transaction value for excisable goods cleared to depot., Central Excise

[manan pandya]

res. sir,

if i want to clear excisable goods to depot , in this case please give guidense on which price invoice should be raised when goods are cleared to depot.

is there any particular provision or any rule for making a transaction value for cleared excisable goods to depot.

please give any suggestion or any advice for this case .

regards,

Manan pandya

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Please see para 19 of CBEC's Circular F.No. 354/81/2000-TRU , Dt. 30/06/2000 which is reproduced below: -

If the goods are not sold at the factory gate or at the warehouse but they are transferred by the assessee to his depots or consignment agents or any other place for sale, the assessable value in such case for the goods cleared from factory/warehouse shall be the normal transaction value of such goods at the depot, etc. at or about the same time on which the goods as being valued are removed from the factory or warehouse. It may be pertinent to take note of the definition of "normal transaction value as given in the valuation rules. What it basically means is the transaction value" as given in the valuation rules. What it basically means is the transaction value at which the greatest aggregate quantity of goods from depots etc., are sold at or about the time of removal of the goods being from the factory/warehouse. If, however, the identical goods are not sold by the assessee from depot/consignment agent’s place on the date of removal from the factory/warehouse, the nearest date on which such goods were sold or would be sold shall be taken into account. In either case if there are series of sale at or about the same time, the normal transaction value for sale to independent buyer will have to be determined and taken as basis for valuation of goods at the time of removal from factory/warehouse. It follows from the Valuation that in such categories of cases also if the price charges is with reference to delivery at a place other than the depot. Etc., then the actual cost of transportation will not be taken to be a part of the transaction value and exclusion of such cost allowed on similar lines as discussed earlier, when sales are effected from factory gate/warehouse.

If an assessee transfers a consignment of paper to his depot from Delhi to Agra on 5.7.2000, and that variety and quality of paper is normally being sold at the Agra depot on 5.7.2000 at transaction value of ₹ 15,000 per tone to unrelated buyers, where price is the sole consideration for sale, the consignment cleared firm the factory at Delhi on 5.7.2000 shall be assessed to duty on the basis of ₹ 15,0000 per tone as the assessable value. If assuming that on 5.7.2000 there were no sales of that variety from Agra depot but the sales were effected on 1.7.2000, then the normal transaction value on 1.7.2000 from the Agra depot to unrelated buyers, where price is the sole consideration shall be the basis of assessment.

In this connection you may refer to Sec. 4 (3) (c) (iii), Sec. 4 (3) (cc) of Central Excise Act, 1944. You may also refer to Explanation 2 to rule 5 and rule 7 of Central Excise Valuation Rules

[Pradeep Khatri]

Dear Manan,

According to the Section 4(3) (cc), in case of sale from Depot, 'time of removal' shall be deemed to the time at which the goods are cleared from factory. Section 4 (3) (ii) [amended w.e.f. 14-05-2003 provides that in case of sale at depot, the depot will be the 'place of removal'.

As per the Explanation 2 to Rule 5 of the Central Excise Valuation Rules, if factory is not the place of removal, cost of transportation from factory to place of removal shall not be excluded for purpose of determining value of excisable goods. In other words, cost of transportation and handling from factory up-to depot will have to be added for purpose of valuation, as the depot is the place of removal.

When goods are sold through depot, there is no sale at the time of removal from factory. In such cases, price prevailing at depot (but at the time of removal from factory) shall be the basis of Assessable Value. The value should be normal transaction value of such goods sold from the depot at the time of removal or at the nearest time of removal from factory. [Rule 7 of Valuation Rules]

Further, for details you may refer Department's Circular Dated 30-06-2000.

This is for your kind information.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)