Turnover tax deduction in excise valuation upheld despite State law bar on passing tax to buyers.

Turnover tax proved to have been paid was deductible from the assessable value for central excise purposes, because the Tribunal treated the Law Ministry's view and earlier Tribunal precedent as supporting deduction from the sale price. The State law restriction against recovering that tax from buyers was held irrelevant to central excise valuation. The pendency of the Department's appeal in a similar matter did not alter the position, as no stay had been granted and the Commissioner (Appeals) had correctly followed the existing Tribunal view in line with judicial discipline.

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Issues: Whether turnover tax paid to the State Government was deductible from the assessable value for central excise purposes, even where the State law prohibited recovery of that tax from buyers and departmental appeal on a similar issue was pending.

Analysis: The Tribunal noted that the earlier decision relied upon by the assessee had proceeded on the basis of the Law Ministry's view that turnover tax, once proved to have been paid, was allowable as a deduction from the sale price for arriving at assessable value. The legal embargo under the State sales tax law on passing the tax on to purchasers was held to be irrelevant to the central excise valuation question. The Tribunal also noticed that the Department's appeal in the similar matter had not resulted in any stay, and that the Commissioner (Appeals) had followed the existing Tribunal view in keeping with judicial discipline.

Conclusion: Turnover tax was deductible from the assessable value, and the Revenue's appeal failed.

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