Excise Duty -Rule 7

Jagdish Trivedi (Practicing CA) (41 Points)
Replied 05 September 2009

Hi dear,

Excellent query. U r right. According to the revised definition of factory it extend the terms upto the client place. But when buyer is not a related party to the assessee and other prescribed conditions are fulfilled as given undercover section 4(1)(a), then the transaction value would be the one which provided upto the place of removal (customer place).

The said rule, as defined under section 4(1)(b), is applicable in the case when one of the condition prescribed under section 4(1)(a) has not been satisfied. .i.e.

1. goods must be sold 2. must be sold for delivery at the time and place of removal 3. buyer must not be related person 4. price must be sole consideration

The above 4 conditions are essential in nature and needs to be satisfied on each removal, otherwise valuation has to be made under applicable rule.

santhosh (CA) (636 Points)
Replied 06 September 2009

Hi there Thanks For the Reply

But ,Rule 7 states

RULE 7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as “such other place”) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment.

If you notice RULE 7 ,it states all other conditions are satisfied.,Except Time and Place of Removal.This seems to be absurd after amendement isnt . Can you get my Question Properly now

CA Kingsley (Audit Manager) (470 Points)
Replied 06 September 2009

Hey. I got answer to query. The Excise act says that you cant remove goods from factory without payment of excise duty. so when u stock transfer, then the rules for stock transfer will definitely apply. When u transfer from warehouse to unrelated parties, with price being sole consideration blah blah, then the transaction value will be applicable. Is your doubt clear?

Jagdish Trivedi (Practicing CA) (41 Points)
Replied 06 September 2009

are dear,

i said only dat, rule 7 is contradicting and, in such a case it was requested to the central govt. to amend the said rule, but no progress till today.

unless it get amended, the effect of the same will bcom redudant. so as of today, section 4(1)(a) prevails, hwever by any rest of condition if it would not possible to apply the said section then rule 11 would apply, whch refer indirectly to rule 4 best for determining transaction value.

got it now or not? don't worry u may revert for the same.

santhosh (CA) (636 Points)
Replied 07 September 2009

so trivedi you agree with my thought that law and rule is redundant/absurd .

M.BALRAJ (EXECUTIVE ACCOUNTS) (22 Points)
Replied 27 March 2010

Dear All,

This is balraj . i have one doubt in Cental Excise we have selling to our customer without Excise duty againts customer NT letter . shall u guide me how Show in ER- 1 Return

CA Amit Kumar Khaitan (Research Analyst) (360 Points)
Replied 28 March 2010

Dear Santosh,

I think i have trhe answer..

The intention and implication of the amendment of the definition of Place of removal is that the Dept. wants to include the cost of transport of goods from factory/ warehouse to the Depot in the transaction value..

For further clarification please send me a PM as this is a very old post........ i dont feel like elaborating more

M.BALRAJ (EXECUTIVE ACCOUNTS) (22 Points)
Replied 29 March 2010

Dear All,

This is balraj . i have one doubt in Cental Excise we have selling to our customer without Excise duty againts customer NT letter . shall u guide me how Show in ER- 1 Return

HS Negi (Senior Executive- F&A) (590 Points)
Replied 30 March 2010

Dear Balraj

Please ask the notfication no. on which you are selling the material availing exemption. You should to intimate the deptt for revenue point of view also . Otherwise you will be in problem while in excise audit.

Regards

Harendra Singh Negi