Applicability of CAS-4 for Sale of goods from Warehouse.

[Asked by Guest]

Dear All,

Good Morning.

1) Is CAS -4,applicable for Sale of goods from Ware house?

In our case we are manufacturing product and sending product to warehouse,At warehouse We are packing them and affixing same price which is at factory only.

Now the Excise Dept asking for CAS-4,certification from Cost Accountant .is it required?

Thanks in advance.

[KASTURI SETHI]

Sh.Suresh Angela,

What is the product ?

[YAGAY and SUN]

In our view, it is not required as CAS-4 is required only for captive consumption scenarios.

[KASTURI SETHI]

With due respect to M/s.YAGAY AND SUN, I agree to the extent that CAS-4 certificate is not required if ONLY sale of goods is involved but in this case it appears that the party is engaged in the manufacture of some product. So Cost Structure Certificate of any finished product can be called for by the Department not only for the products consumed captively but also for any excisable product being manufactured by an assessee. Cost structure of any product is required for cross verification of the information/documents and other records by the department with an intent to plug the leakage of revenue, if any.

[YAGAY and SUN]

Dear Suresh,

It is clear from your query that you are manufacturing excisable Products and Sending to your Warehouse and in warehouse, packaging is being done and the same price is being adopted at which duty was paid at the time of removal from your factory premises.

In this scenario neither Rule 7 nor Rule 8 of the C.E. Valuation Rules applicable as you are removing goods from warehouse but there is no price variation and goods are not even transferred to your other unit for further manufacturing. Principle of payment of duty on the basis of nearest point of time as applicable in goods sold at higher price from the depots would not applicable in this matter. Please read the both Rules for better understanding.

Hence, in our view after going through the factual and legal position, no need to obtain CAS 4 from Cost Accountant. You may further have discussion with the concerned authority by referring our views in this matter and discuss with us if the Department have any other view to substantiate the need of CAS-4.

We remain.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

[KASTURI SETHI]

M/s.YAGAY AND SUN,

I agree with your reply dated 1.10.15.

AI Summary

CAS-4 certification not required for warehouse sales without price variation, though cost structure may be requested for verification.
Where excisable goods are manufactured, sent to a warehouse and sold there at the same factory-set price without price variation or further manufacture or transfer, CAS-4 certification is not required because Rule 7 and Rule 8 of the Central Excise Valuation Rules and the nearest-point-in-time valuation principle are not engaged; however, the department may still request a Cost Structure Certificate for cross-verification to check for potential revenue leakage.