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Practice Questions
Question 1

Distinguish between tariff rate of excise duty and effective rate of excise duty.

Answer

Tariff rate of duty is the rate which is given in Central Excise Tariff. However, Government can give partial or
complete exemption from payment of excise duty. Thus, the rate at which excise duty is actually payable is
termed as effective rate of excise duty. For example, if rate of excise duty given in Central Excise Tariff is 12%,
the same would be termed as tariff rate.

However, if by way of an exemption notification, excise duty payable is reduced to 6%, the effective rate of
excise duty would be 6%.

Question 2

Indicate whether the following activities will be liable to central excise duty?

(a) Manufacture of parts used for repair or replacement during warranty period.

(b) Manufacture of excisable goods in a factory located in Jammu & Kashmir.

(c) Production of excisable goods in notified designated areas at 210 nautical miles from the Indian
landmass.

(d) Repairing, reconditioning or remaking.

(e) Manufacture of alcohol and wine.

(f) Labeling or re-labeling of unit containers of chocolate. Chocolate is specified in Third Schedule to Central
Excise Act, 1944.

(g) Manufacture of salt by the Central Government.

(h) Production of excisable goods in a factory located in SEZ.

(i) Manufacture of medicinal and cosmetic products containing alcohol.



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Answer:

(a) Yes. Excise duty is a levy on manufacture. Therefore, it is of no importance as to whether the manufactured
goods are sold, captively consumed, distributed as free sample or used for free repair / replacement during
warranty period etc.

(b) Yes. The central excise law extends to Jammu and Kashmir.

(c) No. The central excise law extends to the notified designated areas in EEZ upto 200 nautical miles from the
Indian landmass.

(d) No, since repairing, reconditioning or remaking does not result in to emergence of a new product.

(e) No. Entry 84 of the Union List of the Seventh Schedule specifically excludes alcoholic liquors for human
consumption. Since, Entry 54 of the State List covers duties of excise on alcoholic liquors for human
consumption, it may be liable to State excise duty.

(f) Yes. Labeling or re-labeling of unit containers of the goods specified in Third Schedule to the Central Excise
Act is deemed manufacture. Since chocolate is covered under Third Schedule, the labeling or re-labeling of
its container will amount to manufacture.

(g) No. Though there is no distinction between excisable goods produced by the Government and those
produced by others, salt manufactured by Government is not leviable to excise duty.

(h) No. The central excise law does not apply to goods manufactured in SEZ.

(i) Yes. Medicinal and cosmetic products containing alcohol are covered by Entry 84 of the Union List.

Question 3:

Examine whether central excise duty is leviable in the following situations:-

(a) Rajat Builders have constructed an office building for M/s RR & Co.

(b) Jay Maintenance Services Ltd. provided maintenance services for refrigerators, washing machine and air-
conditioners.

Answer

(a) No. Excise duty is leviable only when manufacture results in goods that are excisable. For being called
goods, items ought to be movable and marketable. Since office building is marketable but not movable, it is
not goods but an immovable property.

Hence, excise duty is not leviable on construction of office building.



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(b) No. Excise duty is leviable on manufacture of excisable goods. However, activity of maintenance of
refrigerators, washing machine and air conditioners is not manufacture as it does not result into
emergence of a new article having different name, character or use.

Thus, since the activity is not manufacture, excise duty is not leviable on the same.

Question 4:

RK Ltd. is buying oil in drums of 200 liters. Company packs this oil in small tins of one litre each, put their label
giving details of contents, volume and MRP. Advise whether RK Ltd. is liable to pay excise duty on small tins sold
by it.

Answer

Mere repacking from large container to small pack is not manufacture of oil as oil continues to be oil no new
product comes into existence having a distinct name, character or use. Hence, the activity is not manufacture
and excise duty is not payable.

However, if such oil is covered under section 4A of Central Excise Act, 1944 (RSP based valuation provisions), the
activity of labelling will be deemed manufacture and ABC Co. will be liable to pay excise duty on such
containers of one litre each.

Question 5:

Laal ji purchases cloth and gives it to Bhushan, who is a tailor, to stitch a shirt as per measurements and
requirements of Laal Ji. Bhushan stitched the shirt and gave it to Laal ji. In the given case, who will be treated as
manufacturer of the shirt for the purpose of levy of central excise duty?

Answer

Under central excise law, a person who carries out actual manufacturing process is considered as manufacturer
even if raw material is supplied by someone else and goods are manufactured as per the specifications of such
person. In other words, ownership of raw material is not relevant.

Therefore, in this case, Bhushan (tailor), being the actual manufacturer, will be treated as manufacturer for
purpose of levy of excise duty even though the cloth (raw material) for making shirt is provided by Laal ji and the
shirt is stitched as per his specifications.

Question 6:

Mr. Hari is a trader of steel articles. He purchases steel bars of 10 meters. He cuts the bars as per requirements of
customer and supplies the cut bars to them. He seeks clarification whether he will be liable to pay excise duty on
the cut bars sold by him.


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Answer

Supreme Court has held that manufacture can be said to have taken place when after a process, a new and
different article emerges having a distinctive name, character or use.

However, in this case, after cutting, the product continues to be a bar. There is no change in name, character or
use. Hence, the activity is not manufacture and excise duty will not be payable.

Question 7:

Kali motor Ltd. purchases raw material and supplies it to Jaydev Engineering Company. Jaydev Engineering
Company manufactures automobile components as per the design supplied by LKali Motors. Such components
bear brand name of Kali motor Ltd. namely, Kali moto. Jaydev Engineering Company supplies these
components to Kali Motors Ltd., who in turn sells them in market as spare parts of automobiles. Who is liable to
pay central excise duty on such components?

Answer

Liability to pay central excise duty falls on actual manufacturer of goods. Therefore, in this case, Jaydev
Engineering Company, being actual manufacturer, will be liable to pay excise duty. This would be so even if raw
material does not belong to them and goods manufactured by them bear the brand name of Kali Motors Ltd. as
in case of central excise, ownership of goods is not the relevant criterion to determine duty liability.

Question 8:

Assessable Date of Date of Rate of duty on the Rate of duty on the

value manufacture removal date of manufacture date of removal
(i) 50,000 12-02-2011 10-02-2014 10% 20%
(ii) 20,000 02-01-2014 10-03-2015 10% 8%
(iii) 40,000 20-10-2012 15-09-2014 Goods exempt from Exemption withdrawn
duty vide an and now goods are
exemption notification liable to duty @ 10%
(iv) 30,000 20-06-2014 25-01-2015 15% 15% + Additional
duty @ 6% imposed
w.e.f. 01-07-2013

Further, in case of point (i), goods have been removed from the factory and stored in a warehouse without
payment of duty on 10.09.2014. On the same date, the applicable rate of duty was 12%. Who is liable to pay
duty in this case?
Also, compute the duty payable in case the goods in point (ii) above are to valued on the basis of tariff value
and such tariff value changes from ` 20,000 (applicable on the date of manufacture) to ` 25,000 (applicable on
the date of removal). The other particulars remain the same as in point (ii) above.
In all the above cases, education cess @ 2% and secondary and higher education cess @ 1% has to be
considered separately.


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Answer:

As per Rule 5 of the Central Excise Rules, 2002, the rate of duty or tariff value applicable to any excisable goods
(other than khandsari molasses) is the rate or value in force on the date when such goods are removed from a
factory or a warehouse, as the case may be. Therefore, the duty payable will be computed as follows:

Assessable Applicable rate of duty (inclusive of 3% education cesses) Excise duty

Value Amount (`)
(i) 50,000 20.60% [The applicable rate of duty is the rate prevalent on the date 10,300
when goods are removed from the warehouse.]
(ii) 20,000 8.24% 1,648
(iii) 40,000 10.30% [Since, on the date of manufacture, the goods were excisable, 4,120
the rate of duty on date of removal will be applied.]
(iv) 30,000 15.45% [Since, excise duty is a levy on manufacture of excisable goods, 4,635
the additional duty which was not in force on the date of manufacture
cannot be imposed on goods removed after its levy.]

In case of point (i), where goods have been first stored in the warehouse without payment of duty and finally
removed from the warehouse, the person liable to pay duty is the person who stores such goods in the
warehouse and not the manufacturer.

Under point (ii); Since, the tariff value applicable to any excisable goods is the value in force on the date when
such goods are removed from a factory, the applicable tariff value in this case will be ` 25,000 (value applicable
on the date of removal). The excise duty payable will be ` 2,060 (8.24% of ` 25,000).

Question 9:

Excise duty payable on cane molasses is ` 1,000 per ton. Excise duty on cane sugar is 12%. A manufacturer
cleared 100 tons of cane molasses from his factory. He sold the cane molasses @ ` 15,000 per ton. Calculate
the excise duty payable.

Answer

When excise duty is payable on the basis of a specific rate, the rate at which goods are actually sold is
immaterial. Therefore, since in this case, excise duty on cane molasses is payable on the basis of tonnage
(specific rate), rate at which they are sold is not relevant.

Thus, excise duty payable in this case will be ` 1,00,000 [` 1,000 x 100 tons].


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Question 10:

Khandva Sugar Ltd. produces khandsari molasses and supplies the same to SRK Ltd. which, in turn uses it in the
manufacture of a non-excisable commodity. Khandsari molasses worth ` 5,00,000 have been supplied by
Khandva Sugar Ltd. to SRK Ltd. Compute the duty payable from the following information:

Particulars Applicable rate of duty

(inclusive of 3%
education cesses)
Date of production 27-03-2014 10.30%
Date of removal from the factory of Khandva Sugar Ltd. 04-05-2014 10.30%
Date of receipt of molasses by SRK Ltd. 20-11-2014 12.36%
Date of manufacture of non-excisable product in which 03-03-2015 Molasses have been
molasses have been used exempted vide an
exemption notification

Who is liable to pay duty in the above case?

Answer:

In case of molasses, the person who procures such molasses for use in the manufacture of any commodity,
whether or not excisable, has to pay the duty leviable on such molasses, in the same manner as if such molasses
have been produced by the procurer.

The rate of duty applicable in the case of molasses is the rate in force on the date of receipt of such molasses in
the factory of the procurer of such molasses.

Therefore, the relevant rate of duty will be 12% (rate applicable on the date of receipt of molasses in the factory
of the procurer) and excise duty payable will be ` 61,800 (` 5,00,000 x 12.36%). Duty is payable by SRK Ltd.,
the procurer of molasses, as if the molasses had been produced by it whether such molasses are used in
manufacture of excisable or non-excisable commodity.

Question 11:

YK Co. is a manufacturer. It intends to pay ad valorem excise duty on the basis of assessable value computed
under section 4 of the Central Excise Act, 1944. However, Excise Department insists that YK Co. should pay duty
under Compounded Levy Scheme as the product manufactured by it is covered under the said scheme.

You are required to examine the situation under relevant statutory provisions. Will your answer be different if the
product manufactured by YK Co. is notified under production capacity based duty scheme?


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Answer

Under Compounded Levy Scheme, assessee has an option to pay excise duty on the basis of specified
factors relevant to production of goods covered under the scheme (size of equipment employed, number and
types of machines used for manufacture etc.) at specified rates.

The prescribed duty has to be paid by the assessee for a specified period.

Therefore, since Compounded Levy Scheme is an optional scheme, YK Co. can pay ad valorem duty under
section 4 even if goods manufactured by it are covered under Compounded Levy Scheme.

However, duty based on production capacity is mandatory i.e, duty cannot be paid in any other manner in
respect of the goods notified under this scheme.

Therefore, if goods manufactured by YK Co. get notified under production capacity based duty scheme, it will
not be able to pay duty under section 4 and will have to compulsorily pay duty based on its production
capacity.

Question 12:

Determine the excise duty payable in the following cases:-

Goods Qty. (kg) Value of Goods (`) Rate of Duty

R 5,000 50,00,000 ` 10 per kg
G 2,000 40,00,000 10%

Education cesses @ 3% are leviable separately.

Answer:
Computation of excise duty payable

Goods R:

Since rate of duty is per kg, value of such goods is not relevant. Excise duty payable will be computed on the
basis of the quantity of the goods produced. Therefore, excise duty payable will be:

5,000 kg x ` 10 per kg = ` 50,000

Add: 3% education cesses = ` 1,500

Total excise duty payable = ` 51,500



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Goods G: Since, in this case the rate of duty is a percentage of the value of excisable goods, the quantity of the
goods produced is not relevant. Excise duty payable will be computed on the basis of the value of the goods.
Therefore, excise duty payable will be:

` 40,00,000 x 10% = ` 4,00,000

Add: 3% education cesses = ` 12,000

Total excise duty payable = ` 4,12,000

Ad valorem duty is payable on the basis of the values prescribed under the Act namely, tariff value fixed by the
Government in respect of certain goods; transaction value and value based on retail sale price printed on a
package of goods.

Question 13:

G Ltd. manufactured readymade garments for ` 30 lakh (exclusive of all taxes). The retail sale price of such
garments is ` 50 lakh. The rate of duty is 12.36% (inclusive of 3% education cesses). The tariff value is notified
at 30% of retail sale price.

Compute the excise duty payable.

Answer:

Since the goods are such for which tariff value has been fixed by the Central Government, the excise duty will be
payable on the basis of tariff value.

Tariff Value = ` 15,00,000 [30% of ` 50 lakh (RSP)]

Excise duty payable = 12.36% of ` 15,00,000 = ` 1,85,400.

Question 14:

RSP printed on the package of a pressure cooker is ` 4,000 (inclusive of all taxes). Declaration of RSP on package
of pressure cooker is required under the provisions of Legal Metrology Act, 2009 and has also been notified by
the Central Government for the purpose of section 4A. The prescribed rate of abatement is 25%. The applicable
rate of duty is 12% plus 2% education cess and 1% secondary and higher education cess. Compute the duty
payable.

Answer:

The value under section 4A will be (` 4000 25% of ` 4000) = ` 3000.

Excise duty payable will be ` 371 (12.36% of ` 3,000) rounded off.



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Question 15:

Determine the transaction value and the duty payable from the following particulars:

Particulars Amount (`)

Price of machinery excluding taxes and duties 5,50,000
Installation and erection expenses (machinery has been fixed to the earth) 21,000
Packing charges (primary and secondary) 11,500
Design and engineering charges 2,000
Dharmada 500

Other information:

(a) Cash discount @ 2% on price of machinery was allowed as per terms of contract since full payment was
received before dispatch of machinery.
(b) Bought out accessories valued at ` 6,000. The accessories are optional and provide ease of use of the
machinery.

(c) Central excise duty @ 12% and educational cess as applicable @ 3%.

Make suitable assumptions as are required and provide brief reasons.

Answer:
Computation of central excise duty payable

Particular Amount (`)

Price of machine excluding taxes and duties 5,50,000
Add: Packing charges 11,500
Design and engineering charges 2,000
Dharmada 500
Total 5,64,000
Less: 2% cash discount on price of machinery (11,000)
Assessable value 5,53,000
Excise duty @ 12.36% 68,350.80
Excise duty payable rounded off 68,351

Notes:

While computing the assessable value:-

1. Packing charges, design and engineering charges and dharmada have been included as such payments are
in connection with sale.


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2. Installation and erection expenses have not been included as they result in immovable property which is not
goods.

3. Value of bought out accessories has not been included as they are optional and do not provide any value
addition.

4. Cash discount has been allowed as deduction as it has been passed on to the buyer.

Question 16:

Hush Puppies Footwear is a leading manufacturer of shoes. Legal Metrology Act, 2009 requires declaration of
retail sale price on the package of shoes and shoes are also notified under section 4A of Central Excise Act, 1944
(RSP based valuation provisions). Following information has been furnished by Hush Puppies Footwear:

Aabatement available on shoes 40% of retail sale price

MRP marked on the package ` 5,000 per pair of shoes
Price at which Hush Puppies sells the shoes to their wholesalers ` 3,300 per pair of shoes
Price at which wholesalers sell the shoes to retail shop owners ` 4,000 per pair
Price at which shoes are sold by retailers to final consumers ` 4,500 (` 500 offered as
discount on printed MRP
Excise duty 12%
Education cess 2%
Secondary and Higher Education Cess 1%

Calculate excise duty payable on a pair of shoes.

Answer

Since Legal Metrology Act, 2009 requires declaration of retail sale price on the package of shoes and shoes are
also notified under section 4A of Central Excise Act, 1944 (RSP based valuation provisions), excise duty will be
payable on the basis of RSP less abatement.

Particulars `

MRP marked on the package of a pair of shoes 5,000

Less: Abatement @ 40% of RSP [40% of ` 5,000] 2,000
Value for purpose of excise duty 3,000
Excise duty @ 12% [12% of ` 1,200] 360
Education cess @ 2% [2% of ` 144] 7.20
Secondary and Higher Education Cess @ 1% [1% of ` 144] 3.60

Total excise duty payable (rounded off) 371



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Question 17:
Laxmi Engineers are manufacturers of specialty articles. Such articles are sold through retail shops.
MRP marked on the package ` 2,000 per piece
Price at which Laxmi Engineers sells articles to their wholesalers ` 1,300 per piece
Price at which wholesalers sell the articles to retail shop owners ` 1,500 per piece
Price at which articles are sold by retailers to final consumers ` 1,900 (` 100 offered
as discount on printed
retail sale price
Excise duty 12%
Education cess 2%
Secondary and Higher Education Cess 1%
Calculate excise duty payable on an article. Such articles are not covered under section 4A of Central Excise Act,
1944.
Answer

Since the articles are not covered under section 4A of Central Excise Act, 1944 (RSP based valuation provisions),
excise duty will be payable on the basis of assessable value under section 4 of Central Excise Act (transaction
value). Thus, value for purpose of excise duty will be ` 1,300 i.e., the price at which the articles are sold to
wholesalers.
Particulars `

Transaction value [price at which Zebra Engineers sells articles to their wholesalers] 1,300
Excise duty @ 12% [12% of ` 1,300] 156
Education cess @ 2% [2% of ` 156] 3.12
Secondary and Higher Education Cess @ 1% [1% of ` 156] 1.56
Total excise duty payable (rounded off) 161

Question 18:

What will be the assessable value of the excisable goods in the following cases?

(i) The price-cum-duty of excisable goods sold by A is ` 200 per unit. Excise duty @ 8% has been charged by
A on such goods. However, A comes to know that the actual rate of duty chargeable on the goods sold
by him is 12% and not 8%. A has collected only ` 200 per unit from the customers.

(ii) B sells his excisable goods @ ` 200 per unit (inclusive of excise duty @ 12%). However, it has been found
that B has collected ` 50 per piece separately.
(iii) The price of the excisable goods sold by C is ` 500 per unit. C does not charge any duty of excise in his
invoice on the belief that the goods sold by him are exempt from payment of duty vide an exemption
notification. However, he comes to know that the goods are not exempt from excise duty but are liable to
duty @ 12%.
In all the above cases education cesses have to be considered separately.


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Answer:

Particulars A B C
Price-cum duty charged (per unit) ` 200 200 500
Additional consideration (`) - 50 -
Actual price-cum duty (including additional consideration) (`) 200 250 500
Correct rate (including 3% education cesses) 12.36% 12.36% 12.36%
Value (`) 178 222 445



Duty Payable @ 12.36% 22 28 55

Question 19:

Calculate the assessable value and the excise duty payable from the following particulars:

List price of the product (inclusive of taxes) ` 8,120

Trade discount 10%
VAT 12.5%
Excise duty 12%
Education cesses as applicable

An exemption notification grants exemption of 50% of the duty payable on this product.

Answer:

Particular Amount (`)

List Price of the product 8,120
Less: Trade Discount (812)
Price net of discount but including taxes 7,308
Less: VAT
(812)


Price- cum duty 6,496
Less: Excise duty @ 6% (on account of 50% exemption)
367.70


Education cess@ 2% 7.35
SHEC @ 1% 3.68
Assessable Value 6,117


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Question 20:

A manufacturer cleared some goods by charging excise duty. The invoice provided the following details:

Particular Amount (`)

Price 30000
Excise duty @ 10.30% 3090
Total 33090

However, he came to know later that actual rate of excise duty is 12.36%. How much differential duty is payable
by him, if he is not able to recover any extra amount from the customer?

Answer:

Since the manufacturer charged only Rs. 33,090 and he is not able to recover any extra amount from customer,
this amount is required to be treated as pricecumduty. Hence, differential duty payable by him will be
computed as under:-

Particular Amount (`)

Price-cum duty 33,090
Excise duty @ 12.36%


3,640
Differential excise duty to be paid (3,640 -3,090) 550

Question 21:

Calculate assessable value and excise duty payable on the basis of following information:

Particular Amount (`)

Total invoice price 40,000
State VAT 4,000
Insurance charges for dispatch of final produce 200
Packing charges 1,000
Freight charged from factory to the place of customer 2,000
Excise duty rate is 12% and education cesses as applicable


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Answer:

Computation of excise duty payable

Particular Amount (`)

Total invoice price 40,000
Less: State VAT (4,000)
Freight charges (2,000)
Insurance charges (200)
Price cum duty 33,800
Less: Excise duty @12.36% (inclusive of 3% education cess)
3,718


Total excise duty including education cesses 3,718
Assessable value 30,082

Question 22:

YR India Ltd. sold a machine, manufactured by it, to LML at a price of ` 10,00,000 (excluding taxes and duties).
Further, following additional amounts were also charged:

Particular Amount (`)

Expenses pertaining to installation and erection of the machine at premises of 30,000
LML (machine was permanently affixed to earth)
Special packing charges 12,500
Design and engineering charges 40,000
Dharmada (charged in the invoice and recovered from LML) 10,000

Determine the total amount of central excise duty payable on the machine from the aforesaid information.

Answer:
Computation of central excise duty payable

Particular Amount (`)

Price of machine excluding taxes and duties 10,00,000
Installation and erection expenses -
Special packing charges 12,500
Design and engineering charges of the machine 40,000
Dharmada charged in the invoice 10,000
Assessable value 10,62,500
Excise duty payable @ 12.36% [inclusive of 3% education cesses] 1,31,325


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Notes:

1. Installation and erection expenses have not been included in the assessable value as after the installation
and erection, machine has been permanently affixed to earth and thus, it has resulted in an immovable
property.

2. Special packing charges and design and engineering charges have been included in the assessable value as
such payments are in connection with sale.
3. Dharmada charged in the invoice and recovered from the customer has been included in the assessable
value.
Question 23:

(i) RG Ltd. wants to claim SSI exemption in the year 2014-2015. Its clearances for the year 2013-2014 are ` 3
crore. RG Ltd. manufactures goods bearing brand name of PKL Ltd. Is RG Ltd. eligible for SSI exemption?

(ii) MP Ltd. wants to claim SSI exemption in the year 2014-2015. Its clearances for the year 2013-2014 are ` 3
crore. MP Ltd. manufactures goods bearing brand name of LK Ltd. in rural area. Is ABC Ltd. eligible for SSI
exemption?

Answer:
(i) RG Ltd. is not eligible for SSI exemption as it manufactures goods bearing brand name of others.

(ii) MP Ltd. is eligible for SSI exemption even though the goods manufactured by it bears the brand name of
others as it manufactures goods in rural area.

Question 24:

OPG Kitchen is a leading manufacturer of pressure cookers. Legal Metrology Act, 2009 requires declaration of
retail sale price on the package of pressure cookers and pressure cookers are also notified under section 4A of
Central Excise Act, 1944 [Retail Sale Price (RSP) based valuation] with notified rate of abatement of 25%.
Calculate excise duty payable on 50 pieces cleared during October, 2014 using the following information
furnished by Safe Kitchen assuming the rate of excise duty as 12% plus 2% education cess and 1% secondary
and higher education cess:

No. Of Particulars
Pieces Sold
10 RSPs printed on the package of pressure cooker are ` 4,500 and ` 3,800.
20 RSP printed on the package of 15 pieces sold in Delhi is ` 3,000 per piece
RSP printed on the package of 5 pieces sold in Haryana is ` 2,800 per piece
20 RSP printed on the date of removal of package from factory is ` 3500 per unit.
However, after removal from factory RSP is increased to ` 4,100 per piece

Would the provisions of section 4A of Central Excise Act, 1944 apply had the goods not been notified by Central
Government and manufacturer voluntarily affixed RSP on the products?


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Answer:
Since Legal Metrology Act, 2009 requires declaration of retail sale price on the package of pressure cooker and
pressure cookers are also notified under section 4A of Central Excise Act, 1944 (RSP based valuation provisions),
excise duty will be payable on the basis of RSP less abatement.

Computation of central excise duty payable

Particular Amount (`) Amount (`)
RSP of 10 pieces (10 ` 4,500) 45,000
Less: Abatement @ 25% (11,250)
Assessable value 33,750
RSP of 15 pieces sold in Delhi (15 X ` 3,000) 45,000
Less: Abatement @ 25% (11,250)
Assessable Value 33,750
RSP of 5 pieces sold in Haryana (5 X ` 2,800) 14,000
Less: Abatement @ 25% (3,500)
Assessable Value 10,500
RSP of 20 pieces sold in Delhi (20 X ` 4,100) 82,000
Less: Abatement @ 25% (20,500)
Assessable Value 61,500
Total Assessable value 1,39,500
Excise duty @ 12% 16,740
Education cess @ 2% 335
Secondary and Higher Education Cess @ 1% 167
Total Excise duty payable 17,242

Notes:

1. Where more than one RSP is declared on the package of excisable goods, the maximum of such price will be
deemed to be the RSP.

2. If different RSPs on different packages are declared for different areas, each such RSP is deemed to be the
RSP.

3. If RSP on the package is increased after removal from factory, increased RSP would be deemed to be the
RSP.

4. All goods on which RSP has been declared will not be covered under the provisions of section 4A. Only
when the declaration of RSP on the goods is mandatory under the Legal Metrology Act, 2009 or under any
other law and such goods have been notified by the Central Government for the purpose of section 4A,
then the goods be valued under section 4A. Thus, provisions of section 4A of Central Excise Act, 1944
would not apply if the goods had not been notified by Central Government and manufacturer voluntarily
affixed RSP on the products.