valuation-duty payment

[Dalia Felix]

Dear Sirs,

We are selling 90 percent of our product to our subsidiary company, which in turn sells them to various (unrelated)end customers (at varying prices). The remaining 10 percent is sold to outsiders. If the selling price is the same (to the subsidiary and outsiders), whether we have to follow the 110 percent of Cost of Production method for paying Central Excise Duty? If the sale value is different, what are the provisions for determining excise duty to be paid?

thanks and regards. 

[YAGAY andSUN]

Please check the Rule 10 and Rule 9 of the valuation rule in this regard.

[Mahir S]

It is of no relevance whether the sale price for subsidiary company as well as outsiders are same or different. What is relevant is that you have to follow the 110 per cent of Cost of Production method for payment of Excise Duty, when your product is sold to a related person.Also, the oost of production is to be arrived based on the CAS 4 accounting method.

[Mahir S]

In your case, as regards sale of goods to your subsidiary company, who in turn are selling the same goods to other end customers, Rule 9 of the Valuation rules shall apply..

AI Summary

Company Must Use 110% Cost of Production Method for Excise Duty on Sales to Subsidiary, Per Rule 9 and CAS 4. A company inquires about the correct method for calculating Central Excise Duty when selling 90% of its products to a subsidiary and 10% to unrelated parties. If the selling prices are the same for both, they question whether they must use the 110% of Cost of Production method. Responses indicate that the 110% method applies when selling to related parties, regardless of price similarity. Rule 9 of the valuation rules and the CAS 4 accounting method are relevant for determining the cost of production and excise duty, especially for sales to the subsidiary.