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TMI Blog2024 (12) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... /11126/2017 & E/11172/2017 and Shri Ishan Bhatt, Learned Counsel appeared for appeal Nos. E/11311/2017, E/11370/2017. The appellants submit that the issue is no longer res-integra in the light of the following judgments:- * Pr. Commr of CGST & CE vs Mahindra Steel Service Centre Ltd (2014) 17 Centax 242 (S.C.) * Mahindra Steel Service Centre Ltd vs Pr. Commr of CGST & CE (2014) 17 Centax 241 (Tri-Delhi) * Harit Polytech Pvt Ltd vs Commr of CE & CGST (2023) 13 Centax 264 (Tri-Delhi) * Honda Motor Cycle & Scooters India Pvt Ltd vs Commr of CGST, Customs & CE 2020 (374) ELT 941 (Tri-Delhi) * Commr of CE, Mumbai-I vs Welspun Corp Ltd 2017 (5) TMI 177 - Cestat Mumbai * Commissioner of Central Goods and Service Tax, Customs and Central Excise Vs. Shree Cement Limited, Hon'ble Supreme Court's Order dated 08.08.2024. * CCE v. Welspun Corporation Ltd 2017 (358) ELT 630 (T)- Notice by the Hon'ble Supreme Court of India 2018 (360) ELT A 130 (S.C.) * PGP Glass Pvt. Ltd v. CCE 2023 (7) TMI 659-CESTAT * FCC Clutch India Pvt. Ltd. v. CCE 2019 (365) ELT 539 (T) * Shree Cement Ltd. v. CCE 2019 (366) ELT 900 (T) * Select Poly Products Pvt. Ltd. v. CCE 2019 (370) ELT 970 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entitlement certificate and Form 110 to make them entitle to the benefit of tax deferment or tax remission as the case may be. The subsidy in the form of remission of sales tax was in fact percentage of capital investment. The intention of the State Government was, thus, instead of granting the capital subsidy to the units setting up their manufacturing facility, the subsidy be granted by remitting sales 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 agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time and place of removal. Thus whatever transaction value of the goods prevailing at the time of its removal shall be liable to excise duty, which however shall not include the amount of duty of excise, sales tax and other taxes, if any, "actually paid" or "actually payable" on such goods. In the present case we find that the "sales tax" is "actually payable" to the Government at the time of removal of 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) E.L.T. 273 (S.C.). W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the State of Rajasthan where full incidence of Sales Tax was allowed to be collected from the buyer, 75% thereof was retained by the respondent and the remaining 25% was paid to the State Government. Since the Incentive Scheme availed by the appellants was not of retention of sales tax but comprised of incentive equal to capital invested to be availed in any of 3 different ways as outlined at para 10.3 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-de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of fertilizers, where the subsidy was being received by such manufacturers from the Department of Fertilizers the C.B.E. & C. vide Circular No. 983/7/2014-CX., dated 10-7-2014 has clarified that subsidy is not any additional consideration flowing directly or indirectly from the buyer to the seller and hence, is not required to be included in the assessable value. Applying the same analogy to the facts of the 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 = 2016 (331) E.L.T. 261 (Tri.-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:- "notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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. In view of our above observations, we hold that the impugned order requires no interference. Accordingly, we uphold the impugned Orders. The Revenue's appeals are dismissed. Cross-Objections and stay applications also stand disposed of." b) Similar issue has also been considered by this Tribunal in the case of PGP Glass Pvt. Ltd (Supra) wherein this Tribunal has passed the following order:- "4. We have carefully considered the submission made by both sides and perused the records. The fact is not under dispute that in the present case the nonpayment of sales tax /VAT is not on account of exemption but on account of remission granted by the State Government. The Adjudicating Authority has confirmed the demand relying on the Hon'ble Supreme Court Judgment in the case of Super Synotex (India) Ltd (Supra) whereas the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 value' in Section 4 (3) of the Central Excise Act, 1944 and on the Board Circular No. 354/81/2000-TRU, dated 30-6-2000 and also on judgment of Hon'ble Apex Court in case of M/s Super Synotex case as reported in 2014 (301) E.L.T. 273 (S.C.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject 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) E.L.T. 273 (S.C.). We find that in the impugned order the learned Commissioner (Appeals) dealt with this Apex Court judgment in paras 11, 11.1 & 11.2, which are reproduced below : - 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 "11. CCE v. Super Synotex and hence their refund claims were rejected. In the case of 11.1. Super Synotex India Ltd (supra) referred by the lower authority, the Apex Court held that there being an exemption from the payment of Sales Tax, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital 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 refund claim of the appellants, is unfounded." 5. 5 The Apex Court judgment of Super Synotex has already been distinguished by the learned Commissioner (Appeals) as above. However, the Revenue in the review order/appeal did not refute the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 = 2016 (331) E.L.T. 261 (Tri.-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 State Government has remitted the amount back to the appellants as incentive, Sales Tax was not paid by them. Hence, we find that once the Sales Tax Department assessed the Sales Tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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