Harit Polytech Pvt. Ltd. Vs Commissioner (CESTAT Delhi)
Subsidy under Rajasthan Investment Promotion Policy-2003 not includible in transaction value for levy of excise duty
CESTAT Delhi held that the subsidy amount received under Rajasthan Investment Promotion Policy-2003 using VAT-37B challan cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act.
Facts- The appellant had been granted investment subsidy under the Rajasthan Investment Promotion Policy-2003 to the extent of Rs. 26,98,304/- during the relevant period by the State of Rajasthan in the form of Sales Tax VAT 37B challan and this amount of subsidy was adjusted by the appellant towards payment of VAT. The Department has included this amount of subsidy in the transaction value for the purpose of levy of central excise duty under section 4 of the Central Excise Act, 1944
Conclusion- In FCC Clutch India Pvt. Ltd. vs. Commissioner of Central Excise, Alwar, the Tribunal specifically dealt with the Rajasthan Scheme for payment of VAT using 37B challans and after following Welspun held that the subsidy amount paid by the assessee using VAT-37B challan cannot be added to the transaction value.
In the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act.
FULL TEXT OF THE CESTAT DELHI ORDER
The following questions have been referred on account of difference of opinion having arisen between the two Members constituting the Division Bench:-
”(A) Whether in the facts and circumstances, the capital/wage subsidy in question reduces the selling price of goods, as held by the Member (Technical).
OR
As heldy b the Member (Judicial) that the subsidy in question does not reduce the selling price of the goods. Nor does it amount to indirect flow from the buyer to the seller.
(B)The amount of subsidy under dispute is an independent amount of subsidy received from the Government on the basis of the capital investment and employment generation/wages paid and thus, is not an additional sales consideration, as held by the Member (Judicial).
OR
The amount of subsidy under dispute is not an independent amount received by the appellant. Rather it is computed with reference to the sales tax paid and thus, is an additional consideration for sales, as held by the Member (Technical).
(C) The facts in this appeal are similar to the facts in the case of Super Synotex India Ltd. (supra) as held by the Member (Technical)
OR
The facts in the present case are difference (should be different) and hence, ruling of the Apex Court in the case of Super Synotex India Ltd. (supra) is not applicable.
(D) Under the facts and circumstances, the appellant have received VAT subsidy (directly affecting the selling price of the goods), as held by the Member (Technical)
OR
It is not a case of VAT subsidy, affecting or depressing the selling price of the goods, as held by the Member (Judicial).”
(E) The provisions of Section 9 of Rajasthan VAT Act has not been considered in the case of Shree Cement Ltd. (supra) leading to erroneous judgment in the said case, as held by the Member (Technical)
