CHENNAI II COMMISSIONERATE
692 MHU COMPLEX NANDANAM CHENNAI-35
TRADE NOTICE NO. 14
/2003 DATED:
21 /04/2003
Subject:- Valuation of goods
under Section 4A of the Central Excise Act- reg.
********
Instances have been reported to the
Board where in respect of commodities notified under Section 4A of the Central
Excise Act, 1944 goods are sold only against refundable deposits or against
deposit of an empty bottle, container or jar. As for example in the case of
sale of soft drinks the soft drink bottle is being sold at the printed MRP only
if the buyer leaves some cash deposit for safe return of the bottle or he
deposits before hand an empty bottle of the particular brand. Similar cases
have been reported in respect of sale of mineral water.
In such instances, it can be said
that the MRP is not the sole consideration for sale and, therefore, the cash
value of the additional consideration (the cash deposit or deposit of the empty
bottle) has to be added to the MRP and the assessable value re-determined for
payment of duty.
The matter was
examined by Board. It is observed that in respect of sale of all products in
containers, which have repeated use, the cost of the container is amortised
over the expected durability span of the container. The security deposit
basically takes care of the difference between the actual cost of the
bottle/container and the amortised cost factored into the product. Thus, the
returnable deposit or the deposit of the empty container is not an additional
consideration for sale of the particular product.
The position has been confirmed by
the State Metrology Department also that receipt of returnable deposit or empty
container is not a contravention of the provisions of the Weights and Measures
Act, 1976 or the packaged Commodity Rules, 1977, framed thereunder.
In view of the above, clarification
issued vide Serial No.4 of Board’s Circular No.643/34/2002-CX dated 1.7.2002
will apply to goods assessed under Section 4A also. In other words, if the cost
of reusable containers (glass bottles, crates, etc) is amortised and included
in the cost of the product itself, the question of adding any further amount
towards this account does not arise, except where audit of accounts reveals
that the cost of the reusable container has not been amortised and included in
the value of product
6. Pending cases may be disposed off on the basis of these
instructions.
The contents of this Trade Notice may please be brought to
the notice of all the constituent members of your Association and the
manufacturers in particular.
( Issued from File C.No.
IV/16/217/2003 CX POL)
Authority: Board's Circular No. 697/13/2003CX From F.No. 6/26/2002 CX I
dated 27-02-2003.
-Sd-
(K.R.UDAY
BHASKAR)
ADDITIONAL
COMMISSIONER (TECH)
To
Trade
& Department.
(
As per Mailing List )