Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The coram of Ramesh Nair (Judicial Member) and Raju (Technical Member) allowed an appeal holding that TCS collected from sale of scrap cannot be included in the assessable value for charging excise duty which was filed by the aggrieved on the dismissal of the previous appeal by the Commissioner (Appeals).
The appellant are engaged in the manufacture of M.S Drums falling under Chapter Heading 73 of the Central Excise Tariff Act, 1985 and in the manufacturing process some scrap is generated which is sold in connection with sale of scrap. The appellant collected TCS (Tax collected at source).
The case of the department was that the TCS collected from the buyer over and above the price of the goods should be included in the transaction value as the same shall be treated as amount of money value of additional consideration and Central Excise duty was required to be paid. A show cause notice was issued which was adjudicated by the adjudicating authority by confirming the demand of duty on the said TCS amount. Commissioner (Appeals) upheld the demand, thus the instant appeal.
Counsel appearing on behalf of the appellant submitted that the TCS was not a part and parcel of sale price of the goods which was collected from the buyer of scrap. As per Section 206-C of the Income Tax Act, 1961 said amount was deposited to the income tax department, therefore the said amount was neither returned by the appellant nor earned by them. The appellant was only complying the provision of the income tax without any gain out of the TCS collected and paid to the department, therefore, the same cannot be considered as a part and parcel of the assessable value. Adjudicating authority had invoked Rule 6 of the Central Excise Valuation Rules, for demand of duty to which he submitted that in the present case the amount of TCS was not flowing to the appellant whereas, the said amount was as it is deposited to the income tax department therefore, Rules 6 was also not applicable.
The Tribunal opined that the amount collected as TCS had nothing to do with the price of the goods but it was a tax collected from the buyer of the scrap and the same was deposited in the income tax department, therefore, the amount collected as TCS was a tax and in terms of Section 4, the tax was not includable in the assessable value. While perusing Rule 6 of the Central Excise Valuation Rules the Tribunal clarified that additional amount if it is flowing from the buyer to the assesse directly or indirectly the same is includable in the assessable value meaning thereby any amount which is coming from the buyer and retained by the appellant alone will be includable in the assessable value. In the present case the TCS was collected not as a additional consideration but explicitly as tax and same was deposited to the income tax department, therefore, it cannot be said that the amount of TCS belonged to the appellant.
The appeal was allowed holding that the amount of TCS cannot be considered as additional consideration flowing from the buyer to the appellant accordingly, the same was not includable in the assessable value for charging Excise Duty.
[Yashraj Containeurs Ltd. v. C.C.E & S.T., Excise Appeal No. 800 of 2012, decided on 07-06-2022]
Advocates who appeared in this case :
Shri Prakash Shah, Advocate, for the Appellant;
Shri G. Kirupanandan, Authorised Representative, for the Respondent.
*Suchita Shukla, Editorial Assistant has reported this brief.