Applicability of transaction value provision for paying duty on sale value

[S S KONAR]

We are in Engineering Manufacturing Sector. Our final products, which is Electrical Furnacs, is built uo using various rawmaterials and components. We also sells thease raw materials / components as spares from our manufacturing stores. Can we apply transaction value provision for paying duty on sale value insted of credit availed on such as such material. We need your opinion supported by case laws.

[Rama Krishana]

If you go by the strict provisions of Cenvat Credit Rules, 2004, you need to pay the equal amount of cenvat credit availed on such input when you are removing such input as such. If you would apply the concept of transaction value on removal of such inputs as such, you would be in a great difficulty because, in every case you have to maintain the details for each consignment. Wherever the transaction value is less that original value or rate of duty is less than original value, you have to reverse the actual cenvat credit. So therefore, try to avoid payment duty on transaction value of inputs removed as such for your own future peace.

[S S KONAR]

Thank you for your idea. In case, we pay more duty, based on my sales price, than the input credit taken,is it a violation of Excise Rules and an offense subjest to be penalized? Expecting your views with case laws in favour.

AI Summary

Engineering Firm Seeks Guidance on Duty Payment for Raw Materials; Advised to Reverse Cenvat Credit per Rules 2004 An engineering manufacturing company inquires about using transaction value provisions for paying duty on the sale of raw materials and components used in their electrical furnaces. They seek advice on whether this approach is preferable to reversing the Cenvat credit availed on these inputs. An expert advises adhering to the Cenvat Credit Rules, 2004, which require reversing the credit if inputs are removed as such. The expert warns against using transaction value for duty payment due to potential complications and suggests avoiding this method to prevent future issues. The company further questions if paying more duty than the input credit taken constitutes a rule violation.