Cess valuation must exclude excise duty and sales tax from wholesale cash price under the automobile cess rules.

For levy of cess under the Industries (Development and Regulation) Act, 1951 read with the Automobile Cess Rules, the assessable value was held to follow the valuation basis under Section 4 of the Central Excises and Salt Act, 1944. On that construction, where central excise duty and sales tax form part of the wholesale cash price, both must be deducted in computing the value on which cess is levied. The earlier Tribunal view on the same issue was followed, and the demand was held unsustainable.

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Issues: Whether, for levy of cess under the Industries (Development and Regulation) Act, 1951 read with the Automobile Cess Rules, the assessable value should be determined by excluding central excise duty and sales tax from the wholesale cash price.

Analysis: The valuation for cess was held to follow the same basis as valuation under Section 4 of the Central Excises and Salt Act, 1944 by virtue of Section 9 of the Industries (Development and Regulation) Act, 1951 and Rules 2(f) and 3 of the Automobile Cess Rules. On that construction, where excise duty and sales tax are included in the wholesale cash price, they must be deducted while computing the value on which cess is levied. The earlier Tribunal decision on the same question was followed.

Conclusion: The cess had to be computed after deducting central excise duty and sales tax from the wholesale cash price, and the demand was unsustainable. The appeal was therefore allowed in favour of the assessee.

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