goods supplied to trust on charity.

[Anil Jangid]

please clarify whether we need to pay excise duty for goods supplied to charitable institutions at free of cost. The trust is registered and eligible for exemption under IT. Thanks in advance

[KASTURI SETHI]

Answer is 'NO'. No exemption from Central Excise duty is available to charitable institutions. See Notification No.10/97-CE dated 1.3.97 as amended vide Notification No.16/2007-CE dated 1.3.2007 and Notification No.28/2013 CE dated 1.10.2013. In this notification, definition of 'Hospital' includes Trust, Society, Association etc. which renders medical, surgical or diagnostic treatment. Otherwise also no exemption is admissible. It is pertinent to point out that samples distributed free of cost are to be assessed under Rule 11 with the spirit of Rule 8 i.e. at 110% of the cost of manufacture. Board's Circular No.915/5/2010-CX dated 19.2.2010 refers.

[Ganeshan Kalyani]

Nicely explained by Kasturi Sir. Excise is payable on removal of goods.

AI Summary

Excise duty on goods supplied to charitable institutions remains payable, including free samples assessed under valuation rules. Charitable institutions are not entitled to a general exemption from central excise; supplies to trusts do not automatically escape duty. Free distributions and samples are treated as removals and must be valued and assessed under the prescribed valuation framework, applying the valuation principles equivalent to assessment at a margin above cost as set out in the valuation rules and Board guidance.