In Excise Appeal No. 52473 of 2023- CESTAT-  Subsidy received by Rajasthan Digital Tiles from Rajasthan Government not includible for levy of Excise Duty: CESTAT (Delhi)
Member Binu Tamta (Judicial) [08-05-2023]

Read Order: Rajasthan Digital Tiles (P) Ltd v. Commissioner, Central Excise & CGST

Chahat Varma

New Delhi, May 10, 2023: The Principal bench of the Customs, Excise & Service Tax Appellate Tribunal has held that Rajasthan Digital Tiles (P) Ltd (appellant) was covered by the Rajasthan Investment Promotion Scheme, 2014 and the subsidy received by them from the Government of Rajasthan did not constitute any consideration for the purpose of levy of central excise duty.

In the present case, the appellant is a manufacturer of glaze tiles, registered with the Central Excise Department. The department contended that the appellant had undervalued the finished goods and short paid the Central Excise duty by not including the amount of subsidy received from the Sales Tax Department for arriving at the transaction value of the goods cleared. The appellant's counsel argued that the subsidy received from the Government of Rajasthan did not constitute any consideration for the purpose of levy of excise duty.

The Tribunal observed that the appellant was covered by the investment promotion scheme of the Rajasthan Government and in terms thereof they were required to discharge their VAT liability by making payment of the same. The appellant had been following the said practice and therefore the present case was squarely covered by the decision of Shree Cement Ltd. And Ors v. CCE, Alwar [LQ/CESTAT/2018/98], wherein the Tribunal had considered the same subsidy under Rajasthan Investment Promotion Scheme and relying on the earlier decision of the Tribunal in Commissioner of Central Excise, Mumbai-I v. Welspun Corporation Ltd. [LQ/CESTAT/2017/58], concluded that there was no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B challans.

The Tribunal further observed that the inclusion of the subsidy amount in the transaction value, as per section 4(3)(d) of the Central Excise Act, was a matter of interpretation of law. Therefore, the allegation of suppression of facts did not apply in this case. As a result, neither interest nor penalty was deemed leviable.