Transcation value below manufacturing cost and profit

[RAM SHARMA]

Dear Experts,

As per Circular No. 979/03/2014-CX. Implementation  of decision of Hon’ble Supreme Court in case of M/s Fiat India ltd. If a company manufactured different type of product then it is necessary that every product selling price should be more then cost price as per above circular.

Please advice.

Thanks

AI Summary

Selling Below Cost Domestically for Market Share Expansion Permissible, But Beware of Tax Scrutiny: Fiat Judgment Insight A company inquires about the implications of selling products below manufacturing cost in the domestic market while making profits through exports, referencing a Supreme Court decision and a specific circular. An expert clarifies that selling below cost is permissible under certain circumstances, such as market penetration or unsold inventory, but warns that the tax department may scrutinize such practices, especially if the goods are sold at a loss domestically without a justified reason. The company confirms its strategy to expand its domestic market share, not involving related parties, and is advised that this approach aligns with the Fiat judgment.