Clearance to industrial consumers from depots

[Guest]

Dear Sir,

Please explain us regarding the following, we want to clear mrp based products to industrial consumers from our depot registered under excise. So in this case we will first do stock transfer to our depot and then from there it will be sold to industrial consumer.So for doing stock transfer what valuation is to be taken whether mrp based valuation as per section 4(a) or valuation under section 4 i.e. transaction value. Please explian.thanks and regards.

[Rajagopalan Ranganathan]

Sir,

the transaction value of excisable goods stock transferred to depot for onward sale to the customers is the price of the said goods prevailing at the depot for sale to customers on the date of clerance of the goods from the factory. Suppose you clear excisable goods on stock transfer basis to your depot on 15.4.2015. Then the transaction value will be the price at which such goods are sold to customers from the depot on 15.4.2015. If there is no sale on 15.4.2015 then the price at which such goods sold at the depot nearest to 15.4.2015. this is in accordance with rule 7 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 which states that -

              7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a dept, premises of a consignment agent or any other place or premises (hereinafter to as "such other place") from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment.

AI Summary

Transaction value determination: use depot sale price at or nearest to removal date for stock transfers to depot. Valuation for excisable goods transferred to a depot for onward sale equals the price at which such goods are sold from the depot on the date of clearance; if no sale occurs on that date, use the nearest date price. This applies where the assessee and buyer are unrelated and price is the sole consideration, under rule 7 of the Central Excise Valuation Rules.