Deferred sales tax under a deferment scheme remains deductible from excise value; net present value prepayment does not alter liability.

Sales tax collected under a deferment scheme remained deductible from central excise assessable value where the assessee was statutorily liable for the full tax at a future date and could discharge that liability earlier by paying net present value. The transaction value had to be fixed at the time and place of removal, so the later prepayment did not change the amount of sales tax actually payable on that date. The State law treated the net present value payment as discharge of the deferred liability, and the differential could not be added to transaction value. The incentive-based structure considered in Super Synotex was distinguished because that case involved tax never becoming payable.

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Issues: Whether sales tax collected under a deferment scheme, and later prepaid at net present value under the State sales tax law, was deductible from the assessable value for central excise duty as sales tax actually paid or actually payable.

Analysis: The expression "transaction value" under Section 4 of the Central Excise Act, 1944 had to be determined at the time and place of removal. Under the deferment scheme, the assessee was statutorily liable to pay the full sales tax amount at a future date, and the option of premature payment at net present value did not alter the amount of sales tax actually payable on the date of removal. The State law deemed such prepayment to be discharge of the deferred tax liability, and the Board's circulars consistently recognised deferred sales tax as deductible. The decision in Super Synotex was distinguished because that case concerned a sales tax incentive/exemption structure where part of the tax was never payable, not a deferment scheme with prepayment at net present value.

Conclusion: The deferred sales tax was deductible from the assessable value, and the differential between the deferred tax amount and the net present value payment could not be added to the transaction value.

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