Mrp valuation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 March 2015 RESPECTED SIR
WE HAVE UNDER THE PROCESS OF AUDIT AND OUR PRODUCT IS MRP BASE AND THE OFFICER ASK HOW YOU CALCULATE THE MRP.PLS GUDIE US

ANIL JANGID

ANIL JANGID (Expert)
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29 March 2015 The procedure of valuation of calculation of central excise duty may be understood with the following example:

MRP is affixed on product "X" is Rs. 100/-. Rate of Rebate is 40% in terms of notification no. 2/2006. Rate of Excise Duty is 16% and Cess 3% (2% + 1%). Rate of Sales Tax (VAT) is 3%. Whole sale price of the product is Rs. 65 with duties of excise and local taxes.

Now for the purpose of Excise duty the following steps should be taken:

1

MRP

Rs. 100

2

Less Rebate @ 40%

Rs. 40

3

Value on excise duty to be paid

Rs. 60

4

Amount of Excise Duty of Rs. 60

Rs. 9.888

a. Basic Excise Duty @ 16% = Rs. 9.6

b. Education Cess @ 2% = Rs. 0.192

c. SH Education Cess @ 1% = Rs. 0.096

5

For the purpose of calculation of excise duty - actual sale price to be ignored.

6

Local taxes like sales tax shall be ignored

7

Any discount whether quantity discount / volume discount or performance discount shall be ignored

8

All other adjustments prescribed under section 4 shall be ignored.

9.

Provisions of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 shall be ignored.