Query on rate difference by central excise

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 July 2011 we are manufacturing ingots,We have been queried by the excise department that what is the reason for your finished goods basic value being 23000 and where as others in the same region is selling the same product at basic value 27000? what should be the reply so that we do not attract unwanted attention from the authorities?

Durga prasad Ambati

Durga prasad Ambati (Expert)
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27 July 2011 You should submit the your production cost with the proper way.. i.e... Attested by cost accountant.

You should Give to Excise Authourities Clear Details of your production. with proper Documents. Other wise you are liable to pay penalties.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2011 thank you sir. can you be kind enough to provide us some format or example of the calculation submitted to the department?Please advice if any other precaution needs to be taken?

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U S Sharma

U S Sharma (Expert)
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05 August 2011 transportation and handling charges are additional burden to assesee, and its the basic concept for increase of valuation.

use rule 5, (ii) to reply the department
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RULE 5. Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal up to the place of delivery of such excisable goods.
Explanation 1. - “Cost of transportation” includes -
(i) the actual cost of transportation; and
(ii) in case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles of costing.
Explanation 2. - For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal, where the factory is not the place of removal, shall not be excluded for the purposes of determining the value of the excisable goods.

http://www.cbec.gov.in/excise/cxrules/cx-rules-valuation.htm