Page 51 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes  Duty based on Maximum Retail Price printed on carton after allowing deductions - section
4A of CEA (added w.e.f. 14.5.1997)

 Duty as % based on Assessable Value fixed under Section 4 (ad valorem duty)
(1) Specific Duty: It is the duty payable on the basis of certain unit like weight, length, volume,
thickness etc. For example, duty on Cigarette is payable on the basis of length of the Cigarette,
duty on sugar is based on per Kg basis etc. Presently, specific rates have been announced for - (a)
cigarettes (b) Matches (c) Marble slabs and tiles (d) Colour TV when MRP is not marked on the
package or when MRP is not the sole consideration.
(2) Tariff value: In some cases, tariff value is fixed by Government from time to time. This is a
“Notional Value” for purpose of calculating the duty payable. Once ‘tariff value for a commodity
is fixed, duty is payable as percentage of this ‘tariff value’ and not the Assessable Value fixed
u/s 4. This is fixed u/s 3(2) of Central Excise Act. Government can fix different tariff values for
different classes of goods or goods manufactured by different classes or sold to different classes
of buyers. Presently, tariff values have been fixed for pan masala packed in retail packs of less
than 10 gm per pack, vide notification No 16/98-CE(NT) dated 2nd June 1998.
(3) Value based on Retail Sale Price: Section 4A of CEA (inserted w.e.f. 14.5.1997) empowers
Central Government to specify goods on which duty will be payable based on ‘retail sale price’.
The provisions are as follows -
(a) The goods should be covered under provisions of Standards of Weights and Measures Act.
(b) Central Government can permit reasonable abatement (deductions) from the ‘retail sale
price’. While allowing such abatement, Central Government shall take into account excise duty,
sales tax and other taxes payable on the goods.

(c) If more than one ‘retail sale price’ is printed on the same packing, the maximum of such retail
price will be considered valid.

(d) The ‘retail sale price’ should be the maximum price at which excisable goods in packaged
forms are sold to ultimate consumer. It includes all taxes, freight, transport charges, commission
payable to dealers and all charges towards advertisement, delivery, packing, etc.

Self Assessment

Fill in the blanks:

9. In some cases, tariff value is fixed by ............................ from time to time.
10. This is a “............................ Value” for purpose of calculating the duty payable.
11. The ............................ should be covered under provisions of Standards of Weights and
Measures Act.
12. ............................ Government can permit reasonable abatement (deductions) from the ‘retail
sale price’.
13. If more than one ‘retail sale price’ is printed on the same packing, the maximum of such
............................ price will be considered.
14. The ‘retail sale price’ should be the maximum price at which ................................... goods in
packaged forms are sold to ultimate consumer.

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