Transaction Value, Central Excise

[Krishan Gopal]

Dear Sir,Please advise, if the customer supply machinery free of cost under the rule 4(5) (b), would there any impact on calculating the transaction value of manufactured product.

Posts / Replies

[Pradeep Khatri]

Dear Krishan Gopal

The value of machine/tools/jigs/dies should be amortized.  Suppose machine can produce 1 Lacs products in its entire life and the value of machine is 5 lac, then, this Rs. 5 would be added in the cost of manufactured product, Excise Duty would be calculated on the total value but VAT/CST would be calculated on the taxable price net off Rs. 5 of the product.

Regards,

Team YAGAY & SUN

[Krishan Gopal]

Thanks sir,Further whether we have to mention tooling cost i.e. machinery cost in the face of sales invoice for calculating excise duty or any other method for invoicing. In our view sales tax will not be levied on tooling cost/Machinery cost.Regards,K Gopal

[Pradeep Khatri]

Dear Krishan Gopal,

You need to mention amortized cost of the each product  i.e. per piece on the face of the Invoice. Include it in the assessable value and charge the Central Excise Duty on that amount.  However, no VAT would be charged on the amortized cost.

Regards,

Team YAGAY & SUN

(Indirect Tax Consultants)