Central Excise - Rebate of excise duty for promoting use of specified raw materials - Calculation of assessable value - Regarding - Central Excise - 90/3/87-CX.3

Central Excise - Rebate of excise duty for promoting use of specified raw materials - Calculation of assessable value - Regarding F. No. 90/3/87-CX.3 Dated 9-9-1987 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Rebate of excise duty for promoting use of specified raw materials - Calculation of assessable value - Regarding. The Audit had raised an objection on the method of determining the assessable value from the cum-duty price of soap/vegetable products on which rebate had been claimed for use of certain specific oils used in the manufacture of such soap/vegetable products. 2. The effective rate of duty on soap during the period to which the audit objection relates was 5% ad valorem prescribed by a notification issued under Rule 8(1) of the Central Excise Rules, 1944. By another notification issued under Rule 8(1) of Central Excise Rules, 1944, the duty leviable or such soaps manufactured by using specified V.N.E. oils was further reduced by Rs. 3.50 per tonne of soap cleared for home consumption, for every one percent increase of rice bran oil used over the level of 25% of the total oils used in the manufacture of such soap. The audit's contention was that over and above the effective rate, the extent of rebate that was admissible on such soap should also have been deducted while arriving at the assessable value. 3. In the Departmental reply to the audit, the stand taken was that such notifications providing for the rebate, even though issued under Rule 8(1) of the Central Excise Rules, 1944 have to be distinguished from usual exemptions prescribing effective rates of duty, particularly looking to the effect that such rebate was intended to encourage use of certain specified oils in the manufacture of soap. It was also pointed out that at the point of clearance of each consignment of soap in the manufacture of which such specified oils are used, it is not possible to work out the precise quantum of rebate and the assessable value so derived could vary from batch to batch. In this background the Department did not accept the audit objection. 4. The Office of the Comptroller and Auditor General of India has now intimated that they have decided not to pursue the old objections on this issue and that all the concerned Accountant General Directors of Audit (General) are also being advised to settle the old outstanding objections on this issue. 5. Pending assessments of the type indicated above could therefore, be finalised keeping in view the above observations of the Audit. Similar problems may have existed in respect of Vegetable Products where also a rebate scheme exists for use of certain specified minor oils in the manufacture of vegetable products. The above guidelines could be kept in view in deciding any pending assessment case relating to vegetable product as well. 6. Incidentally, the problem of determining the assessable value of vegetable product or soap from the cum-duty price has ceased to exist after the changes introduced in 1987 Budget. In this connection Notification No. 27/87-C.E. and 40/87-C.E., both dated 1-3-1987 may be referred.