Valuation of Automobiles part

[Sanjay Sharma]

We manufacturing Tractors for agriculture purpose as well as supplying the Tractor Parts to our customers from our Spare Parts Division situated in the same premises on one registration no. in Central Excise Department from 1st June-06 under cover the notification No. 14/2008-C.E.(N.T.), dated 1.03.08. Tractor is exempted for the payment of Excise duty and the “Parts, components and assemblies of any automobiles “are liable to pay the duty.

We are paying the excise duty on MRP basis as the automobiles parts are covered in the Third schedule of Central Excise Act, 1944 and,

 At the same time we are having a another separate assembly unit in a out side location from our existing premises.

Question is this –

 We have to sent the parts from our spare parts division to this outside location of ours unit, what would be the valuation pattern for the payment of excise duty?  Would it be on MRP basis or Transaction value or some thing else,  pls.  clarify with supporting regulation, rules and Case laws, if any.

 Regards.

[YAGAY and SUN]

As per valuation rules,duty will be paid on MRP basis.

[Sanjay Sharma]

Dear Mr. Khatri,

Can you pls. elaborate your submission, why it should on MRP and not on Transaction value or any other mode of valuation?

 

Regards

[sv bhasker]

Sir,

Please note that MRP would apply in case of goods which are meant for retail sale and not for industrial use,in trems of Rule 2(p) of the Standards of Weights and Measures Rules 1977.The definition is like this.

"retail packing 'means the pacjages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages. Provided that for the purpose of this clause, this expression,"ultimate consumer" shall not include industrial or institutional consumers. 

[Radha Arun]

Under rule 8 of the Central Excise Valuation Rules, 2000, the value of goods that are not sold but are used by the assessee or on his behalf in the production or manufacture of other articles will be 110% of the cost of manufacture of the said goods that are being valued. The costing is to be done in terms of CAS-4, as required by the CBEC in Circular 692/8/2003-CX dated 13.2.2003.

AI Summary

Valuation of automobile parts: MRP applies for retail sale; cost based valuation applies for transfers used in manufacture.
Where parts are in retail packing and intended for sale to the ultimate consumer valuation is by MRP; where goods are not sold but used by the assessee in production the value is determined with reference to cost of manufacture with an uplift, and costing must be performed in accordance with CAS 4.