If the normal price of goods is not ascertainable because such goods are not sold or for any other reason, the nearest equivalent price will be determined in the manner provided in the Central Excise Valuation Rules, 1975. If the price at the time of removal of goods from the factory is not known but it is dependent on the time and place of delivery, such price less cost of transportation from the place of removal to the place of delivery will be take to be the assessable value. If excisable goods are consumed within the factory, the value of comparable goods produced by another person or the normal wholesale price of such goods will be treated as assessable value. The assessable value does not include the amount of excise duty, sales tax and other taxes, if any, payable on such goods and subject to rules made in this behalf, the trade discount allowed under normal wholesale business practices at the time of removal. In case a tariff rate has been specified by law, the assessable value must be calculated on the basis of such tariff rate.
Excise duty is paid on the basis of normal price even if free samples are given.
Cost of production is Rs10,000 and profit margin is Rs1,000. Sales tax is five per cent. In this situation, excise duty is Rs1,100 ie 10 per cent of Rs11,000. Sales tax is included for the purpose of excise duty. The goods should be covered by the provisions of Standard of Weights and Measures Act.