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TMI Blog2017 (5) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... o recover the sales tax amount/ VAT amount but to retain with themselves as an incentive. The revenue's contention was that as per the provisions of Rule 6 of Central Excise Valuation Rules, 2000 read with Section 4 (1) and 4 (3) (a) (d) of the Central Excise Act, 1944 and Para 10 and 11 of Board's Circular No M.F. (DR) F.No.354/81/2000 - TRU dt. 30.06.2000 the amount of sales tax retained by the Respondent as an incentive was required to be added/considered for levy of Central Excise duty as an additional consideration. The revenue also relied upon the judgment of Hon'ble Supreme Court in the case of M/s Super Synotex (India) Ltd as reported in 2014 (301) ELT (SC). 2.1 The Appellant paid the excise duty on said incentive amount "Under Protest", however subsequently claimed refund of the same. The Respondent pleaded that under the scheme they have opted for remission of sales tax which means that the sales tax/ VAT was payable at the time of clearances of goods and therefore the same is not a part of the assessable value of the goods. They submitted that in case of M/s Super Synotex there was exemption from sales tax and since the said amount was not chargeable, the recovery there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional consideration in terms of Section 4 (3) (d) of Central Excise Act, 1944, it cannot be deducted from the assessable value, on which central excise duty is leviable. 4. On the other side Shri V.S. Nankani, Ld. Senior Counsel alongwith Shri Vipin Jain, Ld. Advocate appearing for the Respondent submits that under the Incentive Scheme they were eligible for incentive on account of fixed Capital Investments. The State Government instead of collecting the Sales Tax payable and thereafter separately granting the same in the form of incentive in exercise of the powers vested with it under the Gujarat VAT Act, 2003 has given effect to the said Incentive scheme by granting remission of the Sales Tax actually payable and adjusting it against the incentive. In their case not only Sales Tax was actually payable but in fact it stood actually paid, as the remission was nothing but adjustment of the Sales tax paid by them against the incentive which the State Government granted with respect to the fixed capital investment made by it in the State of Gujarat. There is no blanket exemption from sales tax from the levy or payment of sales tax. 4.1 There is difference between the "remission" a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue. He further submits that the entire amount of excise duty paid by them on sales tax amount was borne by them and is appearing as recoverable in their books of accounts. 4.2 He submits that the transaction value, as defined in Section 4 of the Central Excise Act, 1944 does not include any amount of sales tax and other taxes which are 'actually paid' or 'actually payable'. In the instant case, there cannot be any dispute that Sales Tax was actually leviable and payable in respect of the clearances made in as much as there is no exemption in respect of the said clearance. In the absence of any exemption from the levy and/or payment, it cannot be said that Sales Tax was not payable on the transaction in question. Hence they are entitled to deduction of the entire Sales Tax actually payable from the assessable value. He submits that the Tribunal in the case of CCE vs. Uttam Galva Steels Ltd. reported in 2015 -TIOL-2242-CESTAT-MUM considered the difference between the "exemption" and "deferral" of sales tax and held that it is only in case of exemption that the said amount is not excludible from the transaction value. It clearly comes out of the said judgment that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax amount. Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax. The quantum of remission was based upon the investment made in the fixed assets. The condition of the remission amongst others included to remain in production, employment of certain percentage of persons in assessee unit, and numerous other conditions as brought out in Para 9 of the impugned Order-in-Appeal. 5.2 The remission amount was adjusted against the incentive amount receivable as per the Eligibility Certificate. The Sales tax assessment orders indicated that the finished goods cleared by the appellants were assessed to full rate of tax and allowed as remission under Section 41 of Gujarat Value Added Tax Act, 2003. This shows that the Sales Tax was actually payable to the government. The revenue has relied upon the definition of 'transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods from the "place of removal". The liability to pay the sales tax/ Vat is not extinguished at the time of removal of goods since it is not exempted from sales tax/Vat. It is only after the assessment of the sales tax officer and subject to the condition that the Respondent's liability to the Sales tax is "remitted". Thus when the sales tax/ Vat is payable at the time of removal in that case in terms of Section 4 (d) of the Central Excise Act, the same is not includible in the transaction value. Further the sales tax amount was adjusted against the remission granted by the sales tax authority under an assessment. 5.4 The learned AR during hearing has relied upon the judgment of Hon'ble Supreme Court in case of M/s Super Synotex (India) Ltd - 2014 (301) ELT 273 (SC). We find that in the impugned order the learned Commissioner (Appeals) dealt with this Apex Court judgment in para 11, 11.1 & 11.2, which are reproduced below: - "11. I further find that the adjudicating authority while rejecting the refund claims filed by the appellants held that since sales tax has been collected and retained by them their case is covered by the Hon'ble Supreme Court's Order in CCE v Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 above. One of which i.e. its sub para (ii) is to avail incentive by way of remission of tax by retaining the amount of VAT collected and adjustment thereof as capital subsidy specified in the Eligibility Certificate equivalent to the capital investment made in fixed assets. This was further subject to the condition of re-investment of 50% of total incentive i.e. (i) to (ii) of para 10.3 above and not only (ii) incentive received in projects in State of Gujarat within a period of 10 years of the commencement of production. This is thus not an exemption of tax as was the issue before the Hon'ble Supreme Court in the above case, I find that the ratio laid down in this judgement cannot have any bearing on the present case of the appellants. Since the incentive Scheme, 2001 for re-development of Kutch Area affected by the earthquake in the year 2001 provided for incentive to the extent of investment made by the appellants in their industrial unit set up in Kutch area, it cannot be equated with the Rajasthan Sales Tax Incentive Scheme of 1989, Hence, I find that the reliance placed by the lower authority on the Apex Court judgment in the case of Super Synotex (supra) to reject the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case and agreeing with the contentions of the respondents, we are of the view that since in the present case the remission is incentive for setting up the unit is Kutch area, the same would not form part of transaction value. 5.8 The Respondent has cited the order of Tribunal in case of CCE v. Uttam Galva Steels Ltd. 2015-TIOL-2242- CESTAT-MUM. We find that the fact of that case is different from the facts in the present case, therefore, we do not incline to take any inference from the said decision of this Tribunal. 5.9 We find that even sub section (7A) of Section 11 of the Gujarat Value Added Tax Act, 2003 states that the tax that remitted is deemed to have been statutorily paid. The said provision is as under:- "notwithstanding anything contained.... where tax is levied or is leviable under this Act, or any earlier law is remitted or to be remitted or deferred or is deferrable under any tax incentive scheme granted by the Government of Gujarat, then tax shall he deemed to have been paid to the Government treasury..." 5.10 Thus in our view, once the Sales Tax department has assessed the Sales Tax as paid, the Central Excise department cannot contend that since the St ..... X X X X Extracts X X X X X X X X Extracts X X X X
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