Charged proportionately

[paresh zatakia]

A trader importer (regd under excise) imports goods in bulk say 5 m.t. sales to 5 customers 1 mt each.Whatever CVD he pays ,he proportionately charges to his Customers ,is it o.k.?

[Surender Gupta]

Thechnically and practically the importer has to pass the incidence of CVD proportionate to quantity in favour of buyers irresptective of the value at which such goods are sold.

[Madhukar N Hiregange]

If he is registered under central excise he can issue an invoice under Rule 11 for 1 tonnes each to 5 people. He should ensure that he does not pass on duty credit more than he has paid to the extent of Addtional Duty of Customs( popularly called CVD) and the special CVD of 4%.

What you say is allright as per law. However, you have to register with CENVAT as an importer (primary first stage dealer) to be able to issue CENVAT Invoice and you can pass on CVD quantity to quantity. However only a manufacturer gets the final CENVAT credit of CVD. therefore you have to issue the invoice and CVD direct to manufacturer and not to another trader. Normally if you pass on Rs.100 CVD to Manufacturer he will consider an increase in your price by only about Rs.40-60 as he has an input output norm to follow while claiming CENVAT credit on the CVD.

AI Summary

Passing on Countervailing Duty permitted proportionately where importer issues proper invoice and holds CENVAT registration.
Importers may proportionately pass CVD to buyers by quantity and issue subdivided invoices under Rule 11, but must not pass duty credit exceeding CVD actually paid. CENVAT registration as an importer is required to issue a CENVAT invoice. Final CENVAT credit for CVD accrues to manufacturers, so CVD should be invoiced directly to manufacturers who will claim input credit subject to input-output norms.