Deferred sales tax remains deductible in excise valuation; later net present value discharge cannot create additional consideration.

For central excise valuation, sales tax payable at the time and place of removal remains deductible even where the liability arose under a deferment scheme later discharged by payment of net present value under State law. The later statutory option did not change the character or quantum of the tax liability existing when the goods were cleared, and it could not retrospectively reduce the deduction or treat the differential as additional consideration. Board circulars were noted as consistent with this treatment. On that basis, the demand for differential duty, interest, and penalties was unsustainable.

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Issues: Whether sales tax collected under a deferment scheme, but later discharged by payment of net present value under the State law, is deductible while determining transaction value for central excise valuation.

Analysis: The valuation scheme under the Central Excise Act requires assessable value to be determined at the time and place of removal. The expression "sales tax and other taxes, if any, actually paid or actually payable" covers the sales tax liability as it existed at the time of clearance, not a later reworking of that liability because of a subsequent State amendment. The State law introduced an option for premature discharge at net present value and treated such payment as full discharge of the deferred sales tax liability, but that later mode of payment did not alter the character or quantum of the sales tax payable when the goods were removed. The Board's circulars also consistently treated sales tax payable under a deferment scheme as deductible, and the later payment at net present value could not be used to reduce the deduction retrospectively. The demand based on treating the differential between deferred tax and net present value as additional consideration was therefore unsustainable.

Conclusion: Sales tax deferred under the State incentive scheme remained deductible in full for excise valuation, and payment of its net present value did not justify inclusion of the difference in transaction value; the issue was decided in favour of the assessee.

Final Conclusion: The impugned orders confirming differential duty, interest, and penalties were set aside, and the appeals were allowed with consequential relief.

Ratio Decidendi: For central excise valuation, the deductible sales tax is the liability actually payable at the time of removal, and a subsequent State-law option permitting discharge of that liability at net present value does not retrospectively alter the assessable value or convert the differential into additional consideration.

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