Entry tax payable before clearance of goods, whether includible in assessable value?

PJ/CASE LAW/2016-17/3198

Case-INDIAN OIL CORPORATION LTD. Versus COMMISSIONER OF CENTRAL EXCISE, DELHI-I

Citation-2016 (336) E.L.T. 660 (Tri. - Del.)

Brief Facts-These appellants filed this appeal against the order dated 10-5-2006 of Commissioner (Appeals), Jaipur, II. The Appellants are engaged in the manufacture of petroleum products and clear the same through various storage terminals. The appellants were having central excise registration for bonded warehouse at Salawas, Rajasthan. They were receiving petroleum products under bond from outside the State of Rajasthan. There was an entry tax of 1%. When the appellants cleared goods from warehouse they paid central excise duty as well as the entry tax. The Revenue entertained the view that since the entry tax is payable before clearance of goods, the same is includible in the assessable value. Proceedings initiated against appellant concluded in the order confirming demand of differential duty and imposing penalty. On appeal the order was confirmed. On further appeal the appellant is before us.

Appelants Contention-Learned Counsel for the appellant Shri L.P. Asthana submitted the entry tax is collected by the appellant at the time of sale only and not when the goods entered the State of Rajasthan. The clarifications dated 5-7-2002 and 18-7-2002 make it clear about the method of collection of this levy. The entry tax is collected from the customer along with sale price of goods. As such, the learned Counsel pleaded that the said tax is deductible in terms of Section 4(1) of the Central Excise Act, 1944.

Respondents Contention-Learned AR Shri S. Nunthuk reiterated the findings in the impugned order.

Reasoning Of Judgement-The tribunal have heard both the sides and perused appeal records. The includibility of entry tax in the assessable value of goods cleared by the appellant from the bonded warehouse in Rajasthan is in dispute. The reason for the inclusion, mentioned in the impugned order, is that since the tax is on entry of goods the same is to be part of assessable value for clearance from warehouse later. They find that the learned Commissioner (Appeals) did not appreciate the facts of the case in correct legal perspective. The entry tax, as the name suggest, is on the entry of goods into Rajasthan. But the State Government categorically stated that the same can be collected and paid on the basis of prevalent market value of goods. The entry tax can be recovered through invoices at the time of sale. They find that the value under Section 4 does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods. Hon’ble Supreme Court in Bombay Tyre International, 1984 (17)E.L.T.329 (S.C.) held that sales tax, turnover tax and octroi where payable/paid should be allowed deduction. In appellant’s own case for the earlier periods on the same issue, the Commissioner after de novo proceedings vide his order dated 31-3-2014 dropped the demand. The learned Commissioner drew a parallel based on exclusion of excise duty from transaction value. Excise duty though on manufacture is collected at the time of clearance. Here the entry tax though on entry is collected on sale of goods inside the State. On careful examination of the above facts and legal position, tribunal find that the entry tax paid by the appellant is not includible in the value for excise duty. Accordingly, they set aside the impugned order and allow the appeal.

Decision-Appeal allowed

Comment-The crux of the case is that according to Section 4 of Central Excise Act, 1944 Excise duty, sales tax and other taxes payable are not includible in assessable value. The similar facts are supported by the decision in the case of Hon’ble Supreme Court in Bombay Tyre International.Therefore, such entry tax not includible in value of goods.

Prepared By-Neelam Jain

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PJ/CASE LAW/2016-17/3198

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