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TMI Blog2017 (4) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant from the Government of India is to be treated as additional consideration for the sale of the goods manufactured by the appellant and sold to the Ministry, Govt. of India. As the Revenue's case is that subsidy is linked with the quantity of DDT manufactured and supplied by the appellant it is required to be added to the 'value' in terms of the Section 4(1)(b) read with Rule 6 of Valuation Rules. 3. With above background, we have heard Shri Amit Jain, ld. Counsel for the appellant and ld. DR Shri H.C. Saini for the Revenue. 4. Based on the appeal memorandum and written submissions, the ld. Advocate for the appellant mainly submits as under: (i) The subsidy received is not in connection with or by reason of sale of DDT, therefore, it is not an additional consideration; (ii) They rely on the Hon'ble Supreme Court's decision in the case of CCE Vs. Mazagon Dock Ltd. - 2005 (187) ELT 3 (SC) saying that the subsidy has been received subsequent to clearance of goods and has no connection with the value of the DDT manufactured and sold. (iii) The findings of the Commissioner are misplaced since the amount of subsidy received is not linked with the value of the DDT manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncept of 'transaction value'. Under the concept of 'transaction value' the actual value which is received by the appellant manufacturer for the subject goods is to be taken as the assessable value for the purpose of duty of Central Excise. 7. The main issue here is whether the differential amount, which has been received as the subsidy by the appellant assessee is part of value of the goods under Section 4 of the Central Excise Act, 1944 and whether duty of Central Excise accordingly is chargeable on the said differential amount (which is subsidy in the present case). 8. Duty of Central Excise is charged on the transaction value mentioned in Section 4(1) of the Central Excise Act, 1944. Section 4(1) is reproduced below for reference: "4. Valuation of excisable goods for purposes of charging of duty of excise.- (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) In a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidy. However, this submission of the appellant is against the facts on record as the Committee of Secretaries in their decision clearly mentions that subsidy is reimbursement against 'supplies of DDT'. 9.1 It may be mentioned that said subsidy is an indirect consideration received by the assessee appellant for the subject goods only and this indirect consideration is deemed as coming from the buyer as in the present case buyer is no other than the Ministry of Health & Family Welfare, Govt. of India only and it is the Govt. of India who are giving this subsidy to the assessee viz. HIL. Though may be this subsidy is sanctioned by the different Ministry and goods might be being supplied to some other Ministry yet both are part of the same entity, which is Government of India only and when the said subsidy is a kind of additional consideration for the same goods, which fact is very evident from the written decision (minutes) taken in the Meeting of the Committee of Secretaries for the rehabilitation of the appellant assessee. 9.2 On the same issue, CESTAT, Bangalore has given the decision in the case of CCE Vs. Indian Oil Corporation in Appeal No. E/413/2006 vide Final Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2.5 The argument by the appellant that the additional reimbursement is coming from Oil Pool Account Oil Pool Account and not from buyer is not tenable, when this consideration is in respect of the same goods which has been sold to and received by the buyers. Therefore, this reimbursement money from oil pool account has to be deemed to be received from buyers only, though indirectly. Here, the receipts by the assessee from Oil Pool Account of the Ministry of Petroleum which is the reimbursement money has been deemed as receipt from buyers only when this is on account of the subject goods only. The transaction between Oil Pool Account and the assessee cannot be called a transaction without any basis or an empty transaction, where the money is exchanged without any kind of consideration or without any basic exchange of the goods. 10. The show cause notice issued to the appellant invokes Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 along with Section 4 of the Central Excise Act, 1944 for issuing the demand on the subsidy/money paid to them by the Ministry. Rule 6 of the said Valuation Rules, 2000 (supra) is given below : Rule 6. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise on the subject goods sold to the Ministry by the appellant. It is made again clear that in terms of the Explanation to Section 4(1) of the Central Excise Act, 1944, this subsidy or reimbursement amount is deemed to include the duty payable on such goods and this amount is required to be treated as price-cum-duty accordingly. 11.1 The appellant submits that the Central Board of Excise & Customs (CBEC) issued clarification circular No. 983/7/2014 saying that such reimbursement/subsidy is not to be added to the assessable value. However, when the provisions relating to valuation given in the Explanation to Section 4(1) of the Central Excise Act, 1944 and the Rule 6 of the Central Excise Valuation Rules (supra) are very clear, this submission of the appellant does not have sufficient force and cannot be accepted. Further, CBEC circulars/clarifications cannot override or supersede the provisions of Central Excise Act and the Rules made thereunder. 11.2 It is thus clear that any extra consideration received for the subject goods in whatever form (subsidy or otherwise) has to be treated as part of the assessable value for the subject goods viz. DDT under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, it would be absurd to accuse that there was 'intention to evade tax'. CESTAT in the said decision observes as under: "8. In any case it is seen that the show cause notice has been issued after expiry of normal limitation period of one year from the relevant date and same would not survive unless the Department proves that the respondents had deliberately suppressed the relevant facts from the Department with intent to evade the duty. In this regard we find that the respondent is a Public Sector Undertaking wholly owned by the Government of India and in our view it would be absurd to accuse a wholly Government owned company of non-payment of excise duty with intent to evade the tax. In the circumstances of the case, in our view, it would not be correct to allege that the respondent have suppressed the relevant facts from the Department with intent to evade the payment of duty and as such longer limitation period under proviso of Section 11A(1) and the penalty under Section 11AC would not be applicable. Thus the duty demand is not sustainable on limitation, also. 13. In the light of above discussions, it is held that duty of Central Excise is to be levied on the subsidy portion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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