Insertion of capital goods in Input definition

[arbs sarma]

Sirs,

In the recent budget input definition under CCR, 2004 was amended and a new clause (v) is inserted in rule 2(k) i.e., input means all capital goods having value upto 10000 rupees per piece.

query:

CG having value upto 10000 per piece means is it the assessable value or the invoice value (i.e., value including all taxes)

[KASTURI SETHI]

Invoice value.

[Rajagopalan Ranganathan]

Sir,

With due respects to the views of Shri Kasturi Sethi Sir, my view is that vlaue of ₹ 10000 per piece means the transaction value excluding all tases payable /paid on the CG.

[Rajagopalan Ranganathan]

sir, In my reply dated 20.4.2016 please read tases as taxes. The error is regretted.

[KASTURI SETHI]

Sir,

There is neither the word, 'Transaction' nor the word, 'price' in the notification issued. However, I can assume that Sh. Ranganathan, Sir, may be right.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Rajagopalan.

[Suryanarayana Sathineni]

Dear Friend ,

In my view it is the Assessable value/Transaction value of the piece and not the invoice value.

The word indicated in the Rule is "Value" and not the cost to consider invoice value.

Best Regards

Suryanarayana

[arbs sarma]

Thank you sirs for expressing your views.

[Ganeshan Kalyani]

Sir I would like learn what is the difference between 'Value' and 'Cost' ?

[Suryanarayana Sathineni]

Dear Kalyan Ji

In general parlance, the value represents the assessable / transaction value for the purpose of payment of duty and the cost represents the total amount paid to a particular material which includes, duties, other taxes and freight and other handling charges . This differentiation is generally considered while inventorizing the material in the books of accounts.

Best regards

Suryanaryana

[Ganeshan Kalyani]

Sri Surya Sir thanks a lot for clarifying my doubts. Thanks.

AI Summary

Definition of value for capital goods focuses on tax exclusive transaction value versus invoice inclusive value.
An amendment added a per piece value threshold to the input definition for capital goods. Practitioners dispute whether "value" means invoice amount inclusive of taxes or the transaction/assessable value excluding taxes; several practitioners favor the transaction/assessable value reading. The document further distinguishes "value" (used for duty/valuation) from "cost" (total paid including taxes, freight and handling) for inventory and duty treatment.