excluded. We therefore agree with the submissions of the learned senior counsel Shri V.S. Nankani as also all other counsels and do not find substance in the submission made by the learned Commissioner (AR) that issue is already decided by Hon ble Supreme Court in the case of Super Synotex. 16.0 While coming to the above conclusion, we note that the Hon ble Supreme Court in the case of CC(Port), Chennai vs. Toyota Kirloskar Motor .....

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n made between the charges required to be made for pre-importation and post-importation. All charges levied before the capital goods were imported were held to be considered for the purpose of computation of transaction value and not the post-importation one. The said decision, therefore, in our opinion, is not an authority for the proposition that irrespective of nature of the contract, licence fee and charges paid for technical know-how, although the same would have nothing to do with the char .....

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. 20. In Union of India v. Dhanwanti Davi, reported in 1996 (6) SCC 44, the Apex Court held as under : It is not everything said by a Judge while giving judgment that constitutes a precedent. The only thing in a Judge s decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendy. According to the well settled theory of precedents, every decision contains three basic postulates- (i) find .....

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the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there, is not intended to be exposition of whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. 21. Therefore, in order to understand and appreciate the binding force of a decision it is always necessary to see what were the facts i .....

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Patna 100. 23. Yet again, a Division Bench of this Court, in Jaya Sen v. Sujit Kumar Sarkar, AIR 1998 Calcutta 288, of which I was a member, inter alia, held as under : 27. It is now well known that a decision is an authority for what it decides and not what can logically be deduced therefrom. It is also well known that even a slight distinction in fact or an additional fact may make a lot of difference in decision making process. See Quinn v. Lealham (1900-1903) AER (Rep) 1, Krishna Kumar v. U .....

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1997 (1) SCC 203." 24. As indicated hereinbefore, the questions raised in this application were not raised before the Apex Court in CIT Limited (supra) and Pankaj Jain Agency (supra); and in this view of the matter this Court is bound to follow the decisions wherein the Apex Court had relied on the law after considering the rival contentions on the point at issue. 16.2 We also note that the Hon ble Supreme Court in the case of CCE, Calcutta vs. Alnoori Tobacco Products reported in 2004 (170 .....

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tes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1951 AC 737 at p. 761), Lord Mac Dermot observed : The matter cannot, of course, be settled merely by treating the ipsissi .....

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: One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament. And, in Herrington v. British Railways Board [1972 (2) WLR 537] Lord Morris said : There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case. 13. Circumstantial flexibility, one additional or different fact may make a .....

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y matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. *** *** *** Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. 16.3 Keeping in view .....

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the facts of the present cases which involve scheme of deferral payment of sales tax and thereafter prepayment on the basis of net present value. 17. Before we examine the issue with reference to provisions of law and common contentions made by almost every counsel, we shall examine the contentions which were peculiar to learned senior counsel Shri V. Sridharan. 18. One of the submissions made by the learned senior counsel, Shri V. Sridharan, is that the Explanation to Section 4(1) of the Centr .....

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had no application as far as deductibility or includibility of excise duty or sales tax in the value is concerned. On the other hand, learned Commissioner (AR) argued that this Explanation very clearly provides that all that can be excluded is sales tax, if any, actually paid. If the sales tax collected is more than actually paid, then the same will form part of the price cum duty and the value and duty liability will have to be computed based upon the Explanation. 18.1 We have given considerab .....

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x and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. A reading of the said Explanation would indicate that price-cum-duty of the excisable goods shall be the price actually paid to the assessee for the goods sold (we are leaving the part relating to money value of additional consideration as that is not relevant to the present dispute) and such price-cum-duty excluding sales tax and other taxes, if any, actually paid shall be deemed to include the .....

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ise law is concerned, the differential amount of ₹ 25/- will be taken into account while determining the duty liability on the said goods. This may be in addition to any action that Sales Tax authorities may be taking against such manufacturer for higher collection of sales tax which may not be permitted by law. In our view, from the Explanation, it is very clear that the total price i.e. total amount actually collected by a manufacturer from the customer has to be taken into account and o .....

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nance Act, 1955 did not provide for exclusion of sales tax. Still the Board clarified that no excise duty is payable on sales tax element. We are not able to appreciate how the above position helps the cause of the assessees. Even now it is not as if the sales tax is required to be included for assessment of value and hence duty liability. All that is being said (and which is matter of dispute) is the sales tax and other taxes actually paid or payable are only required to be excluded and not any .....

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l helps in resolving the issue or the cause of the appellant. 20. Another submission of the learned senior counsel is that the assessee has shown and collected sales tax as a separate and distinct item in the invoice issued by them and hence cannot be even considered as price. Here again, the fact that sales tax is being shown separately in the invoices as a distinct item does not imply that a manufacturer or an assessee can collect any amount and that amount cannot be part of the assessable val .....

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learned senior counsel has also submitted that sales tax collected by the assessee from purchaser is not even part of sales price and in support of that, he has quoted the Hon ble Supreme Court s judgment in the case of George Oakes Pvt. Ltd. reported in 1961 (12) STC 476 (SC). We are not impressed with this argument. The said judgment of the Hon ble Supreme Court is in the context of Madras sales tax and not with reference to Section 4 of the Central Excise Act, 1944. In fact, if the senior co .....

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yntex Ltd. and Maruti Suzuki Ltd will form part of the assessable value. In all the cases what the Hon ble Supreme Court has held is that the sales tax which was collected but not required to be paid and hence not paid to the Sales Tax authority will form part of the assessable value. It may be mentioned that in all the three earlier mentioned cases, retention of part of the sales tax was permitted under sales tax law. Even in that condition, the Hon ble Supreme Court keeping in view the languag .....

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the same principle has been followed in the case of Anand Swarup vs. CST reported in 1980 SCC 451. Learned AR, on the other hand, has argued how and why these judgments are not applicable. We have gone through these judgments. These are for purpose of computing value for sales tax purpose or turnover for sale tax or turnover tax and are with reference to those Acts. We note that the question here is the value for purpose of excise when the sales tax collected from the purchaser is higher than wh .....

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d senior counsel also submitted that in the case of Bata India Ltd. reported in 1965 (53) STC 132 (Bom.), it has been held that under the Bombay Sales Tax Act, registered dealer is authorised to collect tax from purchaser and hence it is not part of price. In fact, similar notification exists in excise. Even in excise, excise duty is not considered as part of transaction value or price or even for computing the turnover, say for SSI purpose. As mentioned earlier, every law has its own purpose an .....

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tinct and separate item. Hence sales tax is not even part of the price. Hence there is no need to rely on the exclusion contained in the transaction value. We are not agreeable to the proposition made by the learned senior counsel as there is no authority or basis to make such a plea. There is no provision under the Central Excise Act to support his contention. A cursory reading of Section 4 of the Central Excise Act, particularly the definition of the transaction value, even in clause (d) of Se .....

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tted that the exclusion clause in definition of transaction value is relevant when price charged from buyer is inclusive of sales tax. We do not find any authority to make such a claim. In fact the transaction value as defined in the Act includes 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 .....

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yable on such goods were not there, then perhaps the learned senior counsel s submission would have some weight but once the definition provides exclusion of only actually paid or payable, the argument of the learned senior counsel holds no water. We accordingly reject it. 22. Another submission made by the learned senior counsel is that the benefit granted to eligible units registered under the Bombay Sales Tax Act is qua unit and not qua goods. Benefits given are to units satisfying the criter .....

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other submission of the learned senior counsel was that there is no machinery in the Central Excise Act including Section 11A of the Central Excise Act, 1944 to cover situation in the present case. We are not impressed with this argument of the learned senior counsel. The Central Excise Act/Rules provides scheme of provisional assessment which is a definite machinery where assessment for any reason cannot be finally made at the time of clearance. In case a manufacturer is not resorting to the pr .....

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ission is that the relevant date cannot be calculated from the date of NPV payment of sales tax but should be calculated from 16.11.2002 i.e. the date of notification issued by the Government of Maharashtra to insert Rule 31(b) in the Bombay Sales Tax Act. We do not find any strength in the assessee s contention and is without any supporting authority of law. The insertion of Rule 31(b) is not relevant for determining the relevant date under the Central Excise Act. In our view, it has no relevan .....

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n the same context. These submissions are not relevant for determining the sales tax actually paid or actually payable and thereafter determining the transaction value and thereafter duty liability under the Central Excise Act. We agree with the submissions of the learned Commissioner (AR) in this context, particularly para 10(v), 10(vi), 10(vii) and 10(ix). Contention of the learned senior counsel is therefore rejected. 26. Another submission of the learned senior counsel was that disintegratio .....

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udes only the excise duty, sales tax and other taxes, if any, actually paid or payable on such goods. Thus the money flowing from buyer to seller is total amount which includes all taxes. It is different matter that taxes are to be paid by seller to various authorities. In any case, for computing transaction value exclusion is only of the sales tax actually paid or actually payable on such goods. Thus this submission is rejected. 27. Another submission was that the amount of sales tax collected .....

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e to collection but with reference to actually paid or actually payable. This contention is also rejected. 28. Another submission made by the learned senior counsel was that the sales tax collected in previous years has nothing to do with the assessable value of clearances made during the succeeding year. While the proposition as such appears to be alright but in the present case the Revenue has not made a case that the assessable value of clearances is related to the sales tax collected in the .....

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t a lot of post manufacturing expenses are part of the transaction value. We do not even consider it necessary to discuss such a contention and is outrightly rejected. 30. Another submission made by the learned senior counsel was that the provisions of the contract are in nature of general principles of law. Hence the same will apply to all the taxing statute. We are not impressed with such a proposition. The general principles of law may be taken help only when a specific law is silent on the i .....

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o value, such value, shall, subject to the other provisions of this section, be deemed to be- (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that (i) where, in accordance with the normal practice of the wholesale trade in such goods, such go .....

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in clause (a), be deemed to be the normal price of such goods in relation to each such place of removal; (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in rel .....

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e such goods are not sold to such dealers, to dealers (being related persons), who sell such goods in retail; (b) where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. 2. Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference t .....

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(b) "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 and, from where such goods are removed; (ba) "time of rem .....

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r. Explanation. In this clause "holding company", "subsidiary company" and "relative" have the same meanings as in the Companies Act,1956 (1 of 1956); (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. In this sub-clause, " .....

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emoval in respect of such goods sold or contracted for sale. Explanation. For the purposes of this sub-clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of - a. the effective duty of excise payable on such goods under this Act; and b. the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods, and the effective duty of excise on such goods under each Act referred t .....

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Act is for the time being in force, the duty of excise computed with reference to the rate specified in such Act, in respect of such goods as reduced so as to give full and complete effect to such exemption; and ii. in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods. 32. With effect from 1.7.2000, the new Section 4 of the Central Excise Act, 1944 underwent a major change inasmuch as instead of concept of the normal value of th .....

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goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Explanation. - For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing direc .....

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cise under this Act and includes his agent; (b) persons shall be deemed to be related if - (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly, in the business of each other. Explanation. In this clause - (i) inter-connected undertakings shall have the meaning assigned to it in clause .....

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s 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 value means the price actually paid or payable for the goods, when sold, and includes in .....

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of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. 33. The Section 4 mentioned above is for the period prior to 1.7.2000 as also w.e.f. 1.7.2000 as in the appeals before us, in some cases demands are pertaining to period beginning prior to 1.7.2000 and in other cases after 1.7.2000. 34. From the above definition of value it is seen that the concept of time and place of removal has always (i.e. before 1.7.2000 and from 1.7.2000) been an integral part of .....

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oods when sold and includes .. (not relevant for present case) 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. Thus under old section, sales tax payable was to be excluded while under new section sales tax actually paid or actually payable to be excluded. But both the normal value and the transaction value are at the time of removal. A combined reading of the definition of time of removal, place of removal and .....

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nder:- 18. It can be seen that Section 4 as amended introduces the concept of transaction value so that on each removal of excisable goods, the transaction value of such goods becomes determinable. Whereas previously, the value of such excisable goods was the price at which such goods were ordinarily sold in the course of wholesale trade, post amendment each transaction is looked at by itself. However, transaction value as defined in sub-clause (3)(d) of Section 4 has to be read along with the e .....

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has been paid, has been paid in part, or has not been paid at all. The basis of transaction value is therefore the agreed contractual price. Further, the expression when sold is not meant to indicate the time at which such goods are sold, but is meant to indicate that goods are the subject matter of an agreement of sale. Once this becomes clear, what the learned counsel for the assessee has argued must necessarily be accepted inasmuch as cash discount is something which is known at or prior to .....

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n under the Rajasthan Sales Tax Incentives Scheme. On the facts of that case, 25% of the sales tax was paid to the Government, and 75% of the said amount of sales tax was retained by the assessee and became the assessee s profit. Under the earlier Board s circulars that were issued by the Central Board of Excise and Customs, the amount of 75% of sales tax that was never paid to the Government but retained by the assessee was also liable to be deducted from price under the old Section 4, that is, .....

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alue under Section 4 of the Act because the set off does not change the rate of sales tax payable/chargeable, but a lower amount is in fact paid due to set off of the sales tax paid on the input. Thus, if sales tax was not paid on the input, full amount is payable and has to be excluded for arriving at the transaction value . That is not the factual matrix in the present case. The assessee in the present case has paid only 25% and retained 75% of the amount which was collected as sales tax. 75% .....

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value for levy of excise duty. Sales tax or VAT or turnover tax is payable or paid to the State Government on the transaction, which is regarded as sale, i.e., for transfer of title in the manufactured goods. The amount paid or payable to the State Government towards sales tax, VAT, etc. is excluded because it is not an amount paid to the manufacturer towards the price, but an amount paid or payable to the State Government for the sale transaction, i.e., transfer of title from the manufacturer t .....

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essee. The words that gain signification are actually paid . The situation after 1-7-2000 does not cover a situation which was covered under the circular dated 12-3-1998. Be that as it may, the clear legislative intent, as it seems to us, is on actually paid . The question of actually payable does not arise in this case. (at para 22) 24. It will be noticed that this Court did not deal with Section 4(1)(a) as amended in the year 2000 insofar as it speaks of delivery of goods at the time and place .....

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refore held that since 75% of sales tax was retained by the assessee, the said amount could not be deducted as only amounts payable to the State Government as sales tax can be deducted. This was so held on an interpretation of the last part of the definition of transaction value . The facts of the present case are concerned with the first part of the definition of transaction value which has to be read with Section 4(1)(a) as has been stated above. It will thus be seen even the Hon ble Supreme C .....

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ally payable. 37. Thus one has to first of all examine what is the overall price of the goods which is actually paid or payable for the goods by the buyer and exclude from it excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. Thus to determine the transaction value for purpose of excise duty, one will have to find out the price actually paid or payable for the goods as also the sales tax which is actually paid or actually payable on such goods. In the sit .....

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onthly or quarterly) but is permitted to be retained with the assessee for a very long period say 10 to 15 years and after the expiry of the said period, the assessee is required to deposit the said sales tax amount to the Sales Tax authority. When the goods are being cleared (i.e. time of removal) actual sales tax paid is nil but sales tax actually payable is the normal sales tax or what has been collected by the assessee from its customers. Among the terms actually paid or actually payable use .....

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to the old Section 4 and observed as under:- 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 Board s 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 b .....

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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 Law. 4. In situation (ii), Sales tax is payable by the assessee after a particular period. In situation (iii), the manufacturer collects the sales tax from the buyers and retains the same with him instead of paying it to the State Govt. The State Govt. on the other hand grants a cash inc .....

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in category of cases mentioned in Para 1(ii) & (iii) above. 5. The advice of Ministry of Law in the matter has been accepted by the Board and is enclosed for information. It is seen that the present situation is covered by (ii) above and for the period prior to 1.7.2000 i.e. under old Section 4, the Board was of the view that sales tax payable is deductible from the whole sale price for the determination of assessable value for levy of central excise duty in category (ii). 38.1 On 1.7.2000 .....

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er 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 concesssional 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 to the defi .....

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actually payable in the context of the amount of duty of excise, sales tax and other taxes would normally come into play only on those situations where the amount of excise, sales tax or other taxes is not paid at the time of transaction but paid subsequently, for example, sales tax payable under a deferment scheme. Thus even at the time of introduction of new Section 4, the Board recognised the fact that the term actually payable will come into play in the deferment scheme. Thus amount of sales .....

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bject: Inclusion of interest on sales tax in the assessable value. I am directed to refer to Board s Circular No. 378/11/98-CX., dated 12-3-98 [1998 (99) E.L.T. T5] wherein it has been clarified that in situation where deferment of payment of Sales tax for particular period is allowed by State Government as incentive, Sales tax is deductible from the wholesale price for determination of assessable value for levy of Central Excise duty even though it may not be deposited immediately with the Stat .....

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directly or indirectly from the buyer to the seller. The interest earned, on deferred sales tax, by the manufacturer is not a benefit extended by the buyer to the seller but is an incentive, accruing in pursuance of State Government policy. Therefore, this amount cannot be treated as additional consideration under the Central Excise Valuation Rules and the same cannot be added to the assessable value in terms of Rule 5 of Central Excise Valuation Rules, 1975 or Rule 6 of the Valuation Rules, 20 .....

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circulars that the Board has all along been of the view that under the deferment scheme of sales tax, the sales tax is payable though after a long period of time and since the sales tax is payable, the same will stand excluded from the normal value or the transaction value. 39. The only issue in the present case is that the manufacturer assessees have availed the 4th proviso to Section 38 of the Bombay Sales Tax Act, 1959 or the corresponding section of the Maharashtra Value Added Tax Act, 2002 .....

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m 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 .....

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f payment, to our view will not make any difference. Further, the actual amount paid is equal to NPV (which is less than originally payable), cannot make the amount actually payable at the time and place of removal different, particularly when under Sales Tax Law such a payment is considered as deemed payment of the sales tax payable. Quantum of sales tax payable does not change in the above scheme of pre-payment. 40. One of the contentions of the learned Commissioner (AR) was with reference to .....

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have to be read along with actually paid and if the amount actually paid is less than the amount actually payable, then the exclusion can be only of the amount actually paid. In the facts of the present cases, the amount actually paid is far less than the amount actually payable at the time of clearance. We are not impressed with the said argument of the learned Commissioner (AR). The definition of transaction value given in Section 4(3)(d) very clearly stipulates exclusion of the amount of sal .....

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changed. The difference between the amount actually paid and actually payable has arisen due to the time when the amount was paid and originally stipulated date of payment under the deferral scheme. As discussed earlier, the concept of actually paid or actually payable is to be determined at the time of removal. Thus the amount actually paid cannot be determined at some other time. In any case, in the present case, the amount payable has not been varied by the Sales Tax Authorities. Under the fa .....

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the learned counsel, Shri Vipin Jain, was relating to the Hon ble Supreme Court judgment in the case of Maruti Udyog Ltd. (supra). The learned counsel has tried to argue that the said judgment is authentic declaration by the Hon ble Supreme Court that in the case of deferral scheme, the same will not be includible in the transaction value. We have gone through the said judgment of the Hon ble Supreme Court. What the Hon ble Supreme Court has come to the conclusion in the said case was that the H .....

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e is that the amount paid as per NPV is far less the amount actually payable under the deferral scheme and the difference of the two will form part of the assessable value. The judgment of the Hon ble Supreme Court has not given any decision on the issue on hand. 42. One of the contentions of various counsels was that Section 43B of the Income Tax Act, 1961 allows deduction from full amount of sales tax and not for the amount of NPV paid. They have also submitted the CBDT circular dated 25.9.198 .....

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ion was whether the taxes under the deferral scheme are to be considered as actually paid in the year when these are deferred or should be considered as paid when they are actually paid in the year of deferral for purpose of computation of the income. The two circulars referred by the senior counsel are in that context. Further, the issue before the Income Tax Appellate Tribunal as also the Hon ble Bombay High Court in the case of Sulzer India Ltd. vs. Joint CIT was whether to consider the diffe .....

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ference, we reproduce below the two circulars:- a. No. 496 [F. No. 201/34/86-IT(A-II)], dated 25-9-1987 1. Several State Governments have introduced sales tax deferred schemes as a part of the incentives offered to entrepreneurs setting up industries in backward areas. Under these schemes, eligible units are permitted to collect sales tax and retain such tax for a prescribed period. After this period, the sales tax is to be paid to the Government either in lump sum or in instalments. 2. Section .....

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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 .....

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ents are made in the sales tax laws on these lines, the statutory liability shall be treated to have been discharged for the purposes of section 43B. b. CLARIFICATION 2 : Circular : No. 674, dated 29-12-1993 1. The scope of application of the provisions of section 43B to the sales tax collected but not actually paid under deferral schemes of the State Governments was considered in Board s Circular No. 496, dated 25-9-1987 [Clarification 2], and it was decided that, where the State Governments ma .....

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s also provide that entries shall be made in the Government accounts giving effect to deemed collections by crediting the appropriate receipt-heads relating to sales-tax collections and debiting the heads relating to disbursal of loans. It has, therefore, been represented that, as such conversion of the sales tax liability into loans have similar statutory effect as can be achieved through amendments of the Sales-tax Act, the amounts covered under the scheme should be allowed as deduction for th .....

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us year in which such conversion has been permitted by or under Government Orders. A perusal of the two circulars would indicate that the CBDT has clarified in consultation with the Ministry of Law that if the Sales Tax Act provides that the sales tax deferred under the scheme shall be treated as actually paid, such a deeming provision will meet the requirements of Section 43B of the Income Tax Act. 43. There can be a view that since the retention period is very long say 10 to 15 years and the v .....

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not permitted, the assessee/dealer is required, in addition, to pay the interest on the delayed payment. If we keep in mind that the value of the money changes with time, then it will be appropriate to consider net present value of the sales tax payable after say 10 to 15 years and consider that as the sales tax payable at the time of clearance. However, we note that this is not the understanding of the Central Board of Excise and Customs. Moreover, no rules or any notification has been provided .....

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ot be taken. In any case the notices in the present appeals do not propose any such demand. What is proposed is to consider the deferred amount of tax minus actual NPV paid as part of assessable value and duty liability on such an amount. 44. In some of the appeals, the period involved is prior to 1.7.2000. Prior to 1.7.2000, the law did not stipulate exclusion of the amount actually paid or actually payable but stipulated the sales tax payable. Thus prior to 1.7.2000, in any case, the demands w .....

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sue on limitation in case the manufacturer-assessees fail on merits. Some of the manufacturer-assessees have also argued why the extended period of limitation will not be applicable in their cases. In respect of two appeals filed by the manufacturer-assessees, the Commissioner in the impugned orders has invoked the extended period of limitation and upheld that the extended period of limitation would be invocable in the facts and circumstances of the case. Learned Commissioner (AR), on the other .....

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