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Goods notified under Section 4A

Name of Goods

Abatement  notified  by Central Government

Biscuits

30%

Toothbrush

30%

Photographic Camera

30%

Pressure Cooker

25%

Value as per Section 4A= RSP Printed on package  -Abatement

 

Important Points

If more than one RSP Declared

Maximum of these will be RSP

 

If different RSP is for different areas

In this cases, maximum of RSP is not to be taken

Different RSP for sales in different areas to be taken

 

RSP not mandatory for wholesale packages

If goods are sold in bulk in wholesale, in this case RSP declaration is not mandatory.

So Valuation as per section 4A cannot be made.

 

Exam Questions

Question 10
Decent 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 Decent Footwear:

Abatement available on shoes  25% of retail sale price
MRP marked on the package `  Rs.2,000 per pair of shoes
Price at which Decent Footwear sells the shoes to their wholesalers Rs.1,300 per pair of shoes
Price at which wholesalers sell the shoes to retail shop owners Rs.1,500 per pair
Price at which shoes are sold by retailers to final consumers Rs.1,900 (Rs.100 offered  𝛼 discount on printed retail sale price
Price at which shoes are sold by retailers to final consumers  Rs.1,900 (Rs.100 offered as discount on printed retail sale price
Excise duty 12.50%

-a-

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 `  Rs.
MRP marked on the package of a pair of shoes  2,000
Less: Abatement @ 25% of RSP [25% of Rs.2,000]  500
Value for purpose of excise duty  1,500
Excise duty @ 12.5% [12.5% of Rs.1,500]  187.50
Excise duty payable (rounded off)  188

-ea-

Question 11
Zebra Engineers are manufacturers of specialty articles. Such articles are sold through retail
shops.

MRP marked on the package `  Rs.2,000 per piece
Price at which Zebra Engineers sells articles to their wholesalers Rs.1,300 per piece
Price at which wholesalers sell the articles to retail shop owners Rs. 1,500 per piece
Price at which articles are sold by retailers to final consumers  Rs. 1,900 (Rs.100 offered as discount on printed retail sale price
Excise duty 12.50%

Calculate excise duty payable on an article. Such articles are not covered under section 4A of
Central Excise Act, 1944.

-a-

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 Rs.1,300 i.e., the price at which the articles are sold to wholesalers.

Particulars `  Rs.
Transaction value [price at which Zebra Engineers sells articles to their wholesalers] 1,300
Excise duty @ 12.5% [12.5% of Rs.1,300] 162.5
Excise duty payable (rounded off)  163

-ea-

Question 12
Safe 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 September, 20XX using the
following information furnished by Safe Kitchen assuming the rate of excise duty as 12.5%.

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

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?

-a-

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 Ex cise
Act, 1944 (RSP based valuation provisions), excise duty will be payable on the basis of RSP
less abatement.

Particulars   Rs.  Rs.
RSP of 10 pieces (10 × Rs.4,500) (Note-1)  45,000  
Less: Abatement @ 25%  11,250  
Assessable value (A)   33,750
RSP of 15 pieces sold in Delhi (15 × Rs.3,000) (Note-2)  45,000  
Less: Abatement @ 25%  11,250  
Assessable value (B)    33,750
RSP of 5 pieces sold in Haryana (5 × Rs.2,800) (Note 2)  14,000  
Less: Abatement @ 25%  3,500  
Assessable value ©   10,500
RSP of 20 pieces (20 × Rs. 4,100) (Note-3)  82,000  
Less: Abatement @ 25%  20,500  
Assessable value (D)    61,500
Total assessable value (A) +(B)+(C)+(D)    1,39,500
Excise duty @ 12.5% [12.5% of Rs. 1,39,500]    17,437.50
Total excise duty payable (rounded off)    17,438

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.
      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.

  1. Excise
  2. Valuation
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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