Cost of production of a product manufactured by ABC Ltd. worked out to ₹350 per piece. Out of the total produced pieces, company sold 120 pieces @ ₹700 per piece to industrial consumers, 70 pieces to a Central Government

Calculation of excise duty payable Particulars No. of pieces Rate per pc. ₹ Total ₹ Industrial Consumers 120 700 84,000 Central Government Department 70 690 48,300 Wholesaler 210 720 1,51,200 Retailers 70 800 56,000 Others (Free sample) (Rule 4) 20 720 14,400 Assessable Value 3,53,900 Basic excise duty @ 12% (3,53,900 x 12%) 42,468 Education Cess @ 2% 849 SAH Cess @ 1% 425 Total Excise Duty 43,742 As per Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000, value of the excisable goods shall be based on the value of such goods sold by the assessee for delivery at any other time nearest to the time of removal of goods under assessment. Rule 4 cannot be applied here as the dates/times of removal are not available in the question. Hence best judgement method under Rule 11 has been applied. Normal transaction value (price of the greatest aggregate quantity) ie. Wholesale price of highest quantity of 210 has been taken. The pieces returned by Government department and subsequently sold to others at lesser price will also be charged at the value at which the same were first removed because the same have not entered back in to the factory after its first removal.