Turnover tax deduction from excisable value upheld where the tax is statutorily payable by the manufacturer, despite customer-recovery bar.

Turnover tax paid under the relevant sales tax law is deductible from the assessable value under Section 4 of the Central Excises and Salt Act, 1944, where the valuation rule allows statutory abatements from the wholesale price. Earlier Tribunal rulings, following Bombay Tyres International, treated such tax as a permissible deduction when it was legally payable by the manufacturer. A prohibition in the sales tax law on recovering the tax from the customer does not change the excise valuation position if the tax remains a statutory outgoing borne by the manufacturer. The deduction is therefore allowed even when the tax is paid periodically to the taxing authority, and the matter was remanded for fresh adjudication.

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Issues: Whether turnover tax paid under the relevant sales tax law was deductible from the assessable value under Section 4 of the Central Excises and Salt Act, 1944, notwithstanding that the sales tax law prohibited recovery of such tax from the customer.

Analysis: The applicable valuation rule permitted deduction of taxes which formed part of the permissible abatements from the wholesale price. Earlier Tribunal decisions, following the Supreme Court in Bombay Tyres International, had treated turnover tax as an allowable deduction where it was paid in accordance with the taxing statute. The prohibition in the sales tax law against collection from the customer did not alter the excise valuation principle where the tax was otherwise a statutory outgoing borne by the manufacturer.

Conclusion: Turnover tax is deductible from the assessable value under Section 4 if it is paid under the relevant statute, even if it is paid periodically to the taxing authority. The assessee succeeds on the substantive valuation issue and the matter is remanded for fresh adjudication.

Ratio Decidendi: Taxes statutorily payable by the manufacturer are deductible from excisable value when the valuation provision permits abatements, and their periodic payment to the taxing authority does not justify disallowance of the deduction.

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