Gourav Choudhary (CA and CS finalist) (143 Points)
23 September 2011Dear friends,
A company is transferring the goods from factory to depot and is selling the products from depot. It is preparing the excise invoice at the stock transfer rate of that day decided by the company. The company is then calculating the differential excise duty if the previous days assessable value of the maximum aggregate quantity sold is greater than the stock transfer value of that day. Whether the treatment is correct?
HS Negi
(Senior Executive- F&A)
(590 Points)
Replied 24 September 2011
Dear gourav
not clear. Please clarify through example.
Regards
HS Negi
Gourav Choudhary
(CA and CS finalist)
(143 Points)
Replied 24 September 2011
Ok Mr. Negi. Thanks for your reply.
Suppose the company has its factory at Meghalaya. It is transferring goods to Guwahati where it has its godown on 24th September,2011. The stock transfer rate fixed by company is Rs.100. So the excise invoice was raised taking Rs. 100. The rate at which the maximum aggregate quantity was sold at Guwahati on 23rd September,2011 was Rs. 105.
Now, the company is comparing the stock transfer rate with previous days rate of maximum aggregate selling quantity. If stock transfer rate is greater than previous days price, then co. is ignoring it. But, in case stock transfer rate is lower than previous days rate, it is calculating differential excise duty on the differential rate.
In the above example, comparing Rs. 105 with Rs. 100 and is calculating differential excise duty on Rs. 5 (Rs.105 - Rs.100) as Rs. 100 lower than Rs. 105.
I have the following questions in my mind:
1) Is the treatment followed by company correct?
2) Can the company compute differential excise duty taking rate of maximum aggregate selling quantity as on 24th September,2011?
3) Can the company claim the credit in case the stock transfer rate is greater than rate of selling maximum aggregate quantity?
Gourav Choudhary
(CA and CS finalist)
(143 Points)
Replied 30 September 2011
Mr Negi,
Waiting for your reply.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 30 September 2011
selling of same goods from same depot at diff prices may drag the assessee under the violation of valuation under central excise,
fair practice is to raise supplimentary invoice for each invoice issued by the depot and pass on the duty to the buyer ( if depot has issued cenvable invoice to final buyer)
for diff of duties, if paid extra, the company has to account the invoices issued by the depot, and pay only the excess duty after deducting the credits admissible. ( a working sheet per month should be kept in records)
above all the practice is not fair to clear the same goods at diff prices without any proper justification, for such cases the company has to issue seperate lots under separate invoices to depot for sale at diff prices.
R P Ananthakumar
(Sr. Officer - Central Excise/Cash)
(514 Points)
Replied 30 September 2011
Dear Gourav,
1. that the treatment is worng and violation of excise rules
2. You findout the difference between the item sold price at Branch and price adopted at time the of clearance from factory to branch for the same item. It it is not possible,
Your are selling a product in different price on same day at branch. Hence you have maintained different price for same product at branch. In this condition, you have to take maximum price of product sold on that date. Further you have to comapre on lot also
3. It is very diffcult to clam excess duty, which you have paid while transfereing the goods to branch
R P Ananthakumar
(Sr. Officer - Central Excise/Cash)
(514 Points)
Replied 30 September 2011
Dear Gourav,
1. that the treatment is worng and violation of excise rules
2. In this case, difference price is " price of the product that u have adopted while transfertng to branch and sold price of the same product at branch " You have to pay the differential duty for the differencial price on the following condition.
a) if the sold price is higher than transfered price, you have to pay the differential duty.
b) if the sold price is lower then transfered price, no need to pay the differential duty, you may for claim of excess duty, I think it is not possible to claim easily.
Uttam
(AccountS Officer)
(30 Points)
Replied 14 May 2012
Dear Sir,
Any body having in excel format regarding excise, how to maintain and how to keep record cenvat with paymnet challan. Pls send me.
CAclubindia
