Industrial subsidies or refunds of VAT/Sales Tax received from the State Government under the Package Scheme of Incentives (PSI) do not constitute additional consideration and are not includable in the assessable value for calculating central excise duty.

Per: S.K. MOHANTY

Briefly stated, the facts of the case are that the respondents are engaged inter alia, in the manufacture of Sponge Iron, M.S. Ingot and TMT Bars, falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. As a manufacturer of excisable goods, the respondents are duly registered with the Central Excise department and also discharge appropriate central excise duty liability on removal of the said final products out of their factory premises. In this case, the Government of Maharashtra had framed a Scheme, known as “Mega Projects under the Package Scheme of Incentives, 2001/2007” (PSI), as a part of Industrial, Investment and Infrastructure Policy for promotion of fixed capital investment and/or employment generation. On sale of finished products, though Sales Tax/VAT/CST is collected by the manufacturer from the buyers and deposited into the State Government exchequer, but subsequently part of the amount of such Sales Tax/VAT/CST paid by the assessee are refunded by the State Government. The scheme also provides for the manner of claiming such refund. In the present case, the respondents had filed the refund application under the said PSI towards Industrial Promotion Subsidy, which was favourably considered by the Department of Industries, in the Government of Maharashtra and the refund claim was sanctioned by them in favour of the respondents. The subsidy amount received by the respondents as refund from the State Government was considered by the Central Excise Department as receipt of ‘additional consideration’, which should be leviable to central excise duty under the provisions of Section 4 of the Central Excise Act, 1944 read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. On the basis of such understanding, show cause proceedings were initiated by the department, seeking for recovery of the Central Excise duty of Rs.8,43,46,894/- from the respondents. The SCN dated 03.03.2017 issued in this regard was adjudicated vide the impugned order dated 21.02.2018, wherein the proposals made in the SCN were dropped. Feeling aggrieved with the impugned order, Revenue has preferred this appeal before the Tribunal.

2. Heard both sides and examined the case records.

3. We find that the issue arising out of the present dispute is no more res integra, in view of the judgements relied upon by the respondent in the cases of Harit Polytech Pvt. Ltd. & others Vs. Commissioner of Central Excise & CGST, Jaipur – 2023-TIOL-235-CESTAT-DEL., Mahindra Steel Service Centre Ltd., Vs. Principal Commissioner of CGST & Central Excise, Bhopal – (2024) 17 Centax 241 (Tri. Del.), Shree Sidhbali Ispat Ltd. Vs. Commissioner of Central Excise, Nagpur (Final Order No. A/86845/2024 dated 07.11.2024) and The Supreme Industries Ltd. Vs. Commissioner of CGST & Central Excise, Nashik (Final Order No. A/86808/2024 dated 06.11.2024). The issue decided in those cases was to the effect that incentives/industrial subsidy of VAT/Sales Tax refunded by the State Government at a percentage of the tax paid by the assessee, under the PSI, would not be includable in the assessable value for the purpose of payment of central excise duty thereon. We further find that in the case of Mahindra Steel Service Centre Ltd. (supra), Civil Appeal filed by Revenue was dismissed by the Hon’ble Supreme Court, reported in (2024) 17 Centax 242 (S.C.). In view of the settled position of law, as discussed in those referred cases, the issue arising out of the present dispute is no more open for any debate and as such, the impugned order passed by the learned adjudicating authority su