The document outlines the valuation rules under the Central Excise Act to determine the assessable value of excisable goods if the value cannot be determined under section 4(1)(a) of the Act. The key points covered are: (1) the Central Excise Valuation Rules 2000 provide the methodology; (2) if goods are not sold at removal, the value will be based on similar goods sold nearest to removal with adjustments; (3) samples distributed free are valued based on rule 4; and (4) if sale price is not the sole consideration, the value includes additional consideration received.

1. VALUATION RULES

2. Valuation rules to determine assessable
value
• Sec.4(1)(b) of the Central Excise Act states
that if “Assessable Value” can’t be determined
u/s 4(1)(a),it shall be determined in such
manner as may be prescribed by rules.
• Under these powers , Central Excise Valuation
(Determination of Process of Excisable Goods)
Rules ,2000 have been made effective from 1-
7-2000.These rules are discussed below-

3. Value nearest to time of removal if
goods not sold
• If the goods are not sold at the time of
removal then the value will be based on the
value of SUCH GOODS sold by assessee at any
other time nearest to the time of removal
subject to reasonable adjustments. [Rule 4].

4. Valuation of samples
• CBE&C, vide circular no.813/10/2005 has
clarified that in case of samples distributed
free, valuation should be done on basis of rule
4(earlier it was dine in the basis of rule 8 i.e.
cost of production plus 10%).

5. Goods sold at different place
• Some times goods may be sold at place other
than the place of removal
• E.g. in case of FOR delivery contract. In such
cases actual cost of transportation from place
of removal upto place of delivery of the
excisable goods will be allowable as
deduction. cost of transportation can be
either on actual basis or on equalized
basis.[Rule 5]

6. Valuation when price is not the sole
consideration
• If price is not the sole consideration for sale,
the “Assessable Value” will be the price
charged by assessee, plus money value of the
additional consideration received.[Rule 6 of
Central Excise Valuation Rules].

7. • The buyer may supply any of the following
directlry or indirectly ,free or at reduced cost-
• Materials,components,parts & similar items
• Tools,dies,moulds,drawings,blue prints etc
• Materials consumed, including packaging
materials

8. Sale at Depot/Consignment agent
• Sec 4(3)(c)(iii)provides that in case of sale at
depot/consignment agent the depot will be the
place of removal . As per section 4(3)(cc) in case
of sale from depot/place of consignment agent
time of removal shall be deemed to the time at
which the goods are cleared from factory.
• Duty will be payable on the price prevailing at the
depot as on date of removal from factory.
• Price at which such goods are subsequently sold
from the depot is not relevant for purpose of
excise valuation.[Rule 7]

9. Valuation in case of captive
consumption
• The valuation shall be done on basis of cost of
production plus 10%(it was 15% upto5-8-
03)(Rule 8 of valuation rules)
• Cost of production is required to be calculated
as per CAS -4
• It means goods are not sold but consumed
within the same factory or other of same
manufacturer(i.e. inter-unit transfer)

10. Sale to a ‘RELATED PERSON’
• As per sec 4(3)(b) of CEA persons shall be
deemed to be related if-
• They are interconnected undertakings
• They are relatives
• Amongst them buyer is a relative & a
distributor of assessee
• They are so associated that they have interest
directly or indirectly in the business of each
other.

11. Valuation when sale is through related
person
• If sale is made through related person price
relevant for valuation will be normal
transaction value at which related buyer sales
to unrelated buyer .
• Normal transaction is the transaction value at
which the greatest aggregate quantity of
goods are sold.

12. Best judgement assessment
• If assessment is not possible under any of the
foregoing rules,assessment will be done by
‘best judgement’. If value of any excisable
goods cannot be determined under foregoing
rules,the value shall be determined using
reasonable means consistent with the
principles & general provisions of these rules
& sub sction(1) of section 4 of the act(Rule 11)

13. • THANK YOU