Amount of TCS not additional consideration flowing from Buyer to Appellant hence not chargeable as Excise Duty: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that, the Amount of TCS (Tax Collected at Source) is not additional consideration flowing from buyer to appellant and hence not chargeable as Excise Duty.

The appellant, YashrajContaineurs Ltd is engaged in the manufacture of M.S Drums falling under Chapter Heading 73 of the Central Excise Tariff Act, 1985. During the course of the manufacturing process, some scrap is generated which is sold in connection with the sale of scrap. The appellant collected TCS (Tax collected at source). The case of the department is 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 the amount of money value of additional consideration and Central Excise duty is required to be paid.

Accordingly, a show-cause notice was issued which was adjudicated by the adjudicating authority by confirming the demand of duty on the said TCS amount. In appeal, the Learned Commissioner (Appeals) upheld the demand and dismissed the appeal therefore, the present appeal was filed by the appellant.

Ramesh Nair, Judicial Member, and Raju Technical Member held that “From the plain reading of the above Section it is clear that the amount collected as TCS has nothing to do with the price of the goods but it is a tax collected from the buyer of the scrap and the same is deposited in the income tax department, therefore, the amount collected as TCS is a tax and in terms of Section 4, the tax is not includable in the assessable value.

In view of the above facts and observations, we are of the clear view that the amount of TCS cannot be considered as additional consideration flowing from the buyer to the appellant accordingly, the same is not includable in the assessable value for charging Excise Duty, hence, the impugned order is not sustainable.”

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