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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether, for purposes of assessing excise duty under section 4 prior to the 1-10-1975 amendment, the assessable value had to be determined on the wholesale cash price after excluding post-manufacturing selling and marketing expenses, and whether the price charged through the marketing division could be taken as the governing price.
Analysis: The governing principle applied was that excise is a duty on manufacture and not on post-manufacturing commercial activities. Accordingly, where the sale price includes elements of selling and marketing expenditure, those elements are not part of the assessable value and must be excluded on a proper basis. The Court treated the case as materially covered by the earlier decision dealing with pre-amendment valuation, and held that the price charged through the marketing division could not, by itself, be treated as the decisive assessable value if it embedded post-manufacturing expenses and profit. The Court also accepted that such expenses may be spread over the turnover on an equalised basis where necessary.
Conclusion: The assessee was entitled to exclusion of post-manufacturing selling and marketing expenses from the valuation base under the pre-amendment regime, and the impugned orders and demand based on refusal of such deductions could not stand.
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