Central Excise duty cannot be levied on subsidy amounts received under State Government scheme

While hearing an appeal filed to challenge levy of Central Excise duty on subsidy received under a State Government scheme, the Customs, Excise, Service Tax Appellate Tribunal Principal Bench New Delhi, observed that as per settled precedents, Central Excise duty could not be levied on subsidy amounts received under a State Government scheme.

In arriving at such a conclusion, the Division Bench of Mr. Dilip Gupta, President and Ms. Hemambika R Priya, placed reliance on the order passed by the Tribunal in the case of M/s Harit Polytech Pvt. Ltd. Vs. Commissioner, Central Excise, CGST, Jaipur-I.

The Appellant-Assessee was represented by Mr. B L Yadav, Advocate, whereas the Respondent-Revenue was represented by Mr. Rakesh Agarwal, DR.

The present appeal was filed by the Assessee to challenge vires of an Order-in-Appeal, wherein an Order-in-Original raising duty demand had come to be upheld. The issue that arises for consideration in this appeal is as to whether the amount of subsidy received by the appellant from the State Government under the Rajasthan Investment Promotion Scheme, 2010 was includible in the assessable value of the goods cleared during the period in dispute i.e. from March 2011 to March 2015 in terms of section 4(3)(d) of the Central Excise Act, 1944.

Considering the contentions of both parties, the Bench examined the findings laid down in the case of M/s Harit Polytech Pvt. Ltd. Vs. Commissioner, Central Excise, CGST, Jaipur-I wherein it was categorically held that subsidy under the promotion policy did not reduce the selling price, was not an additional consideration and also did not affect the selling price of the goods, and therefore, exempted from duty.

Moreover, the Tribunal in the case of M/s Harit Polytech Pvt. Ltd. also observed that the judgment of the Supreme Court of India rendered in the case of Commissioner of Central Excise Jaipur-II Vs. Super Synotex (India) Ltd was not applicable to the facts of the case.

Following the findings laid down in the case of M/s Harit Polytech Pvt. Ltd. the Bench found them to be squarely applicable to the facts of the present case. Hence the Order-In-Appeal was set aside, with the issue being resolved in favor of the Assessee.

Cause Title: M/s Kaenat Glass Industries vs. CCE & CGST [Excise Appeal No. 50797 of 2020 / 2023-Enterslice-6-CESTAT-Del]

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Kaenat-Glass-Industries-vs.-CCE-CGST