Differecne duty on Depot sales

[Guest]

Dear Sir,

We sales our Non MRP items to our Depots and from depots further sale to our various branches.

Suppose one item whose assessable value is 100 for clearance from the factory on a particular date. but the same dates our highest Aggregate quantity sale of allover our branches is say 110.

So in the above case ₹ 110 is our total consideration from dealer we don't charge excise duty extra in commercial invoice so we assume that ₹ 110 is including Excise duty so we calculate the differential duty on 110-100=10 we consider ₹ 10 is including Excise duty 12.50% so we make back calculation 10 is 112.5% so 100% is 8.88 so we paid excise duty on 8.88 12.50%.

So my question is it is right way for calculation of difference duty on depot sales or not.

Regards

Swapneswar Muduli

[YAGAY andSUN]

You have to pay Central Excise Duty on ₹ 10 only as it cannot be treated as cum duty price. Correct method is to pay duty on ₹ 110 -100 =10

AI Summary

Differential excise duty must be levied on the price difference, not by cum-duty back-calculation. The question is whether depot-to-branch sales should be treated as cum-duty price requiring back-calculation. The correct approach is to levy central excise duty only on the excess consideration (the difference between branch aggregate sale value and factory assessable value); the excess cannot be treated as a cum-duty price, so duty is payable on the differential amount alone rather than by grossing up the consideration.