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M/s Honda Motorcycles & Scooters India Pvt. Ltd. Versus CCE, Delhi-III

2016 (9) TMI 533 - CESTAT CHANDIGARH

Valuation - whether or not the amounts collected by the appellants as Sales Tax from the customers but not paid to the State Sales Tax authorities should be included in the assessable value for the purpose of levy of Central Excise duty - appellants obtained an Entitlement Certificate dated 20.10.2003 by the Haryana VAT authorities - Appellant contended that they are eligible for full education of Sales Tax payable by them in terms of the Entitlement Certificate as they have discharged 50% of th .....

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s Tax/VAT in the assessable value collected by the appellants but not paid or payable to the State Government followed by the various decision of Hon'ble Supreme Court. - Invokation of extended period of limitation - Demand for the period April 2003 to June 2006 - SCN issued on 02.07.2007 - Held that:- it is found that there is nothing in the impugned order which examined the party’s submissions against longer period demand. We note that in the present case the correct valuation for Central .....

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gainst the appellants is not sustainable. - It is apparent that the issue involved is one of legal interpretation and without a positive evidence for deliberate suppression of fact with intent to evade payment of Central Excise duty invoking the extended period for demand, is not legally sustainable. Accordingly, we hold that the appellants will be liable to different duty of Central Excise during the normal period of demand as confirmed by the lower authority. The demand for extended perio .....

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in the order, the appellants are eligible for such calculation of duty liability. - Appeal disposed of - Excise Appeal No. 4001 of 2012 - A/61018/2016-EX(DB) - Dated:- 5-8-2016 - Mr. Ashok Jindal, Member (Judicial) and Mr. B. Ravichandran, Member (Technical) Shri. B.L. Narshimahan, Advocate- for the appellant Shri. Vijay Gupta. AR for the respondent ORDER The appeal is against the order dated 27.09.2012 of commissioner of Central Excise, Delhi-III. The appellants are engaged in the manufacture .....

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nder Rule 28-C of the Haryana General Sales Tax Rules, 1975 and Rule 69 of Haryana Value Added Tax Rules, 2003. In terms of said Certificate, the appellants were granted Sales Tax deferment not exceeding ₹ 214.93 crores. Under the deferment scheme, 50% of the total Sales Tax payable to the State Government is to be retained by the appellants and they need not play this amount to the Sales Tax Department in future. Proceeding s were initiated to demand and recover differential Central Excis .....

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arned counsel for the appellants contested the impugned order mainly on the ground that the appellants are eligible for full education of Sales Tax payable by them in terms of the Entitlement Certificate as they have discharged 50% of the deferred tax liability and the remaining 50 % is deemed to have been discharged in full and as such nothing has been retained by the appellants. In other words, it is the plea of the appellants that the lower authority erred in adding up the deferred amount of .....

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. (b) The concept of Actually Paid or Actually Payable amount of Sales Tax has to be determined at the time of removal. Reference was made to para 10 of board Circular dated 30.06.2000. (c) The actual Sales Tax payable at the time of removal has correctly been claimed for exclusion from the transaction value. The appellants have paid VAT as legally payable which is considered deemed discharge of 100% tax dues. In that context, no addition could be made on the foregone 50% of Sales Tax. Reliance .....

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for calculation of differential excise duty as no amount representing excise duty has been collected from the buyers on this differential amount now confirmed by the lower authority. 3. The learned AR contested the submissions of the appellants on various grounds. He submitted that the Explanation inserted under Section 4(1) in 2003 is very clear to the effect that the exclusion of Sales Tax is to be on the basis of the actual paid amount. There is no ambiguity in the terms of the statutory pro .....

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ropriate as the Explanation has been inserted is Section 4 in 2003. He also submitted that deeming fiction created in the State Sales Tax Rules cannot be applied to Central Excise Act where such fiction has not been recognized specifically. He also supported the demand for extended period and imposition of penalty on the appellants stating that both were done in terms of the provisions of Section 11a and 11AC of the Act. 4. We have haear both sides and examined the appeal records carefully. 5. T .....

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g the period 2003-04 to 2008-09 and this amount has not been paid to the VAT authorities. The said amount has been retained by the appellants in terms of the applicable regulations of the VAT Rules. Section 61(2)(d) of Haryana Value Added Tax Act, 2003 stipulates that, tax concessions to the industrial units in terms of Haryana General Sales Tax Act, 1973 shall remain in force with certain modifications. Sub-clause (i) states that, an industrial unit availing the benefit of exemption from the pa .....

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ppellants chose to make half of the amount of deferred tax. While such payment will satisfy the full discharge of VAT in terms of deeming fiction as per Section 61 of the Haryana Value Added Tax Act, 2003, the applicability of such deeming concept to the provisions of Section 4of the Central Excise Act, 1944 is the point in dispute. In other words, in view of the deeming fiction payment of say, ₹ 50/- as VAT will be considered ₹ 100/-. The appellants case is that ₹ 100/- should .....

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y of an exemption. The said exemption was converted into the scheme of deferring payment of tax upon introduction of Haryana Value Added Tax Act, 2003. In fact, it is apparent that we are dealing with an exemption scheme where the mode of payment has been modified by the Act of 2003. This is relevant in view of the reliance placed by the appellants on the decision of the Tribunal In Uttam Galva Steels Ltd. (supra). There the Tribunal was dealing with a scheme under Maharashtra Value Added Tax Ac .....

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ted by the original authority, the implication of deeming provision in a VAT enactment for the purpose of Central Excise valuation has to be examined. The Hon ble Supreme Court In Meghraj Biscuits Industries Ltd. vs commissioner of Central Excise, U.P, 2007 (210) ELT 161 (SC), and Commissioner of Central Excise, Bangalore vs Meyer Health Care Pvt. Ltd., 2011 (264) ELT held that,145 (SC), deeming fiction of a particular Act cannot be extended to the excise law automatically. Further, the purpose .....

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of retention of collection Sales Tax and its treatment in ascertaining the transaction value for excise purpose. In Commissioner of Central Excise, Delhi-III vs Maruti Suzuki India ltd., 2014 (307) ELT 625 (SC), it has been clearly held that 50 % of the Sales Tax collected was retained by the assessee and was not actually paid to the exchequer nor was is actually payable since the HPC permitted the assessee to retain the said amount. The Hon ble Supreme court observed, therefore, whichever way t .....

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(SC), while dealing with a similar issue held as below. 22. It is evincible from the language employed in the aforesaid circular that set off is to be taken into account for calculating the amount of sales tax permissible for arriving at the transaction value 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 .....

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e or value in relation to excisable goods is obvious. The price or cost paid to the manufacturer constitutes the assessable value on which excise duty is payable. It is also obvious that the excise duty payable has to be excluded while calculating transaction 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 t .....

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and is not payable or paid, it is a part and should not be excluded from the transaction value. This is the position after the amendment, for as per the amended provision the words transaction value mean payment made on actual basis or actually paid by the assessee. 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, i .....

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n retained by the assessee. That has to be treated as the price of the goods under the basic fundamental conception of transaction value as substituted with effect from 1-7-2000. Therefore, the assessee is bound to pay the excise duty on the said sum after the amended provision had brought on the statute book. 9. The learned counsel for the appellants attempted to distinguish the above decisions of the Hon ble Supreme Court by pleading that they are not applicable to the facts of the present cas .....

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tually paid to the Government and hence held that 75 % of Sales tax retained by the assessee could not be deducted as only amounts payable to the State Government as Sales Tax can be deducted. We find that the Hon ble Supreme Court again reiterated that the Sales Tax actually paid or payable to the State Government is only eligible for deduction. In the present case, admittedly, the Sales Tax/VAT payable/paid to the Haryana State Government is only 50% which was eligible for education. The remai .....

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(320) ELT 27 (SC), again held that post 01.07.2000 in arriving transaction value Sales Tax benefit which as retained by the assessee, would be included while fixing the transaction value . 10. We find while the case on merit is against the appellants, their plea of time bar of that portion of demand beyond normal period has merit. We have examined the impugned order with reference to reasons for upholding the extended period of demand. The original authority had very briefly dealt with the issu .....

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se purpose is in dispute. The dispute is directly relatable to Sales Tax amount paid/payable by the appellants directly relatable to Sales Tax amount paid/payable by the appellants directly relatable to Sales Tax amount paid/payable by the appellants to the State authorities. The Sales Tax amounts collected were all reflected in the invoices issued to the clients. Out of this amount, the appellants retained 50 % based on a scheme announced by the State Government. In this factual matrix, we find .....

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