[aaykarbhavan] Business line update 16-1-2014

 

Govt clarifies on excise duty valuation on discounted sales

OUR BUREAU

NEW DELHI, JAN. 15:  

In what could be a major relief to industries, the Finance Ministry has clarified that excise duty valuation as in Fiat case judgment can not be a criterion for all cases.

The Finance Ministry clarification came after the Supreme Court verdict on the Fiat case. The matter related to sale of goods at discounted price and whether excise duty can be levied at discounted price.

In the Chief Commission of Excise (Mumbai) versus Fiat India case, the apex court held that where products were sold at considerable loss for an unduly long period for the purpose of market penetration, the transaction value cannot be the basis for levy of excise duty. Pursuant to this decision, tax officials are asking assessees to furnish cost data of various products for past years.

The revenue authorities have also listed circumstances where duty can be levied. A circular issued by the revenue authorities said that the Court has cited two instances where a manufacturer may sell goods at a price lower than the cost of manufacture and profit and yet the declared value can be considered as normal price.

These instances are when the company wants to switch over its business or where a manufacturer has goods which could not be sold within a reasonable time. "The Court has further held that these examples are not exhaustive. Therefore, mere sale of goods below the manufacturing cost and profit cannot be taken as the sole basis for rejecting the transaction value," it said.

(This article was published on January 15, 2014)

 

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CS A Rengarajan

9381011200

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