Charitable dharmada is excluded from excise transaction value when it is not sale consideration.

Dharmada collected by a manufacturer as a voluntary amount earmarked for charity is not part of the transaction value or assessable value of excisable goods. The Court reasoned that under Section 4 of the Central Excise Act, 1944, and Rule 6 of the Central Excise Valuation Rules, valuation covers the price actually paid or payable for the goods and any additional consideration connected with the sale. Because the amount was paid for a charitable purpose and not as consideration for transfer of goods, the seller acted only as a conduit and the payment lacked the character of sale consideration.

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Issues: Whether Dharmada collected by the manufacturer as an optional payment from buyers, and credited to charity, forms part of the transaction value and assessable value of excisable goods.

Analysis: Dharmada, on the facts found, was a voluntary amount paid by buyers along with the sale price and was earmarked for charity. Under Section 4 of the Central Excise Act, 1944, duty is chargeable on the transaction value, meaning the price actually paid or payable for the goods and any additional amount liable to be paid by the buyer in connection with the sale. Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2006 also proceeds on the basis that valuation tracks the price paid for the goods and any additional consideration flowing from the buyer. An amount paid for a purpose other than consideration for transfer of goods cannot be treated as part of the transaction value. Dharmada was held to be a charitable payment, with the seller acting only as a conduit, and therefore it lacked the character of sale consideration.

Conclusion: Dharmada collected as an optional charitable payment is not includible in the transaction value or assessable value, and the answer is in the negative.

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