MARUTI UDYOG LTD. Vs. CCE

JUDGEMENT

(1.) The appellant - assessee challenges the order passed by the Commissioner of Central Excise, Delhi dated 22.5.2003 denying their claim for deduction of sales tax collected from its buyers while computing assessable value of the goods manufactured.

(2.) Appellants are engaged in the manufacture of various types of motor vehicles falling under Chapter 87 of the Central Excise Tariff Act 1985. Appellants carried out first expansion of their factory by installing Plant No.2 in their factory in 1994. The Haryana Government under Rule 28C of Haryana General Sales Tax Rules, 1975 granted tax concession by way of capital subsidy equal to 50% of sales tax collected from customers in respect of vehicles cleared from Plant No.2 for 14 years with a maximum limit of Rs 564.35 Crores. As part of the scheme, the appellant was allowed to collect sales tax from the buyers and retain it with them, while they agreed to forego the sales tax incentives pertaining to subsequent expansions effected by them. Appellant did not include sales tax element in the assessable value of the goods while paying excise duty thereon. While so, show cause notice dated 4.10.2002 was issued to the appellant alleging that the benefit conferred by Haryana Government is includible in the assessable value of the vehicle under section 4 of the Central Excise Act 1944 for the reason that this amount does not form part of the sales tax 'actually paid or payable' by the appellant and thus is not eligible for exclusion provided under Section 4(3)(d) of the Act. Duty to the extent of Rs 7,20,90,932 was demanded on the sales tax benefit which came to Rs 22.44 Crores for the period August 2001 to July 2002. The notice also proposed imposition of penalty. The Commissioner took the view that sales tax amount collected by the appellant from the buyers and retained by it under the incentive scheme is not eligible for abatement under section 4(3)(d) of the Act and excise duty is payable on the sales tax element. Accordingly, duty demand was confirmed under the proviso to section 11A and a penalty of Rupees One Crore was imposed. Aggrieved by the above order the assessee has come up in appeal.

(3.) It is contended on behalf of the assessee that the Commissioner has not properly appreciated the nature of the incentive scheme and that he has given a wrong interpretation to the term 'actually paid or actually payable' in the definition of 'transaction value' under section 4(3)(d) of the Act as it stood after July 2000. Section 13, 13A and 13B of the Haryana General Sales Tax Act enables the State Government to exempt particular goods or particular persons from payment of sales tax. In such a case the specified person or persons dealing with specified goods are not required to pay any sales tax to the Government. Section 25A deals with deferment of tax and provides that the State Government may defer payment of tax by specified class of industries in the interest of industrial development of the State. Section 25A reads as follows :