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Practical Q. - Assessable Value {CA Final Scanner)

Patricia (C.S.- Professional) (sdd) (197 Points)

16 September 2010

1) U&V Ltd. Manufactures 10,000 units of Product-W , Assessable Value of which is Rs. 400 per unit. Duty payable is 16%. Duty paid on raw material is Rs. 3 Lacs. U&V Ltd. sells 2,000 units in India and 8,000 units are exported thru a merchant exporter. What is CENVAT credit available and what is the duty payable through “PERSONAL LEDGER A/C [ PLA]” ? Can U&V Ltd. Get any refund of CENVAT credit ?

Ans. Duty shall be payable as %age of tariff value . Duty payable = Rs. 1,31,840 ( including Cess) CENVAT Credit Available = Rs. 3,00,000 , Refundable CENVAT Credit = Rs. 1,69,440 . No need to pay duty thru ‘PLA’.

Unable to understand answer. Pl help..

regd,

Aditi Garg,

CA final

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5 Replies

Harsha (Chartered Accountant CS (Final)) (227 Points)
Replied 20 September 2010

As per the provisions of Central Excise, we need to pay the Excise duty on the local clerances. As per notification 42/2001 any clerance made to foreign countries is exempted (by way of notification) from the payment of Excise duty subject to certain procedural aspects. Further, as per Cenvat Credit Rules, CENVAT credit is available on the clerances made to exports even though there will be no ED payable.

In your case, Local clerances is 2000 units. AY is 2000*400=800000

ED payable @ 16.48% (including Cess @ 3%) = 1,31,840

Cenvat Credit avaiable = 3,00,000

Closing balance of Cenvat credit is 3,00,000-1,31,840= 1,69,440

On Exports assessee can go for Refund / Rebate as per Excise notification.

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Patricia (C.S.- Professional) (sdd) (197 Points)
Replied 20 September 2010

Hi. Thanks a lot. Pl also solve the below Query ( Taken from Scanner CA Final)

1) An assessee manufactures certain goods on job-work basis. The trader supplies the raw material to Job-Worker and sells the manufactured product under his brand name. Find the ‘Assessable Value’ for the purpose of levy of Excise Duty from the following particulars :-

(i) Cost of RM supplied by Trader - Rs. 10,000

(ii) Cost of bringing RM to factory - Rs. 500

(iii) Value of Job work done - Rs. 2, 500

(iv) Job Worker’s Profit - Rs. 400

(v) Transportation Charges incurred for returning the manufactured

Product to the Trader - Rs. 600

(i) Traders’s Sales Price of Finished Product – Rs. 15,000

Ans. A.V. = Rs. 13, 400

Harsha (Chartered Accountant CS (Final)) (227 Points)
Replied 21 September 2010

Here Job worker is liable for payment of Excise duty as he manufactured the goods on behalf of trader.Excise duty will be levied on Transaction value i.e.2500+400=2900. As per valuation rules of Central Excise, if any free material is added from the cusomer, that should be added to the assessable value for discharging Excise duty. So, the assessable value for the above case is

Transaction value 2,900

Value of Free materials 10,500 (including inward freight)

Total AV 13,400

Note: 1) Transportation charges from Job wokers place to trader is not considered because, Excise duty will be levied at the value upto the clearance of goods from the goods. Clerance means expenses incurred upto the factory gate of the job woker.

Note: 2) If the trader does further processing of goods after receiveing from Job worker then Trader liable to pay ED. In such a case, the Job worker can claim the exemption from the payment of Excise duty under notification 214/86

1 Like

vickey jain (ca) (75 Points)
Replied 28 September 2010

i think in the case of job worker Rule 10A shall be applied of valuation rules & normal transaction value shall be taken at the time of removal frm job worker premises.

Anand (ACCOUNTS EXECUTIVE) (68 Points)
Replied 01 October 2010

According to your question the answer is as

Product Sale in India 2000 Nos. @ 400/- unit = 800000

Excise Duty Rate 16.48% (Inc. 3% Ed.&H.E.Cess) = 131840

Duty received on raw material = 300000

less duty payable on material sale in india = 131840

duty balance = 168160

You will refund the above duty or you will forward the duty to next month and take credit.

you will sale 8000 unit @ 400/- 3200000 outside india, Hence no duty charged on exciseable goods is the merchant issued a CT-1 form which will be issue by their excise deptt. in which he will deposit the amount of duty..

In the above situations company not liable to pay duty throught PLA