Assessable value under Central Exice Law

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Meekha (Querist)

24 December 2009 Can any one please teach me and help me to solve this problem?

A ltd supplies raw material to a job worker K ltd. After completing the job-work, the finished product of 5,000 packets are returned to A ltd. putting the retail price of Rs.20 on each packet. The product in the packet is covered under the MRP provisions and 40% abatement is available on it.Determine the assessable value under Central Excise Law from the following details:

i) Cost of raw materials supplied Rs.30,000
ii) Job workers charges including profit Rs.10,000
iii)Transportation charges for sending the raw material to the job worker Rs.3,000
iv) Transportation charges for returning the finished packets to A ltd. Rs.3,000

Please teach me how to do this.

ADITYA

ADITYA (Expert)

28 December 2009 Excise Duty is always on the Transaction Value and not on the cost of production.As mentioned by you, Your Product is under MRP provisions hence you have to discharge Excise Liability under MRP provisions.
C

SANJAY JAIN

SANJAY JAIN (Expert)

28 December 2009 Assuming that job worker is not under obligation to pay Excise duty for being due declaration has been filed by the raw material supplier under the Notification No. 214/86-CE. By virtue of filing this declaration, the duty liability shifts upon A Ltd.

In case the goods is covered by MRP provisions and liable to duty under Rule 4A, then duty shall be levied upon Rs. 60,000.00 on after deducting 40% abatement from the MRP Rs. 20x5000.

In case the goods is liable to duty under Section 4A, then the other costing data are irrelevant.

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