Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Central Excise – Section 4(4) (d) – Deduction of “Sales tax payable” from the cum-duty price – Regarding –
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.