2023-VIL-973-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Area-based exemption – Rejection of applications for fixation of special rate on the ground of barred by limitation; balance sheet is not in conformity with Section 211 of the Companies Act, 1956 – HELD - The first ground for denial of special rate of fixation is that the balance sheet is not in conformity with Section 211 of the Companies Act, 1956 - As per the said provisions, the profit and loss accounts and the balance sheet of the Company shall comply with the accounting standards - Section 211 of Companies Act, prescribes the form in which the Balance Sheet and Profit & Loss Account of every Company registered under the said Act is to be prepared, showing the financial position of the said Company and the balance sheet prepared by the appellants is in consolidated form, in the sense that all its Units located all over the country have been brought under the common Balance Sheet and Profit & Loss Account - Hence, the Balance Sheet prepared is very much in conformity with the provisions of Companies Act and the findings of the Ld. Commissioner that statement of value addition based on the said Balance Sheet and Profit & Loss Account is not acceptable are in conformity of law - Further, the figures in the Extract of Balance Sheets, area based on which the value addition, has been calculated, is very much in conformity with Companies Act and the Income Tax Act - Therefore, the reason for rejection of application for special rate fixation on the balance sheet is not in conformity with the Companies Act, 1956, is not correct and on the said ground, the said application cannot be rejected - the rejection of the applications of fixation of special rate by the adjudicating authority is not correct and are in violation of law - the impugned orders are set aside and appeal is allowed - Acceptability of gross sales value based on all India average rate – HELD - the products manufactured by the appellants were delivered to their depots from where the same were sold at a uniform selling price. The term uniform selling price indicates that there is uniform all India average rate prevalent at all the depots of the appellants and hence, multiplying the number of units cleared from the unit with the said all India average rate of selling price is the only and correct way of computing the gross sales value - Since different States have different rates of Sales Tax, it is not possible for the appellant to identify as to what quantity of which product, stock transferred to their Depot, is sold in which State, in order to claim the amount of Sales Tax against that particular clearance - Hence, it is not a case that a separate Balance Sheet was prepared for the purpose of special rate fixation, as held by the adjudicating authority - Rejection of application on the ground that the average rate of VAT at the rate of 12.5% is not acceptable – HELD - the appellant are entitled to claim deduction of Equalised Sales Tax from the transaction value to arrive at the assessable value - the average rate of VAT at the rate of 12.5% is equalized the basis and the same is permissible for fixation of special rate. Hence, rejection of special rate of fixation, the applications cannot be rejected on that ground - Whether inclusion of work in progress in computation of actual value addition is correct – HELD - the term “inventory” would include stock of finished goods as well as stock of unfinished goods in as much as some stock of goods may be incomplete or just few steps away from the stage of completed finished product. The said stock of incomplete/ unfinished goods, which have passed through some processes and are yet to be subjected to some processes to reach the final stage of production, are termed as ‘work-in-progress’, which are also the part of the inventory, which means that the process of production on such materials i.e. work in process is the part of inventory and the appellants have correctly included the work in process in their stock. Therefore, the work in process is to be included in the opening stock and closing stock in computation of actual value addition - Rejection of applications for fixation of special rate on the ground of barred by limitation – HELD - the application for special rate fixing for the period 2009-10 to 2016-17 were initially held that they have filed the applications for fixing special rate after 30th September of the same year and is barred by limitation - The issue has been examined by the Hon’ble Apex Court and the Hon’ble Apex Court in the case of Union of India Vs. V.V.F. Limited has held that the pending refund application shall be decided as per the subsequent notification/industrial policies, which were impugned before the respective Hon’ble High Courts and they shall be decided in accordance with the law and on merits - as all the applications were filed by the appellants before 20.04.2020, all the applications were filed within time, therefore, the applications in question cannot be rejected on limitation
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