Excise duty on trading

[S.C. WADHWA]

Dear Experts,

Unit A manufactured BREAD CRUMBS IN HARYANA and transferred the stock in bulk packing to unit B in Haryana (who is also manufacturers of food products )after
paying excise duty under tarrif head 19041090 @6%. And Unit B is paying excise duty @2% without getting cenvat. Unit B
will sell this item both in bulk and in retail packing.
Now my query is that whether Unit B has to pay again excise duty or not. And Unit B has to inform excise authorities in
this regard. Please give your expert opinion. Regards, WADHWA

[BHUWAN BHATT]

Invoice issued by manufacturer from depot or premises of consignment agent or any other premises where goods are sold on behalf of manufacturer is eligible for availing Cenvat credit [rule 9(1)(a)(i)(I)]. The duty is paid by manufacturer, which is passed on by the depot/consignment agent. However, the depot/consignment agent of manufacturer is not a ‘first stage dealer’. The depot/consignment agent should be registered with Central Excise

1. Transaction Value

1.1 Section 4 of the Central Excise Act, as substituted by section 94 of the Finance Act, 2000 (No.10 of 2000),came into force from the 1st day of July, 2000. This section contains the provision for determining the Transaction value of the goods for purpose of assessment of duty.

1.2 For applicability of transaction value in a given case, for assessment purposes, certain essential requirements should be satisfied. If any one of the said requirements is not satisfied, then the transaction value shall not be the assessable value and value in such case has to be arrived at under the valuation rules notified for the purpose. The essential conditions for application of a Transaction value are:

(i) The goods are sold by an assessee for delivery at the time of place of removal. The term “place of removal” has been defined basically to mean a factory or a warehouse, and will include a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearances from the factory.

(ii) The assessee and the buyer of the goods are not related; and

(iii) The price is the sole consideration for the sale

above point clearly shows that if you want to clear goods from unit B then ED can be discharged based on sale price of Unit B And you have to take prior permission from Central Excise for clearing the goods from Unit B.

else you have to pay additional duty of 2% as applicable without availing CENVAT Credit.

AI Summary

Cenvat credit entitlement may allow duty discharge on reseller's sale price with prior excise permission.
An invoice from a depot or consignment premises can qualify for Cenvat credit and a depot/consignment agent is not a first stage dealer but must be registered. Where transaction value conditions are satisfied-delivery at place of removal, unrelated parties, and price as sole consideration-duty may be discharged based on the reseller's sale price; clearing goods from the reseller's premises requires prior Central Excise permission, otherwise the reseller must pay duty without availing Cenvat, leading to additional duty under valuation rules.