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Regarding Valuation of Goods under Section 4A of the Central Excise Act
Central
Excise Circular No. 697 dated 27th February 2003
I
am directed to say that instances have been reported to the Board where in
respect of commodities notified under Section 4A of the Central Excise Act, 1944
goods are sold only against refundable deposits or against deposit of an empty
bottle, container or jar. As for example in the case of sale of soft drinks the
soft drink bottle is being sold at the printed MRP only if the buyer leaves some
cash deposit for safe return of the bottle or he deposits before hand an empty
bottle of the particular brand. Similar cases have been reported in respect of
sale of mineral water.
2. In such instances, it can be said that the
MRP is not the sole consideration for sale and, therefore, the cash value of the
additional consideration (the cash deposit or deposit of the empty bottle) has
to be added to the MRP and the assessable value re-determined for payment of
duty.
3. The matter has been examined in the Board. It
is observed that in respect of sale of all products in containers, which have
repeated use, the cost of the container is amortised over the expected
durability span of the container. The security deposit basically takes care of
the difference between the actual cost of the bottle/container and the amortised
cost factored into the product. Thus, the returnable deposit or the deposit of
the empty container is not an additional consideration for sale of the
particular product.
4. The position has been ascertained from the
State Meteorology Department also and they have confirmed that receipt of
returnable deposit or empty container is not a contravention of the provisions
of the Weights and Measures Act, 1976 or the packaged Commodity Rules, 1977,
framed thereunder.
5. In view of the above, clarification issued
vide Serial No. 4 of Board�s Circular No. 643/ 34/ 2002-CX dated 1.7.2002 will
apply to goods assessed under Section 4A also. In other words, if the cost of
reusable containers (glass bottles, crates, etc) is amortised and included in
the cost of the product itself, the question of adding any further amount
towards this account does not arise, except where audit of accounts reveals that
the cost of the reusable container has not been amortised and included in the
value of product
6.
Pending cases may be disposed off on the basis of these instructions.
7.
Field formations may be suitably informed.
8.
Trade Notices may be issued for the benefit of the Trade.
9.
Hindi version will follow.
10.
Receipt of these instructions may kindly be acknowledged.
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