TMI BlogCentral Excise - Determination of assessable value - When additional consideration is received by the manufacturers - Rule 5 of Central Excise (Valuation) Rules, 1975 - Forwarding of Attorney General's opinionX X X X Extracts X X X X X X X X Extracts X X X X ..... essable value - When additional consideration is received by the manufacturers - Rule 5 of Central Excise (Valuation) Rules, 1975 - Forwarding of Attorney General's opinion In continuation of Board's Circular No. 10/88-CX.1 (issued from F. No. 15C/33/86-CX.1), dated 21-3-1988, I am directed to enclose a copy of the opinion, dated 6-5-1989 given by the Attorney General of India on the subject mentioned above for compliance and necessary action by all field formations. 2. In respect of show cause notices/demands already issued which require to be revised/modified in view of the said opinion of the Attorney General of India, suitable action may be taken immediately. 3. Please acknowledge receipt of this circular. OPINION Ref : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion how is the price to be ascertained for the purpose of levy of duty ? The stand of the manufacturer that in such a situation, to the cum-duty price should be added the money value of the additional consideration would not be correct on a proper interpretation of rule 5. Rule 5 prescribes that where excisable goods are sold in the circumstances specified in section 4(1) (a) except that such price is not the sole consideration, the value of such goods would be based on the aggregate of such price and the amount of money value of any additional consideration flowing from the buyer to the manufacturer. Rule 5 prescribes the method of determination of the value of such goods. It makes the amount of money value of additional consideration a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods as Rs. 6.90. The duty thereon is Rs. 31.60. The declared cum-duty price becomes Rs. 38.50. Suppose the additional consideration is Rs. 9.24. It will not be correct to add it to Rs. 38.50 to make it a total of cum-duty price of Rs. 47.74 and by working it backwards to determine the duty at Rs. 37.51 and the assessable value at Rs. 10.23. On the other hand how it has to be worked out is to take the assessable value at Rs. 6.90 and the value of the additional consideration as Rs. 9.24 and when both are added assessable value will come to Rs. 16.14. Excise duty on this is Rs. 45.45 and the total cum-duty price will come to Rs. 61.59. My view is that the second calculation is the correct one. This flows clearly from the language of ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remaining amount of Rs. 9.25 would have been collected by the manufacturer as price payable to himself without including the duty therein, because if the manufacturer has treated this amount as including the duty, corresponding duty on this amount should also have been paid. Therefore it is clear that the amount of additional consideration should not be treated as including also the duty element thereon. Hence it is my view that the second method of calculation referred to by me earlier has to be adopted and the total cum-duty price will have to be arrived at Rs. 61.59. Rule 5 contains three concepts - value, price and additional consideration. 4. The question posed for my opinion is : Query (1) : Where the price is not the sole c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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