2026-VIL-1801-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Includibility of sales tax subsidy received under a State Investment Promotion Scheme in the assessable value of goods under Section 4 of the Central Excise Act, 1944 - Appellant, a manufacturer of cement, paid VAT/CST on its sales and was entitled under the Scheme to an investment subsidy and an employment generation subsidy computed as a percentage of the VAT/CST paid, which was not paid in cash but received by way of VAT challans used to discharge output VAT/CST liability of subsequent periods - SCN alleged that the subsidy amounted to retention of the VAT/CST collected from customers and was includible in the transaction value, the adjudicating authority dropped the demand, and the Commissioner (Appeals) set aside that order and confirmed the demand - Appellant contended that the issue is no longer res integra in view of the decisions of the Tribunal in its favour - Whether the sales tax subsidy is includible in the assessable value of the goods cleared during the relevant period - HELD - The Principal Bench of the Tribunal, on a reference to resolve a difference of opinion, held that the subsidy under the promotion policy does not reduce the selling price, is not an additional consideration, and that the decision of the Hon'ble Supreme Court on subsidy relied upon by Revenue and Section 9 of the State VAT Act have no application. The subsidy does not reduce the sales tax payable by the assessee, since the entire amount of sales tax collected from the customer is paid and not retained, and VAT paid using such challans is to be construed as actual payment of VAT, which cannot be included in the transaction value under Section 4(3)(d). This view has been followed in later decisions of the Tribunal - The sales tax subsidy is not includible in the assessable value, no duty is payable and consequently no penalty is imposable, the impugned order is set aside and the appeal is allowed
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