Judgment:
1. By the impugned order, the Collector (Appeals) allowed deduction of purchase tax from the sale price of electric fans manufactured by the respondents. On hearing both sides, we observe that the department wants this deduction to be disallowed on the ground that the said purchase tax is paid not on the electric fans which are the excisable goods required to be valued and assessed for the purpose of charge of Central Excise Duty but on the raw materials purchased by the respondents for the manufacture of electric fans. We agree with the department. Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944 permits deduction of sales tax and other taxes, if any, payable on the excisable goods which are the subject of assessment. Such goods, in the present case, are electric fans. Deduction towards sales tax or purchase tax paid on raw materials, which go into the manufacture of the fans, is not permissible. Such tax on the raw materials becomes a part of the price paid for the raw materials and enters into the manufacturing cost of the fans. The respondents contended before us that purchase tax on raw materials was levied by the West Bengal State Government in lieu of sales tax which the said State Government could not impose on inter-state sales. Whatever may be the intentions of the State Government, the legal position remains that sales tax or purchase tax paid on the raw materials of electric fans cannot be deducted while determining assessable value of the electric fans themselves.
2. Accordingly, we set aside the order of the Collector (Appeals) in so far as it relates to purchase tax and restore the order of the Assistant Collector in respect of purchase tax. The appeal of the department is allowed in these terms.