Impact of FIAT India Case-Central Excise

The Hon’ble Supreme Court, in the Fiat India case, has cautioned against drawing general conclusions and inferences, quoting the truism stated by Lord Halsbury that “a case is only an authority for what it actually decides and not for what may seem to follow logically from it” After examination of the issue as to whether the declared transaction value can be rejected in all cases where the transaction value is lower than the manufacturing cost and profit, the Ministry has clarified vide Circular No. 979/03/2014-CX dated 15th January, 2014 that mere sale of goods below the manufacturing cost and profit cannot be taken as the sole basis for rejecting the transaction value. The Supreme Court, in the Fiat India case, has not ruled that the subsidy component provided by the Government would tantamount to consideration flowing from the buyer to the seller and therefore, should be included in the assessable value of an excisable good in terms of the extant Valuation Rules. It is, therefore, clarified by Central Board of Excise & Custom (CBEC) that in respect of fertilizers for which subsidy is provided by the government, the excise duty will be chargeable on the MRP and not on the subsidy component provided by the Government.