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Trade Notice 1/2003 Subject :- Inclusion of interest on sales tax in the assessable value Attention is drawn to Board's Circular No. 378/11/98-CX dated 12.03.98 where it had been clarified that in situations where deferment of payment of Sales tax for particular period is allowed by State Government as incentive, Sales tax is deductible from the wholesale price determination of assessable value for levy of Central Excise duty even though it may not be deposited immediately with the State Government. 2. The issue whether the interest on the money retained should be treated as additional consideration in terms of Rule 6 of Central Excise (Valuation ) Rules, 2000, or not, in cases where sales tax is retained by the assessee has been examined in the Board. As per Rule 5 of the earlier Valuation Rules, 1975 & Rule 6 of Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000, "Additional consideration " should flow directly or indirectly from the buyer to the seller. The interest earned, on deferred sales tax, by the manufacturer is not a benefit extended by the buyer to the seller but is an incentive, accruing in pursuance of State Government policy. Therefore, this amount cannot be treated as "additional consideration" under the Central Excise Valuation Rules and the same cannot be added to the Assessable value in terms of Rule 5 of Central Excise Valuation Rules, 1975 or Rule 6 of the Valuation Rules, 2000. 3. All the Trade Associations are requested to give wide publicity of the contents of this Trade Notice to their members / constituents.
Authority : Circular NO. 679/70/2002 - CX, dated 04.12.2002
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