MRP Based valuation in Central Excise

[Surender Gupta]

Section 4A of Central Excise Act, 1944 provides special procedure for valuation of certain goods on which MRP is maladroitly required to be printed.

Under the provision of Section 4A, central government prescribes the rate of rebate. See notification no. 02/2006 CE(NT) dated 1/3/2006.

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.

Discussions to this article

[Deepak Jha]

Dear Sir,

If Mrp is 100 and abatment is 30 % and selling price is ₹ 80 than excise duty will be applicable on (100-30% = 70 or excise duty will be applicable on selling price Of ₹ 80.

waiting for your valuable reply

Thanks & Regards,

Deepak Jha