09 March 2010
My sister concern import some machines at free of cost by paying full custom duty and frieght charges on it. Now they want to sell to us after some modifications on it. We are only trader not manufacturer. but they want to charge excise duty from us on the value which we are supposed to sell to our customer. Kindly clarify whether they should charged excise duty on whole price or on only modification charges paid by them
09 March 2010
Assuming that your sister concern has not imported capital goods. Here to examine whether modification made on the machine is sufficed to take it as manufacturing activity and in case the modification are not major one, then the treatment shall be different.
So please come out with these information to reply properly.
10 March 2010
In case there is manufacturing activity, then the valuation shall be carried out in the valuation rules in which the cost construction method shall be applied. In this rule, the cost plus 10% profit margin would construed assessable value in terms of the Rule 8.
Though duty paid on such machine, shall be available as CENVAT credit.
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