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Whether royalty paid to govt. is excisable

ANIL KUMAR (PROPRIETOR) (109 Points)

23 March 2013

SOUTH ESTERN COAL FIELDS LTS. SOLD COAL TO ITS CUSTOMERS.

NOW THEY ARE ASKING MORE AMOUNT ON ACCOUNT OF EXCISE DUTY

IMPOSED ON THEM ON ROYALTY PART BY EXCISE INTELIGENCE.

WHETHER EXCISE WILL BE CHARGED ON ROAYALTY PORTION ALSO?

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5 Replies

Shekhar (CA Final) (84 Points)
Replied 23 March 2013

I think Royalty do not come in the definition of Excisable Goods. Hence, should not be charged for the same.

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shivani (consultant) (122 Points)
Replied 23 March 2013

your question is not in full.

The observaions from excise team may be duty amount with assumtion seling price would have been reduced to the tune of Royalty amount paid . They feel ass.val is lesser. Hene Excise dept suspects the duty is not paid on full material value.

ANIL KUMAR (PROPRIETOR) (109 Points)
Replied 24 March 2013

Dear Shivani jee,

SECL is selling coal to trader/consumer. Levey of Excise @ 5% started w.e.f. 01-03-2011.

SECL charged Excise only on the amount charged by it on account of coal only. Now excise authority

asked SECL to pay excise on Royalty and Stowing Excise Duty also.

My view is Royalty and Stowing Excise Duty both are taxes .

And u/s 4 taxes will be deducted while calculating Transaction Value.

Thanks for reppy.

shivani (consultant) (122 Points)
Replied 25 March 2013

Sir

Royalty paid from its internal accruals,ie from its profit.-before the sales.

If SEFL is purchased the coal and re-sells - ED should be levied on Ass .value ( ie purchase value + proift) ( that time royalty is also considering factor Bcoz royalty is paid from profit).

if SEFL is first stage delar / manufacture than Excise team only look into production cost and profit element on that ED levied and paid,

Like wise we pay sales comission to brokers ,team may not ask the duty on sales comission..

Dept . should watch gaurd any leakage or under valuation.

S .Ghosh (audit assistant) (258 Points)
Replied 04 August 2014

Originally posted by : shivani
	Sir Royalty paid from its internal accruals,ie from its profit.-before the sales. If SEFL is purchased the coal and re-sells - ED should be levied on Ass .value ( ie purchase value + proift) ( that time royalty is also considering factor Bcoz royalty is paid from profit). if SEFL is first stage delar / manufacture than Excise team only look into production cost and profit element on that ED levied and paid, Like wise we pay sales comission to brokers ,team may not ask the duty on sales comission.. Dept . should watch gaurd any leakage or under valuation.