TMI Blog2017 (6) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... s unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant. - E/86265/16 - A/87410/17/EB - Dated:- 18-5-2017 - Mr. M.V. Ravindran, Member (Judicial) And Mr. C.J. Mathew, Member (Technical) Shri Vipin Kumar Jain, Advocate with Shri Vishal Agarwal, Advocate for appellant Shri Ajay Kumar, Jt. Commr (AR) for respondent ORDER Per: M.V. Ravindran This appeal is directed against order-in-original No.21-22/COMMR(RS)/LTU-M/CX/2015-16 dated 07.03.2016. 2. The relevant facts that arise for consideration in this case are appellant herein is engaged in manufacture of excisable goods i.e. MS Pipes falling under CETH No.73 of the schedule to the Central Excise Tariff Act, 1985 and registered as Large Taxpayer Unit. Appellant has been availing incentive benefits given to them by State Govt. of Gujarat in Sales Tax exemption (remission of tax) under Economic Development of Kutch District, Government of Gujarat. Industries Commissioner, Gujarat has issued eligibility certificate No.IC/INC/ST/KUTCH/T-5/1741 dt 10.04.2008 under the said incentive benefit scheme. The appellant was allowed to recover the amount of sales tax involved on sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of CCE v. Mazagon Dock Ltd. As reported at (2005) 12 SCC 400. (ii) It is further submitted that in the case of Ajanta Manufacturing Ltd. (supra) on very same scheme under which current appellant has been operating fell for consideration of the Hon ble High Court and it was held that capital subsidy was not directly disbursed by the State Government, but was routed through the customers to whom goods were sold, would not change the character of the incentive from being a capital subsidy. (iii) It is his further submission that CBEC in the context of incentive scheme clarified vide Circular No.378/11/98-CX dt 12.03.1998 as to where sales tax incentive is extended through a book adjustment, the sales tax subsidy so granted would not be included while computing the assessable value. (iv) It is further submission that in the instant case the capital subsidy is in the form of remission from the payment of sales tax was extended by way of a book adjustment hence the subsidy received by appellant would not form a part of the assessable value on which excise duty was payable. (v) It is his further submission that the CBEC vide Circular No.983/7/2014- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Act; he would submit that the Apex Court in the case of Pradip Nanjee Gala v. STO (2015 13 SCC 149 observed that power to grant remission of the tax payable vests only with the State Govt. or the Commissioner. In the case in hand, Commissioner of Sales Tax as empowered under Section 41 of GVAT Act passed by a remission order which would mean that the amount which is sought to be included in the assessable value is a sales tax payable and has been remitted. He would then draw our attention to the difference between exemption of the sales tax wherein there is no tax actually paid or actually payable vis-a-vis the case of remission, to submit that sales tax is actually payable but subsequently by an order is remitted subject to the conditions precedent for grant of remission being satisfied. (ix) It is his further submission that power to grant remission of the tax payable is distinct and independent from the power to grant exemption from the levy/payment of tax. It is his further submission in the case of remission, tax that is payable, is by an executive action, is remitted, while in the case of an exemption there is no tax leviable and / or payable at all at the thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Without prejudice to the above, even if the department was not aware of the facts and the dispute in this case is being one of interpretation wherein there were several decisions of the Tribunal and the Circulars of the Board taking a particular view which was followed by appellant, extended period cannot be invoked. 3.1 In view of the foregoing, it is his submission that the appeal be allowed. 4. Learned D.R. submits that appellant had billed and collected sales tax from the customers. It is his submission that as per the provisions of Rule 6 of Central Excise Valuation Rules read with Section 4 of the Central Excise Act, 1944 and the definition of transaction value, the case is very clear that the amounts retained by appellant collected as sales tax from the customers needs to be included in the assessable value of the goods on which excise duty is discharged. He would submit in paragraphs 10 and 11 of CBEC Circular dated 30th June 2000 it has been clarified that the amount of sales tax retained is to be considered for levy of central excise duty. He would submit that the judgement of the Apex Court in the case of Super Synotex - 2014 (301) ELT 273 (S.C.) and Maruti Suzu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the same. On perusal of the said final order, we find that the issue in that case is identical to the issue in the case before us, except for a difference that in the case of Welspun Corporation Ltd ., the assessee had paid the excise duty under proteston the amounts of the sales tax incentives remitted and filed a refund claim while in the case in hand there is a demand for the duty on the amount retained by appellant as sales tax incentives and subsequently remitted by the assessing officer under GVAT Act. On deeper perusal of the final order dated 23.03.2017 in the casse of Welspun Corporation Ltd., we find that the ratio is spelt out clearly in favour of the assessee appellant therein. We reproduce the relevant paragraphs:- 5.3 We find that in the present case the tax was actually payable and there was as such no blanket exemption from sales tax. The term remission from sales tax itself means that the sales tax was actually payable at the time of clearance of goods but was remitted at a later date by passing of assessment orders by the Sales Tax authorities. We find that Section 4 (c) and (d) of the Central Excise Act, defines transaction value and Place of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat from the Scheme as well as from the Eligibility Certificate, that the amount of Sales Tax allowed to be remitted to the respondent was towards capital subsidy. Even the requirement to re-invest 50% of the incentive in projects in the State of Gujarat further emphasizes the point that the amount of Sales Tax retained was only as capital subsidy. We further find from the facts narrated in the impugned order that the incentive receivable as capital subsidy by the appellants was from the Department of Industries, whereas the Sales Tax amount collected was payable to the Department of Sales Tax but allowed to be retained and adjusted against such incentive by their very department which also granted refund of tax paid on raw materials and CST paid. This scheme was thus operated by Department of Sales Tax and accordingly Commercial tax officer has necessarily to pass order for each tax period. It implies that the State Government of Gujarat under which both the departments fall, would have put in place some mechanism whereby the incentive paid to the appellants by way of retention of Sales Tax collected from their customers and refund granted on other two items (VAT on purchases and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 5(2) as also Section 41 of the Act that while Section 5 grants exemption from the levy/payment of sales tax, remission under Section 41 is granted in respect of any part of the tax payable by a dealer. In case of exemption no tax is actually paid or actually payable, whereas in the case of remission, tax is actually payable and paid which is allowed to be remitted by way of retention or by way of refund. In the instant case as already discussed above it is not that Sales Tax was not only payable but in fact it stood actually paid, as the remission was nothing but the incentive or capital subsidy which the State Government granted with respect to the investment made by the appellants in the earthquake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value. Hence for this reason also the sales tax remitted by the Government towards incentive of Capital investment cannot be a part of the transaction value. 6.2 It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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