LexCOMMISSIONER OF CENTRAL EXCISE, JAIPUR-II versus M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS
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A B (2014] 3 S.C.R. 486 COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II v. MIS. SUPER SYNOTEX (INDIA) LTD. AND OTHERS (Civil Appeal Nos. 9154-9156 of 2003) FEBRUARY 28, 2014 [ANIL R. DAVE AND DIPAK MISRA, JJ.] Central Excise Act. 1944· s.4(4)(d) - Transaction value - Inclusion of sales tax in transaction value - Held~ The amount C paid or payable to the State Government towards sales tax, VAT etc. is excludible from the assessable value because it is not an amount paid to the assessee-manufacturer towards the price but an amount paid or payable to the State Government for the sale transaction i.e. transfer of title from D the manufacturer to a third party - However, if a part of sales tax collected is retained by the assessee towards incentive then the amount retained becomes profit or effective cost paid to assesssee by the purchaser and assessee is bound to pay excise duty on the said sum - Therefore, amount of sales tax E retained is includible in transaction value of goods - Rajasthan Sa/es Tax Incentive Scheme, 1989 - CBEC circular no. 3781 11-98-CX dated 12.03.1998. F Circular/government order/Notification: Circulars issued by CBEC - Binding effect of - Discussed. Tax/Taxation: Exemption and incentive - Distinction between - Discussed. The respondent-assessee has been engaged in the G manufacture of yarn. A show cause notice was issued on the assessee alleging that it has not paid the excise duty on the additional consideration collected towards the sales tax. The assessee placed reliance on CBEC circular no. 378/11-98-CX dated 12.03.1998 and claimed that sales H 486 COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II v. 487 SUPER SYNOTEX (INDIA) LTD. tax collected was not includible in the assessable value A and deduction was admissible under the Central Excise Act, 1944. The claim of assessee was not accepted and the adjudicating authority confirmed demand and penalty. The Tribunal accepted the appeal of the assessee and held that the assessee being entitled to the benefit of the B Sales Tax New Incentive Scheme for Industries, 1989 had availed the same w.e.f. 03.12.1996 and under the scheme itr was entitled to retain with it 75% of the sales tax cotlected and pay only 25% to the Government and that sales tax was deductible from the wholesale price for C determination of assessable value under Section 4 of the Central Excise Act. In the instant appeals, the revenue and the assessee challenged the order of the Tribunal. Disposing of the appeals, the Court D HELD. 1. Rajasthan Sales Tax Incentive Scheme 1989 is a pure and simple incentive scheme, in view of the language employed therein. In fact, by no stretch of imagination, it can be construed as a Scheme pertaining I to exemption. Thus, analysed, though 25% of sales tax E ·is paid to the State Government, the State Government instead of giving certain amount towards industrial incentive, grants incentive in the form of retention of 75% sales tax amount by the assessee. In a case of exemption, sales tax is neither collectable nor payable and if still an F assessee collects any amount on the head of sales tax, • that would become the price of the goods. Therefore, an · incentive scheme of the present nature has to be treated ·on a different footing because the sales tax is collected •and a part of it is retained by the assessee towards G incentive which is subject to assessment under the local sales tax law and, as a matter of fact, assessments have been accordingly framed. In this factual backdrop, it is , held that circular entitles an assessee to claim deduction towards sales tax from the assessable value. [Para 19) H 488 SUPREME COURT REPORTS [2014] 3 S.C.R.. A [503-B-F] Modipon Fibre Company, Modinagar, U. P. v. Commissioner of Central Excise, Meerut. (2007) 10 SCC 3: 2007 (11) SCR 688 - Distinguished. B 2. After the substitution of the old Section 4 of the Act by Act 10 of 2000, the Central Board of Excise and Customs, New Delhi, issued certain circulars and by circular No. 671/62/2000-CX dated 9.10.2002 clarified the circular issued on 1.7 .2000. In the said circular reference C was made to the earlier circular No. 2/94-CX 1 dated 11.1.1994. It was observed in the circular that after coming into force of new Section 4 with effect from 1.7.2000 wherein the concept of transaction value has been 1 incorporated and the earlier explanation has been D deleted, the circular had
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