Sale of Ex Goods from Branch / Manuf Depot

[V K]

Dear Sir

We have a plant in vasai ( MH) , from plant we TRF the goods to our variuos Excise Registered Branches on duty paid TRF Invoices. When Branch sold the goods to customer, branch pass on the actual ED recived on TRf Invoices. Plant deposit the ED on rate Diff as per Branch Invoices. This is the normal procedure, what we are having. ( Prov Assess & then Actual Assesment by Manufacturer )

Now somebody adviced us that  ED on rate Diff can be paid by branch itself & passed on to the end customer. so that customer can claim the actual modavte ( ED deposited by Plant + ED on rate diff deposited by branch)

Pls give your valuable views on the following points.

1) If Plant deposited the ED on rate diff on the basis of Invoices raised by branches to end customer, then No body can claim the Benifit of ED deposited on  Rate Diff,( i.e we are paying more duty but can pass on the benifit for lesser duty. )

2) Can Branch Pass on the duty ( more than recived from Plant ) ,on Which goods are sold to end customer & pay the diff of ED passed on -- (less) Ed Received on Plant TRF Invoice)? how the entries will be posted in RG 23D Register.

3) How branch can deposit the ED on Rate Diff ( Branches are having only dealer Registration )??, if Yes , Pls give procedure /   Notification / Any case law for the same.

Sir , I know that the Q is very complecated / or may not clear from my example. your expert advice will be highly oblized 

VIKAS KAPOOR

 [email protected]

 

[Alok Kumar]

Dear Mr. Vikas kapoor,

As the Central Excise Valuation rules/ Act is applicable to the manufcaturers only  , the depots/ warehouses or registered dealers cannot pay the differential duty on behalf of the manufacturers.

In case of rate diffrences it is the manufcaturer who will deposit/ pay the duty (i.e differential duty) and pass on the benefit to the end user/ actual user of your goods on the basis of a supplementary invoice to my mind.(and no doubt the invoices will be in the name of end users only).

thanks,

alok kumar

[YAGAY andSUN]

It is advisable to start pay the duty on the factory gate on the depot prices. This is the legal position.

[V K]

Dear Mr Pradeep

ED on depot prices can not be paid at factory gate , ( actual sale does not fixed, it depends on customer to customer ). Then how we can assume the depot sale price.

Also confirm benifit of differential duty paid can be claimed.???????????

rg

 

vikas

[sv bhasker]

Dear Vikasji

Query is not complicated but the practice in dealing with such cases is. Please read the definition of place of removal given under Section 4 of CE Act,1944. Depo is also declared as place of removal. But there has been no convention/practice of paying duty from the depos,though the definition recognises depo on par with factory. In fact Rule 9(b) of Cenvat Credit Rules 2004, regarding taking credit , makes a mention of supplemenary invoice issued by the depot. In practice ,Rule 8 of CE Rules 2002  regarding manner of payment of duty talks of factory and warehouse and not depo. Thus, if there is differential value of goods due to depo sales, diff duty is to be paid .from factory. It is strange that depots are recognised on par with factories, but in practice duty is discharged from factory only. If you want to  pay duty from the depo, discuss above facts of law and inform the same to jurisdiction CE authorities and seek their advice before paying duty from depot.

[RAM SHARMA]

Dear Experts,

How will be the mention of excise duty in  Depot Holder Invoice. Please tell way of mention of excise duty in Depot Invoice.

Thanks

[Radha Arun]

One solution may be to issue a proforma invoice initially from the branch, and pay differential excise duty at the factory on that basis; then issue regular invoice from the branch cross-referencing both entries of duty payment by the factory. 

[Vijay kumar]

Pl refer to Rule 7 of the Central excise valuation Rules, 2000. Duty cannot be paid at the Depot. Duty is to be paid at the factory based on the price prevailing at the depot "at or about the same time" or "nearest to the time of removal of goods under assessment". In as much as sale price is fixed at depot, that price is to be adopted at the factory gate. This is the correct and legal practice. For some reason, if provisional asst is adopted, the differential duty can be paid by the mfr / refund applied on finalization of provisional assessment in terms of Rule 7 of  of the CER, 2002. The diff duty thus paid can be passed to the depot/customers by way of supplementary invoice under Rule 9(1)(b) of CCR, 2004.

AI Summary

Manufacturer liability to pay excise duty: must discharge differential duty at factory and pass benefit via supplementary invoice. Manufacturers are required to deposit differential excise duty at the factory gate based on depot sale prices; depots/branches with dealer registrations are not normally permitted to pay the differential duty themselves. Where depot prices give rise to valuation differences, the manufacturer must pay the differential duty (including on finalisation of provisional assessment) and may pass the benefit or reflect the duty to customers by issuing a supplementary invoice under the procedural rules.