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TMI BlogValuation of fertilizers for the purpose of levy of excise duty – inclusion of subsidy component in the assessable value – Clarification – Regarding.X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the purpose of levy of excise duty inclusion of subsidy component in the assessable value Clarification Regarding. In the Budget 2011-12, excise duty of 1% was imposed on chemical fertilizers falling under Chapter 31 of the Central Excise Tariff such as Urea, Di-ammonium Phosphate (DAP), Ammonium Sulphate, Single Super Phosphate (SSP), etc. and various grades of complex fertilizers. 2. Consequent upon the levy of excise duty @ 1% (without CENVAT facility) on chemical fertilizers in the Budget 2011-12, the Department of Revenue had clarified to the Department of Fertilizers that in the case of price-controlled fertilizers which are sold to distributors/wholesale dealers at MRP fixed by the Government at the time of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed value be accepted as the normal price for sale of cars. As the main reason for selling cars at a lower price than the manufacturing cost and profit was to penetrate the market, the apex court held that this would constitute extra-commercial consideration and not the sole consideration. Since the price was not the sole consideration for sale of cars, the Court held that the Department was justified in invoking the provisions of Valuation Rules for the purpose of levy of excise duty. 4.1 In the case of fertilizers, the manufacturers are mandated to sell the goods at the prices notified by the Government. In the case of urea, the cost of production varies greatly from manufacturer to manufacturer depending upon the use of feedstock, tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While dealing with the word consideration , the Supreme Court has observed that consideration means a reasonable equivalent or other valuable benefit passed on by the promisor to the promisee or by the transferor to the transferee and it is for the Excise authorities to show that the price charged to the buyer is a concessional or specially low price or a price charged to show favour or gain in return extra-commercial advantage. 4.4 From the above, it is clear that the facts at hand are clearly distinguishable from the facts and circumstances of the Fiat India case. The manufacturers of fertilizers do not gain any extra commercial advantage vis-a-vis other manufacturers because of the subsidy received from the Government. The subsidy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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