Treatment of excise in the case of Branch return

This query is : Resolved

Khushbu Dave (Querist)
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14 May 2009 Kindly give ur advice on the following issue
ACo situated in Gujarat has branch all over India, Now it following the practice for good clearance as under

First of all it (H.O) make sale on the basis of Invoice to its branch at its list price and pay excise on the same( Say @ Rs.100 and pay excise @10% on the same)

When branch sell the same goods to the third party it make sale at its list price and company pays the excise duty on this differential sales amount being transactioan value as per the act ( Say branch make sales @ Rs.150/- so comapny will pay the excise on the differential sales price of Rs.50/- at 10%)

Now when there is return from the branch company is taking Excise credit of the amount actually paid (i.e excise paid on Rs.100/- )ONLY and not able to take credit on the differential excise duty paid as for the same company does not have DUTY PAYING DOCUMENT (As the at the time of branch return branch gives the original invoice issued by HO)

So issue is "what is the way out to take the credit of this DIFFERENTIAL EXCISE DUTY PAID on the differential sales value at which branch has made sales

Rajesh Kumar

Rajesh Kumar (Expert)
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14 May 2009 Because the procedure followed by you is faulty. How can the branches pay excise duty when there is no manufacture there? Consult an advocate/consultant and streamline your procedure.

Khushbu Dave

Khushbu Dave (Querist)
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15 May 2009 Actually sir here branch is treated as just clearing point and On the final sales H.O is paying excise on differential amount, and not the branch as it does not have ECC no.

So there is question of taking credit at the time goods return from the branch because company can take the credit on the invoice made to branch but the final sales invoice (made to customer)does not contained the H.O name as well as it does not mention excise amount

HO is paying differential duty by doing revers calculation.

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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19 May 2009 The method followed by you is only possible if you have applied for provisional assessment. If not please read Rule 7 and follow the same. No diffrential duty need be paid under that option as long as the price at the depot at the time of removal from the factory is cpatured.

Khushbu Dave

Khushbu Dave (Querist)
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19 May 2009 But i here as this is branch sale it is treated as branch transfer.
so as per the valuation rules when the goods are trasfered at the place other than the place of removal then assessable value will be the value at which goods are sold from the place other than place of removal(Rule-7)
So the company is paying excise on the final sales value and i think for that provisional assessment is not necessary.