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

Related-party valuation requires a cost-of-production based method and valuation rules for subsidiary resales under excise law. Sales to a related person are to be valued for excise by applying the 110 percent of Cost of Production method, with cost of production computed under the CAS 4 accounting method. Where a subsidiary resells the goods to other customers, valuation provisions for intercompany transfers apply and the subsidiary's resale prices do not displace the related-party valuation method.