TMI BlogValuation (Central Excise) - Uniformity in the additions/deductionsX X X X Extracts X X X X X X X X Extracts X X X X ..... 1983/15-11-1983 [1984 (17) E.L.T. 329 (S.C.) in the case of UOI v. Bombay Tyres International Ltd. Others several aspects of the issue of valuation and prescribed guidelines for deciding several other aspects of valuation. 3. The Supreme Court of India's decision dated 21-12-1986 in the case of UOI v. MRF Ltd. was recalled by the Supreme Court vide their order, dated 7-5-1989. Meanwhile, CEGAT and High Courts have been giving decisions relying on the said decision, dated 2-12-1986 of the Supreme Court. 4. Lack of uniformity in valuation has brought in disparity in the pricing of the commodities by the assessees with consequent impact on sales and the market economy. 5. Pending a final decision of the Supreme Court in the said MRF ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit is also under dispute. (d) Whether any notional profit requires to be added in respect of loss-making units. Decision : 3. If the goods have not been actually sold then direct profit cannot be identified, the relevant rule stipulates inclusion of profit which the assessee could have normally earned on the sale of such goods. This profit is only a notional profit. For the purpose of assessment of goods captively consumed, value should be arrived at by adding previous year's gross profit, if any, of the assessee as per their audited balance sheets. B. Issue : Valuation of goods manufactured on job-work basis When the goods are manufactured on job-work basis the job worker undertakes manufacturing activities on the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit margin) of the job worker. It is clarified that the selling expenses and the selling profit of the persons who entrusted the raw material shall not be taken into account for determination of the assessable value, though the same could be one of the factors for determination of assessable value. C. Issue : Whether the interest on delayed payments will affect the assessable value Section 4 of the Central Excises and Salt Act, 1944 inter alia provides that assessable value of the goods is the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal. Thus both factors viz., time and place of removal plays a vital role. The followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Decision : The interest on receivables is not separately identified and collected from the buyers. The interest element, if any, is built into the price of the goods itself. It is more in the form of a general credit period given to the buyers. The price is the same when payment is made on any day within the general credit period from the date of delivery. The interest will form part of the assessable value. E. Issue : Deduction of "sales tax payable" from cum-duty price Though sales tax are leviable at tariff rates, they are payable at "effective rates" taking into account exemption notifications. In addition, there are instances of exemption for giving credit or deduction of duty by way of set-off of the duty paid on the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of days from the date of invoice. Decision : When such prompt payment discount is allowed in respect of all varieties of products cleared by an assessee, the same is permitted to be deducted for the purpose of arriving at the assessable value. However, such prompt payment discount, if allowed in respect of only certain variety of products, the same is not admissible. III. Issue : Year ending discount in respect of certain varieties of goods when the payments are actually received within a specified number of days from the date of invoice, a bonus at the end of the year is given on the basis of declaration received dealer-wise, the allowance of such discount is not known at the time of or prior to the removal of goods. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in different towns or cities or regions. Such discounts are not permissible to be deducted to arrive at the assessable value for excise purposes. VI. Issue : Special Discounts : There are instances for claiming special discounts which are negotiated by the representatives of the company with the dealers dependent on the target fixed for the dealers. Such discounts are offered for specific periods and for specific regions. Decision : These type of discounts which are not known at or prior to the time of removal and are often given for specific regions or specific periods are not deductible for the purpose of arriving at the assessable value. Board further directs that a copy of this order be sent to all Collectors who shall inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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