Central Excise - Valuation - Inclusion of royalty charges in the assessable value - Regarding - Central Excise - 4/89-CX.1

Central Excise - Valuation - Inclusion of royalty charges in the assessable value - Regarding Circular No. 4/89-CX.1 Dated 6-4-1989 [From F. No. 6/52/88-CX.1] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise and Customs, New Delhi Subject : Central Excise - Valuation - Inclusion of royalty charges in the assessable value - Regarding. I am directed to say that doubts have been expressed from some quarters regarding inclusion/ exclusion of royalty charges in the assessable value of excisable goods. The matter was discussed in the South Zone Collectors Tariff-cum-General Conference held at Bangalore on 4th and 5th October, 1988. It was pointed out in the meeting that in such cases the sale of excisable goods by the manufacturer is conditional. The manufacturer is reported to be receiving the royalty charges from the customers/buyers besides the price of the goods separately. The price therefore cannot be considered sole consideration for sale and there is an additional consideration flowing directly from the buyer to the assessee in the form of royalty. The conference took a view that price received includes price received subsequently also. The conference accordingly concluded that basis for assessment should be the price plus royalty. 2. The matter has been further examined in the Board and the Board have accepted the above views of the conference. Accordingly, it is held that royalty charges received by the assessee are includible in computing the assessable value as per Rule 5 of the C.Ex. (Valuation) Rules 1975. 3. The field formations may be informed accordingly. 4. Receipt of this circular may please be acknowledged.