Central Excise - Valuation - Difference between ex-factory price and ex-depot price - Regarding - Central Excise - 15/25/87-CX.1

Central Excise - Valuation - Difference between ex-factory price and ex-depot price - Regarding F. No. 15/25/87-CX.1 Dated 13-5-1988 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Valuation - Difference between ex-factory price and ex-depot price - Regarding. I am directed to say that it has been brought to the notice of the Board that in certain cases the assessees deliberately decrease the wholesale price at the factory gate and effect bulk of the sales from the depots at higher prices and only a small portion of the total sales, is made at the factory gate, in order to artificially bring down the assessable value at factory gate. The matter has been examined in the Board. The assessable value should be the value/price (wholesale) at the factory gate and the ex-depot price should be the ex-factory price at the factory gate (wholesale) transportation charges+overhead charges for maintaining the depot. It was felt that in case of wide variance in ex-factory price and ex-depot price, it will be justifiable to include the difference between actual cost and the cost of such transportation/overhead shown but not justifiable, as part of assessable value. In view of the above, it has been decided that the following exercise in costing may be undertaken where it is suspected that a particular assessee has deliberately depressed the wholesale price at the factory, and has only nominal sales purely to justify the depressed price :- (i) transport charges from the factory gate to the depot(s). (ii) overhead charges of maintaining the depots (i.e., rent, or in the case of godown owned by the factory, deemed cost towards maintaining the godown, and its incidence per unit of the excisable product + factory staff maintained at the godown and its incidence per unit of the excisable product; and action may please be taken to collect duty on differential price. Receipt of this letter may please be acknowledged.