Please suggest on excise transaction

This query is : Resolved

abhishek (Querist)
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28 September 2011 1) We are ABC Pvt Ltd. registered under central excise for manufacturing division. We have received a order from BBC Pvt Ltd for manufacturing XYZ which includes product X & Y as raw materials and our offer value is of Rs 500000/-(we have not consider cost of product Y as it is going supplied on free basis by BBC pvt ltd which is costing to Rs 550000/- because BBC Pvt ltd has a rate contract with his supplier and he gets product Y at discounted rate has compared to other suppliers). So how this transaction will be done without violating the excise rules.
2)Same as above Question no 1 only difference is we have received order from BBC Pvt Ltd. but Consignee is XYZ Pvt Ltd which is a SEZ Unit and excise duty is not applicable under ARE 1 which we will receive from XYZ. So how this transaction will be done without violating the excise rules. how to proceed with transaction if goods are supplied by customer of RS 550000/-.

rajula gurva reddy

rajula gurva reddy (Expert)
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30 September 2011 The cost of the free supply material has to be loaded to the value for you have agree to supply in terms of Valuation Rules.Accordingly you have to pay duty on Rs.500000+550000,if the profit element and administrative charges already included in the price you have agreed to supply for.
In respect of SEZ supply, the supply has to consider as export. Though no duties are payable, you have to load the value in the above said manner.