Cum-duty valuation under excise law permits deduction of later demanded duty from realised sale price on actual sale facts.

Section 4(4)(d)(ii) of the Central Excises Act, 1944 requires exclusion of excise duty payable from the value of goods. The majority held that, where goods were sold at a realised wholesale price and the subsequently demanded higher duty could not be recovered from the buyer, that realised price had to be treated as cum-duty price; the later duty was therefore deductible in computing assessable value. The determination was said to depend on the actual facts of sale, not a hypothetical assumption that the price would have been higher if the correct duty had been charged initially. The dissenting view rejected abatement where the higher duty had not in fact been included in the original wholesale price.

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Issues: Whether, when excisable goods were sold at a price that included no declared duty or only a lower duty and a higher duty was subsequently demanded, the amount of the subsequently demanded duty could be abated from the realised sale price while determining assessable value under Section 4(4)(d)(ii) of the Central Excises Act, 1944.

Analysis: The relevant scheme of Section 4(4)(d)(ii) requires exclusion from the value of the duty of excise payable on the goods. The majority held that the realisation obtained from wholesale sale is the actual consideration received and, where the additional duty subsequently demanded cannot be recovered from the buyer, that realised price must be treated as cum-duty price. The determination has to proceed on the actual facts of sale, not on a hypothetical assumption that the price would have been higher had the correct duty been charged initially. On that basis, the subsequently demanded duty is deductible from the sale price for arriving at assessable value.

Conclusion: The question was answered in the affirmative and in favour of the assessee; the subsequently demanded duty is to be abated from the realised sale price.

Concurring Opinion: The dissenting member held that where the higher price was not declared and duty had not in fact been included in the original wholesale price, the assessee could not claim abatement of the later demanded duty from that price. On that view, the question was answered in the negative.

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