Circular No. 432/65/98-Central Excise-3

dated 23/11/1998
F. No. 345/35/908-TRU

Government of India

Ministry of Finance

Department of Revenue, New Delhi

Subject: Central Excise S.No. 229 of Notification No. 5/98-CE-Chargeability to specific rates of duty on colour television sets in cases where extra amounts are collected, beyond the retail sale price declared, from the ultimate consumer-Reg.

I am directed to say that it has been gathered that some color television (TV) manufacturers have adopted the practice of making the Retail Sale Price (RSP) on the colour TV packages at an amount which is lower than the amount actually collected or payable by the ultimate consumer. It has been reported that the job-manufacturer clears the colour TVs manufactured by him to the ” brand name holder” at the same price as declared on the cartons. However, the brand name holder and the dealers invariably recover extra amounts from the ultimate consumer in the name of transportation, local taxes, octroi, etc. cover and above the declared “RSP”. Substantial amounts in the guise of optional warranty charges (which is not really optional as the said charges are invariably recovered from the dealers who pass it on to the customers) are also recovered in some cases.

2.  As per S.No. 229 of notification No. 5/93-CE, dated the 2nd June, 1998, specific rates of excise duty have been prescribed in the respect of colour television sets where the retail sale price is not declared on the packages at the time of clearance from the factory of production or where the retail sale price declared does not form the sole consideration fro sale to the ultimate consumer. In the context of these facts, the Board is of the view that the assessment of TV sets cannot be allowed or the basis of the RSP.

3.  It is responsibility of the manufacturer to determine RSP properly and correctly by taking into account cost of manufacture, distribution, other expenses and margins and the responsibility of the manufacturer does not end merely by clearing the colour TVs to the brand owning marketing company at printed sale price. “Retail sale price” has been defined under S.No. 229 of the said notification to mean the maximum price at which the excisable goods in packages form may be sold to the ultimate consumer and includes all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the likes as the case may be and the price is the sole consideration for such sale. In view of this all inclusive definition of “retail sale price”, where extra amounts are collected from the ultimate consumers as local taxes, octroi, freight, etc. the RSP declared cannot be considered to be the sole consideration for sale to the ultimate consumer. Hence, in such cases, specific rates of excise duty will require to be collected on such colour TVs.

4.  In view of the above, it is clarified that irrespective of the fact that the manufacturer clears the colour TVs to the brand name holder on declared RSP, once it is established that the said TVs are sold to the ultimate consumer on the packages cannot be said to be the RSP as envisaged under clause (i) of S.No. 229 of Notification No. 5/98-CE and in such cases, the duty has to be worked out at the specific rates prescribed under clause (ii) of S.No. 229 of the said notification.

(P.R. Chandrasekharan)
Director (TRU)

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