Excise valuation: turnover tax is deductible only if actually paid or legally payable; exempt levy cannot be excluded.

Under excise valuation rules, turnover tax can be deducted from assessable value only if it is actually paid or legally payable. Where the unit was exempt from turnover tax at the relevant time, no such liability existed in law, so amounts recovered from customers could not be excluded as a deductible tax component. Reliance on valuation rules did not change the statutory requirement that the levy be payable. The stated position is that an exempt and non-payable turnover tax is not deductible in computing central excise duty.

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Issues: Whether turnover tax, when not paid or payable because the unit was exempted from such levy, could be deducted while determining the assessable value for central excise duty.

Analysis: Under Section 4 of the Central Excise Act, 1944, deduction is available only for tax actually paid or payable. The unit was exempt from turnover tax at the relevant time, so no turnover tax was legally payable. In such circumstances, the amount recovered from customers could not be excluded from the wholesale price as a deductible tax component. The attempted reliance on valuation rules did not alter the position, since the deduction claim failed on the statutory requirement that the tax be payable.

Conclusion: The deduction of turnover tax was not admissible, and the Revenue's challenge lacked merit.

Final Conclusion: The valuation adopted by the appellate authority was not sustainable on the issue of turnover tax deduction, and the Revenue appeal failed.

Ratio Decidendi: For excise valuation, only tax that is actually paid or legally payable can be excluded from assessable value; an exempted levy not payable in law is not deductible.

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