29 March 2015
The procedure of valuation of calculation of central excise duty may be understood with the following example:
MRP is affixed on product "X" is Rs. 100/-. Rate of Rebate is 40% in terms of notification no. 2/2006. Rate of Excise Duty is 16% and Cess 3% (2% + 1%). Rate of Sales Tax (VAT) is 3%. Whole sale price of the product is Rs. 65 with duties of excise and local taxes.
Now for the purpose of Excise duty the following steps should be taken:
1
MRP
Rs. 100
2
Less Rebate @ 40%
Rs. 40
3
Value on excise duty to be paid
Rs. 60
4
Amount of Excise Duty of Rs. 60
Rs. 9.888
a. Basic Excise Duty @ 16% = Rs. 9.6
b. Education Cess @ 2% = Rs. 0.192
c. SH Education Cess @ 1% = Rs. 0.096
5
For the purpose of calculation of excise duty - actual sale price to be ignored.
6
Local taxes like sales tax shall be ignored
7
Any discount whether quantity discount / volume discount or performance discount shall be ignored
8
All other adjustments prescribed under section 4 shall be ignored.
9.
Provisions of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 shall be ignored.
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