Please try to send the solution

[Prabhat Salecha]

M/s. Marico ltd. Supplies raw material costing ₹ 25000 to job worker/processor M/s. Indian Extrusion. M/s. Indian Extrusion processes the raw material and supplies an intermediate product 'Plastic containers' to M/s. APPL (being other unit of M/s. Marico ltd) for packing of hair oil manufactured by Marico Ltd. M/s. Indian Extrusion charged ₹ 1400 as processing charges which include ₹ 1200 as processing charges and 200 as its profit margins. The cost of transportation of RM to premises of Indian Extrusion is ₹ 200 and sending the plastic jars to APPL is 60 rs. The rate is 12% Compute assesable value of M/s Indian Extrusion?

[KASTURI SETHI]

Resort to Rule 10 A of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Board's Circular No.902/22/2009-CX dated 20.10.2009 and also peruse judgement of Hon'ble Supreme Court 2010(260)/ELT/A84 (SC) in the case of P.R. Rolling Mills Pvt. Ltd.= 2010 (9) TMI 1072 - SUPREME COURTfor computation of transaction value/assessable value for payment of Central Excise duty.

[Ganeshan Kalyani]

Dear Prabhat if you can share you calculation we could guide you where you are right or need change. Try first.

[DR.MARIAPPAN GOVINDARAJAN]

First try to do as advised Shri Kalyani. If there is any mistake it can be guided.

[Prabhat Salecha]

What I think its solution can be.. As I found it a case of captive consumption so as per Rule8 of valuation of excise the assessable value is 110% of cost of production.So cost of production =RM 25000Processing 1200Profit in mfg. 200Transportation placeofRemoval 200Placeofdelivery 60So 26660 *110%= 29326My doubt is1. Whether my approach of captive consumption is correct?2.if yes than whether transportation charges of place of delivery will be added in cost of production becoz Rule 10(A)(iii) says dat transportation charges of place of delivery are not added to assessable value but I think dat place of delivery transportation charges are yet related to a mfg. Process dat is packaging so we should add it

[KASTURI SETHI]

Suppose Marico Ltd. is 'A' , Principal Manufacturer and A sends raw material to job-worker, namely , M/s Indian Extrusion termed as 'B'.After job work sends intermediate product i.e. Plastic Containers to APPL called 'C' . (C is A's own unit.). Product is completed at the hands of C. Now we can say that finished product has not been sold/is not to be sold by B, the job worker. It will be sold by C (APPL) who completes the finishing stages of the product. Rule 10 A is applicable only if the final product is sold by the job worker (after complete processes) in the market on behalf of the Principal Manufacturer i.e. A. B has only manufactured intermediate product i.e. Plastic containers. Duty is to be charged/payable on complete finished product which is in the hands of C.(Your Own Unit)

In such scenario, Central Excise duty has to be paid on transaction value under Section 4. Your approach to captive consumption is not correct.Hence no cost data. Hence the question of addition of transportation charges becomes redundant. This is my view. Pl.do not treat it final view until or unless these are upheld by Sh.MARIAPPAN GOVINDARAJAN, Sh.Ganeshan Kalyani, M/s.YAGAY and SUN and other legal luminaries inasmuch as I have no commerce background as is evident from my profile.

 

 

 

AI Summary

Assessable value determination: transaction value governs when a job-worker supplies intermediates to the principal's own unit, not captive consumption.
Where a principal sends raw material to a job-worker who returns an intermediate product to another unit of the principal for completion, the job-worker has not sold the finished goods; Rule 10A applies only when the job-worker sells finished goods on behalf of the principal. Consequently the situation is not captive consumption and assessable value should follow transaction value principles for the final product under the charging provisions, making additions like place-of-delivery transport irrelevant to the job-worker's valuation.