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1
st
March, 2003
Notification No. 11/2003 - Central Excise (N.T.)
In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby
makes the following rules to amend the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000,
namely,-
1. (1) These rules may be called the Central Excise Valuation (Determination of Price of Excisable Goods) Amendment
Rules, 2003.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (herein after referred to as the
said rules), for rule 5, the following shall be substituted, namely:-
'5. Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act
except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the
value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place
of removal upto the place of delivery of such excisable goods.
Explanation 1.- "Cost of transportation" includes -
(i) the actual cost of transportation; and
(ii) in case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles
of costing.
Explanation 2. - For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal,
where the factory is not the place of removal, shall not be excluded for the purposes of determining the value of the excisable
goods.'.
3. In the said rules, in rule 6, the Explanation shall be renumbered as Explanation 1, and after the Explanation so
renumbered, the following shall be inserted, namely:-
" Explanation . 2- Where an assessee receives any advance payment from the buyer against delivery of any excisable goods,
no notional interest on such advance shall be added to the value unless the Central Excise Officer has evidence to the effect
that the advance received has influenced the fixation of the price of the goods by way of charging a lesser price from or by
offering a special discount to the buyer who has made the advance deposit.
Illustration 1. - X, an assessee, sells his goods to Y against full advance payment at Rs. 100 per piece. However, X also sells
such goods to Z without any advance payment at the same price of Rs. 100 per piece. No notional interest on the advance
received by X is includible in the transaction value.
Illustration 2.- A, an assessee, manufactures and supplies certain goods as per design and specification furnished by B at a
price of Rs. 10 lakhs. A takes 50% of the price as advance against these goods and there is no sale of such goods to any
other buyer. There is no evidence available with the Central Excise Officer that the notional interest on such advance has
resulted in lowering of the prices. Thus, no notional interest on the advance received shall be added to the transaction value.".
Alok Shukla
Deputy Secretary to the Government of India
F.No. 334/1/2003-TRU
Footnote.- The principal rules were published in the Gazette of India vide notification No. 45/2000-Central Excise (N.T.), dated
the 30
th
June, 2000, GSR 575 (E), dated the 30
th
June, 2000.