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2020 (3) TMI 198

..... ation for sale, in the assessable value - HELD THAT:- There are several schemes of State Governments in which, as an incentive, businesses are allowed to collect amounts as representing VAT/Sales Tax but not remit the amount to the State Government. The question is whether in such cases the amounts so retained form part of the assessable value for the purposes of Excise Duty. Since such matters were pending in various States all these appeals or at least many of them were disposed of by the Hon’ble Apex court who held that Excise Duty has to be paid on such amounts which are retained by the assessee. This judgment was not confined to any particular law of a particular state or a particular scheme but has laid down the law. Review Petitions filed against this judgment were also dismissed by the Hon’ble Apex Court. There is nothing on record to show that a larger Bench of Supreme Court has taken any contrary view - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [2014 (3) TMI 42 - SUPREME COURT]. We therefore, find this judgment is binding on us and leaves us with no option but to hold that .....

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..... s which they have collected as representing VAT, but which they have not paid to the State Government under the Remission Scheme. He would submit that in the impugned Order, the Adjudicating Authority has confirmed the demand relying upon the judgment of the Hon ble Apex Court in the case of Super Synotex (India) Ltd. [2014 (301) E.L.T. 273 (S.C.)] in which the Hon ble Apex Court has held that where an amount is collected as the representing VAT/Sales Tax but which has not been paid to the State Government, is includable in the assessable value for the purpose of Central Excise Duty. Ld. Counsel would argue that this judgment of the Hon ble Apex Court has not taken into account the fact that VAT itself is payable on the price plus Excise Duty. Therefore, if VAT is then added to the assessable value, we will get into loop in which the determination of the liability of VAT and Excise Duty become impossible. He also relies on the Order of Tribunal, Mumbai in the case of Welspun Corporation Ltd. 2017 (358) E.L.T. 630 (Tri.-Mumbai) in which that Bench had distinguished that case from the case of Super Synotex (Supra) and held that the Sales Tax actually payable at the time of removal bu .....

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..... of this judgment read as follows :- 20. The question that would still remain alive is that what would be the effect of amendment of Section 4 which has come into force with effect from 1-7-2000. The Section 4(3)(d) which defines transaction value , reads as follows :- 4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) & (2) * * (3) For the purposes of this section, - (a) to (cc) * * * (d) transaction value means 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 at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; 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. 21. After the substitution of the old Section 4 of the Act by Act, 10 of 2000 .....

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..... #8377; 4, in view of the set off notification, and the assessee would recover an amount of ₹ 4 only from the buyer as Central Excise duty. Thus, it is seen that the set off scheme in respect of sales tax operate in these cases somewhat like the Cenvat Scheme which does not have the effect of changing the rate of duty payable on the finished product. 6. Therefore, since the set off scheme of sales tax does not change the rate of sales tax payable/chargeable on the finished goods, the set off is not to be taken into account for calculating the amount of sales tax permissible as abatement for arriving at the assessable value u/s 4. In other words only that amount of sales tax will be permissible as deduction under Section 4 as is equal to the amount legally permissible under the local sales tax laws to be charged/billed from the customer/buyer. [Emphasis added] 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 am .....

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..... 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 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. 24. What is urged by the learned counsel for the assessee is that paragraphs 5 and 6 of the circular dated 9-10-2002 do protect them, as has been more clearly stated in paragraph 5. To elaborate, sales tax having been paid on the inputs/raw materials, that is excluded from the excise duty when price is computed. Eventually, the amount of tax paid is less than the amount of tax payable and hence, the concept of actually paid gets satisfied. Judged on this anvil the submission of the learned counsel for the assessee that it would get benefit of paragraph 6 of the circular, is unacceptable. The assessee can only get the benefit on the amount that has actually been paid. T .....

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..... ct from 1-7-2000 they shall only be entitled to the benefit of the amount actually paid to the Department, i.e., 25%. Needless to emphasise, the set off shall operate only in respect of the amount that has been paid on the raw material and inputs on which the sales tax/purchase tax has been paid. That being the position the adjudication by the Tribunal is not sustainable. Similarly the determination by the original adjudicating authority requiring the assessees to deposit or pay the whole amount and the consequential imposition of penalty also cannot be held to be defensible. Therefore, we allow the appeals in part, set aside the orders passed by the Tribunal as well as by the original adjudicating authority and remit the matters to the respective Tribunals to adjudicate as far as excise duty is concerned in accordance with the principles set out hereinabove. We further clarify that as far as imposition of penalty is concerned, it shall be dealt with in accordance with law governing the field. In any case, proceeding relating to the period prior to 1-7-2000 would stand closed and if any amount has been paid or deposited as per the direction of any authority in respect of the said p .....

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..... Department has not challenged an order passed by the Commissioner for an earlier period, it does not mean that the Department is estopped from raising a demand for a subsequent period. Therefore, there is no force in the argument that the matter is hit by the principle of res judicata. (vi) On the argument that the Tribunal Mumbai had in the case of Welspun Corporation Ltd. (Supra) distinguished the case from the case of Super Synotex Ltd. (Supra), he would take us through the case and submit that in Para 5.5 of the Order, it is clearly recorded that the Commissioner (Appeals) in that case distinguished that case from the case of Super Synotex. Revenue s proposal to challenge this finding was rejected by the Bench only on the Technical Ground that such refutation was not part of the Review Order/Appeal. Therefore, he would submit that the distinction was not made by the Tribunal on merits of that case but only a technicality which should not bind this bench in this case. He would therefore, urge that the appeal is without merits and needs to be rejected. 7. We have considered the arguments on both sides and perused the records. There are several schemes of State Governments in whi .....

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..... stance, Service Tax was paid by many assessees on Works Contract Service prior to 01/06/2007 although subsequently, it was held by the Hon ble Apex Court that no such tax is payable. Merely because assesses had paid Service Tax wrongly for an earlier period, it does not mean that they are bound to pay Service Tax for subsequent periods also on the principle of res judicata. In this particular case, when there is a clear ruling by the Hon ble Apex Court, the assessee cannot be get away from tax liability on the ground that a wrong decision was taken for some earlier period by the Commissioner which was not challenged for that period by the Revenue. 10. As far as the invocation of extended period of limitation is concerned, we find such a suggestion preposterous considering that it is clearly on record that the Revenue is aware of modus operandi of the assessee. To allege fraud, collusion, willful misstatement or suppression of fact or violation of Act or rules with an intent to evade payment of duty and invoke extended period has no basis. For this reason, we find the demand for extended period of limitation needs to be set aside and we do so. For the same reasons, we also find that .....

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