Excise on profit

harsh (ca ) (109 Points)
Replied 22 October 2012

hi..

1.Excise is charged on profit

2 Excise would be charged on 5000 only since there is no value addition n excise is charged on value addition

3 charge excise on rs. 5000/- only

kabs (xyz) (144 Points)
Replied 22 October 2012

sorry but it is little bit confusing

if profit is included in the excise duty then it should be carged on the 6000? isnt it?

because in the above example 1000 is my profit.

harsh (ca ) (109 Points)
Replied 22 October 2012

hi..

u can charge excise on profit only when u have made value addition on it..

since u r trading n not doing any value addition, therefore, u are not required to pay excise on profit of rs.1000/-

on other hand , when u purchased for rs. 5000/- then since it was manufactured therefore u paid excise on profit

kabs (xyz) (144 Points)
Replied 22 October 2012

so i cnt calim any credit on my purchase.right?

so in this case it is better to add word "system" to my product and sale it to consumer after cargeing excise duty and claim credit of duty paid.

wich one will be benefical to me in this case?
to charge excise(after adding word system to my product to prove that i had carried manufacturing activity, but in this case i cnt calim credit on input used) or not

kabs (xyz) (144 Points)
Replied 22 October 2012

thanks for all your help till now

CA Subin VR (Practicing CA) (450 Points)
Replied 22 October 2012

Excise is a duty on Manufacture.

If you are a trader (merely buying and selling) there is no excise duty liability.

Merely adding the word "System" will not amount to manufacture hence there is no manufacture and excise liability.

Excise duty has to be paid on the assessable value of the manufactured goods. And in many cases it includes profit also.

Rahul Bhurat (STUDENT) (23 Points)
Replied 23 October 2012

For excisable good to be chargeable to excise duty, there has to be a manufacturing process. (A process will be manufacture if after you apply the process, a new product with a different use and name comes into existence.) If your case, since there is no manufacturing process, 'computer system' sold by you will not be liable to excise duty. If you buy your product directly from a manufacturer, you will be called as First stage dealer in excise law. As a result, you can charge excise duty to your customer and avail input credit of duty paid so that your input duty paid does not become part of your cost (obviously you need to be registered with dept as an assesse and issue Cenvat invoice)

Rahul Bhurat (STUDENT) (23 Points)
Replied 23 October 2012

P.S.: You are eligible to charge from your customer the same amount of ED which you paid on your input. for example, if you purchased computer for Rs. 5000 and paid ED @ 10% on 5k I.e. 500. And if you sell at 6000 then you will charge your customer Rs. 500 only and not 600 for ED liability

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 31 October 2012

Originally posted by : kabs
	Friends, Excise duty is charged on Which Amount? I mean Excise duty is charged after adding profit.Do we have to charged excise on profit. Suppose i bring a product X at 5000 rs and then sell it at 6000 rs without doing anything (for a profit of 1000 rs,due to difference in market price), in this case do i have to pay excise duty.If yes then how much? whether on 6000 or on 5000 rs. or simply forward the excise burden to the buyer for the amount that i have paid while purchasing this product. One of my friends is doing business in computer system, he has same query.Currently what he is doing is that he added word "system" to the purchased product and then charge excise duty. so finally; 1)do excise is charged on the profit? 2)on which amount the duty will be charged if i purchase the product at 5000 and sold it at 6000 with profit of 1000 without doing anything. 3)what about the excise duty in above case if i donot amount to manufacturer?

if you are not manufacturer then you have not to charge any ED,

your sale price would be all inclusive ( including ED /VAT/CST paid to manufacturer) and you dont have to show the ED pasrt seperately in your invlice, unless your customer is not asking for cenvatable invoice under excise.

if the client ask for cenvatable invoice then you have to get regd with excise as dealer, and issue cenvatable invoice, for the duty portion paid to manufacturer in proportionate way, balance situation is same

in a nutshell you have to pay excise on your profit as a trader.