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CORPORATE LAWYER: EXCISE DUTY (GST) - 'Dharmade' paid voluntarily by customers cannot be added for the purpose of calculating excise duty. Order of CESAT set aside. Earlier decision of SC in Panchmukhi held to be not a good law.


BENCH : Three Judges

It is in vogue that the purchaser of highly excisable goods are paying apart from consideration for the goods, ' dharmade ' - charity, to the Seller.

This issue was earlier dealt by Supreme Court in Panchmukhi case in which the dharmade was allowed to be added to the consideration price while levying the Excise Duty.

In the case titled as " D.J. Malpani V/s Commissioner of Central Excise", the Supreme Court was seized of the matter in which the issue which was pending consideration before the court was whether Dharmade paid voluntarily by customers is a part of consideration price for the purpose of calculation of excise duty.

The Apex Court overrule its decision in Panchmukhi and has held that 'Dharmade - charity' paid voluntarily by customer to the seller cannot be said to be consideration price for the goods and is therefore not liable for the levy of Excise Duty. 

It was further held that the money received on account of Dharmade by Seller is credited to charity and is held in trust by seller, therefore, no excise duty is leviable. While Setting aside order of CESAT and of the authorities below.

In view of the above, the relief was given to the appellant who was in the business of chewing tobacco, and the appeal succeeded before the apex court. 


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