Exchange rate in case of Export for Excise Duty calculation

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Matang (Querist)
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05 August 2008 All Experts.... pls. reply....

I am CA final student. I have a query about export sales made by HEOU.

1. When an Export sale is to be booked in Books of account, we have convert it in to Indian Rupee (base currency) for booking sales. As per accounting standard (AS11) we have to convert it by using exchange rate on the transaction date i.e. Bank rate.
2. According to Excise dept., we have to use exchange rate as per Government notification for calculation of excise duty.

3. If we follow point 1 & 2 sales as per excise records & sales as per books of account will be different; and at any time (e.g. during audit) excise dept. will ask to match the sales as per books of account.

Now, my questions are…

1. Is it necessary to use exchange rate as per Government notification for calculation of excise duty? If Yes, why? Because excise duty is to be paid on “transaction value” and there is no specific mention in Central Excise Act to use exchange rate as per Government notification for calculating excise duty (unlike in Customs Act, where there is specifically mention to use exchange rate as per Government notification).

2. If we have to use exchange rate as per Government notification for calculation of excise duty, how can we match the sales data as per books of account and as per excise records, as required by Excise dept.? And will they accept the argument for difference in sales.

Matang Parekh

Sreenath

Sreenath (Expert)
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20 November 2008 Hi,

There is no need to use the Government notified Exhange rate we can use the Bank rate for Excise purpose.