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Central excise

BIKASH AGARWAL (ASSISTANT CS) (89 Points)

11 January 2012

OUR COMPANY RECEIVED FREE SUPPLY OF DIES AND MOULDS FROM THE A. LTD. FOR MANUFACTURING PLASTICS BOX FOR THEM. AS WE RECEIVED MOULDS FREE OF COST AND IT WAS RETURNED BACK TO A. LTD. AFTER 5 YEARS WHEN THE PURCHASE ORDER WAS COMPLETED. IS THERE ANY EXCISE WE HAVE TO PAY WHILE DESPATCHING GOODS TO A. LTD. REGARDING MOULD AND DIES? THE COMPANY IS ALSO SUPPLYING FREE STICKER AND LABELS WHICH ARE USED DURING MAKING OF GOODS. IS ANY EXCISE IS PAID ON THAT PACKING GOODS WHICH ARE SUPPLIED AT FREE OF COST?

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9 Replies

Suraj Agarwal (Self Practitioner in Income Tax & GST) (782 Points)
Replied 11 January 2012

Hi Bikash,

Please specify your relationship with A LTD.

whether it is a Employer to Employer Relatioship OR Employer to Employee relationship.

Whether A Ltd have any control or supervision power upon you ??

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BIKASH AGARWAL (ASSISTANT CS) (89 Points)
Replied 11 January 2012

A LTD. IS OUR CUSTOMER. WE GET ODER FROM THAT COMPANY AND WE MANUFACTURE GOODS AS PER THEIR MOULD SPECIFICATION AND THEN WE SELL THAT GOODS TO A LTD. NO ANY RELATIONSHIP.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 11 January 2012

RULE 6. Where the excisable goods are sold in the circumstances specified in clause (a) of sub section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.
Explanation 1 - For removal of doubts, it is hereby clarified that the value, apportioned as appropriate, of the following goods and services, whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the price actually paid or payable, shall be treated to be the amount of money value of additional consideration flowing directly or indirectly from the buyer to the assessee in relation to sale of the goods being valued and aggregated accordingly, namely : -

(i)	value of materials, components, parts and similar items relatable to such goods;
(ii)	value of tools, dies, moulds, drawings, blue prints, technical maps and charts and similar items used in the production of such goods;
(iii)	value of material consumed, including packaging materials, in the production of such goods;
(iv)	value of engineering, development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods.

Explanation 2. - Where an assessee receives any advance payment from the buyer against delivery of any excisable goods, no notional interest on such advance shall be added to the value unless the Central Excise Officer has evidence to the effect that the advance received has influenced the fixation of the price of the goods by way of charging a lesser price from or by offering a special discount to the buyer who has made the advance deposit.
Illustration 1. - X, an assessee, sells his goods to Y against full advance payment at Rs. 100 per piece. However, X also sells such goods to Z without any advance payment at the same price of Rs. 100 per piece. No notional interest on the advance received by X is includible in the transaction value.
Illustration 2. - A, an assessee, manufactures and supplies certain goods as per design and specification furnished by B at a price of Rs. 10 lakhs. A takes 50% of the price as advance against these goods and there is no sale of such goods to any other buyer. There is no evidence available with the Central Excise Officer that the notional interest on such advance has resulted in lowering of the prices. Thus, no notional interest on the advance received shall be added to the transaction value.

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

Suraj Agarwal (Self Practitioner in Income Tax & GST) (782 Points)
Replied 14 January 2012

Hello Bikash,

I think ur problum is solved after the reply by Mr. U S Sharma. His reply is sufficient & complete. but still u hv any problem, specify it.

BIKASH AGARWAL (ASSISTANT CS) (89 Points)
Replied 14 January 2012

THANKS TO ALL MY SENIORS AND FRIENDS FOR SUCH A GOOD SUPPORT.

BUT STILL THERE IS SOME DOUBT BECAUSE I RECEIVED A SHOW CAUSE FROM CENTRAL EXCISE REGARDING FREE SUPPLY OF GOODS TO US. AS PER THE TENDER, A. LTD. WILL GIVE US STICKER, LABEL & MOULD AT FREE OF COST WHICH WE WILL BE ATTCAHED TO OUR MANUFACTRUING PLASTIC BAGS AND THEN SOLD TO THE A. LTD. BUT C.E. DEMANDING DUTY ON FREE SUPPLY. BUT AS PER OUT TERMS AND CONDITION WE SHOULD CHARGE TWO DIFFERENT RATES FOR WITH LABEL AND WITOUT LABEL. SO PLEASE JUSTFY ME WHETHER WE ARE CORRECT IN NOT CHARGING DUTY ON FREE GOODS. MOREOVER, THE DIES & MOULD SUPPLIED BY THE PARTY ARE RETURNED BACK TO THEM AS PER THE CONTRACT, AFTER THE CONTRACT IS OVER. WHAT SHOULD BE THE TREATMENT REAGRDING ABOVE?

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 14 January 2012

Department is right

if you have rate diff between with and without customer supplies, then fix the same as diff on customer supplies.

dies and moulds have its own working life, which should be divided into total period of use, ( in your case department will fix that dies was used 100% during the period of 5 years and useless after that), so total value of dies should be added to your sales over 5 years.

SHAFIQ (owner) (22 Points)
Replied 19 January 2012

HELLO SIR,

I WANT TO KNOW MY ASSESSEE CODE ON ONLINE EXICE DUTY THIS IS A MY PAN NO. AAIPI12961. HOW,

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 19 January 2012

Originally posted by : SHAFIQ
	HELLO SIR, I WANT TO KNOW MY ASSESSEE CODE ON ONLINE EXICE DUTY THIS IS A MY PAN NO. AAIPI12961. HOW,

look into

1) your aces account by clicking ST-2 ( view REG)

2) into physical copy of your RC

3) contact your range officer

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beforehand i request you to recheck your data at your hand before asking any query to anybody, as the pan no posted by yourself is not a valid number.

Ashish Shah (Partner) (63 Points)
Replied 23 February 2012

can any body explain about steel trader who keeps the stock in common warehouse, where the trader has to take excise registration for the trading activity?

If the trader is cutting steel plates also in his own premises not in the ware house does the cutting of plates will be clubed with excisable trading activity?

please mail your answers to ashpint_79 @ yahoo.com

Ashish Shah