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Regarding Central Excise - Section 4 (4) (d) - Deduction of "Sales
tax payable" from the cum-duty price
Circular
No. 2 dated 11th January 1994
The
issue regarding actual amount of "Sales tax payable" which can be
deducted from the cum-duty-price for purpose of determining assessable value for
excise purposes has been raised by Internal Audit in Bombay and AG's audit as
well. The matter was referred by
Principal Collector, Bombay to Branch Secretariat, Bombay, of Law Ministry and
they have opined in favor of giving abatement of only effective rate of duty
after adjusting the set off available in respect of taxes paid on inputs which
resulted in issued of SCNs by some Collectorates. In view of the said opinion of
Branch Secretariat, the SCNs. Board instructed Principal Collector, Bombay and
CCE, Pune, not to issue SCNs on this account and also to withdraw all SCNs that
might have been issued.
2.
Board has sought the advice of the Attorney General of India as to which
of the following amounts is eligible for deduction from the cum-duty price of
excisable goods for determining the assessable value under Section 4 of the
Central Excise Act:
i.
Amount of sales tax payable at tariff rate, ignoring the effective rate
of sales tax payable on finished goods as well as set off of taxes paid on
inputs.
ii.
Amount of sales tax payable at effective rate, ignoring the amount of set
off available in respect of inputs.
iii.
Net amount of sales tax payable at effective rate after adjusting the set
off availed of in respect of inputs.
3.
The Attorney General of India has confirmed the view expressed in sub-para
(ii) above i.e., "amount of sales tax payable at effective rate, ignoring
the amount of set off available in respect of inputs, is eligible for deduction
from the cum-duty price of excisable goods for determining the assessable value
under Section 4 of the Central Excise Act".
4.
The aforesaid developments may be brought to the notice of the field
formations.
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