Accounting treatment of excise duty. - Income Tax - 1389/CBDT

INSTRUCTION NO. 1389/CBDT Dated: March 24, 1981 On a reference made to the Institute of Chartered Accountants of India the board have been informed that the question of appropriate accounting treatment of Excise Duty as a part of cost price has already been examined by the Research Committee of the Institute and the opinion of the committee was that normally Excise Duty should be considered as a manufacturing expenses and as an element of cost for inventory valuation. The position will be same in respect of customs duty also. Guidance note on Accounting Treatment for Excise Duty for the benefit of its members has been published in the October 1979 issue of the Institute Journal. 2. In cases where assessments are pending and the assessees have not included customs and Excise Duties in the cost price, suitable action, proviso to section 145(1) as recommended by the director of Inspection (special cell) should be taken. Where assessments have already been completed steps as provided in law may be taken to reopen the same.