MANU/EXCR/0003/2022

Ministry : Ministry of Finance

Department/Board : Central Board of Indirect Taxes and Customs

Circular No. : 1082/03/2022-CX

Date : 01.02.2022

Notification/ Circulars Referred : Notification No. 49/2008-Central Excise (N.T.), dated 24.12.2008 MANU/EXNT/0076/2008

To,

All the Principal Chief Commissioners/Chief Commissioners of Customs & GST,
All the Principal Directors General/Directors General of Customs & GST

Madam/Sir,

Valuation of tobacco and tobacco products for the purposes of payment of Basic Excise Duty and National Calamity Contingent Duty (NCCD)-reg.

Representations have been received seeking clarification on the manner of computation of valuation, after admissible abatement, for the purposes of computation and payment of Basic Excise Duty and National Calamity Contingent Duty (NCCD). It has been argued that on calculation of excise duty and NCCD on the value arrived at after abatement on the retail sale price and thereafter computing Goods and Services Tax (GST) on such value inclusive of the excise duty and NCCD results in the total retail sale price of such tobacco and tobacco products overshooting the declared retail sale price, and accordingly, the rate of abatement is being questioned citing the increase in NCCD rates in the year 2020.

2.1 As per section 4A of the Central Excise Act, 1944, retail sale price based assessment has been prescribed for tobacco and tobacco products (like chewing tobacco, preparations containing chewing tobacco, Jarda scented tobacco, Pan masala containing tobacco) and an abatement of 55% on the retail sale price has been prescribed for such products. Accordingly, assuming the retail sale price to be Rs. 100, the basic excise duty and NCCD is computable on an assessable value of Rs. 45. The cumulative basic excise duty (@0.5%) and NCCD combined being 25.5%, at present, on such products, the amount of excise duty and NCCD payable would be Rs. 11.475. It may be noted that abated value of Rs. 45 in this case is a prescribed value for computation of basic excise duty and NCCD. It is not the prescribed sale price by the manufacturer. He is free to maintain his sale price, as appropriate, taking into account the relevant factors of costing and profit. Also, the abated value of Rs. 45 (used only as measure for computation of basic excise duty and NCCD) is not relevant for computation of GST and Compensation Cess. Under the respective Acts, GST and Compensation Cess is payable on transaction value, that is price actually paid or payable for the supply of good including duties like basic excise duty and NCCD. Therefore........