Differential Excise Duty

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Ajay Raghatate

Sr Executive (Excise & Accounts)

629 Points Posted on 04 March 2009

We are a manufacturer. We are transferred stock to Branch in One rate, but branch sale it at two different rates. We paid differential duty if branch sale this goods on higher rate.

What will be Excise duty treatment for the following transactions.

Qty Rt Value Rt of Duty Amt of Duty

A Stock trf to Branch 400 kg 125 50000 14% 7000

B. Sold at Branch

I Transaction 100 kg 125 12500 14% 1750

II Transaction 100 kg 125 12500 10% 1250

III Transaction 100 kg 150 15000 10% 1500

II nd transaction , there is loss of Duty - 500/-, Can we adjust ? or consider as Loss of Duty
IIIrd transaction, Overall loss of Duty 500/- ( ED paid on material 1750, & collection is 1250 ), but excess collection as per Material Rt. 250, ( 25*100)=2500 @ 10% , 250/-

Please clarify.

Replies (2)

Rajesh Kumar

Advocate- Tax

6957 Points Posted on 05 March 2009

Well, the branch is a dealer. It is not required to calculate any duty- it needs only pass on duty as paid by the manufacturer. Price fluctuation in depot is irrelevant for calculation of duty.

The only thing u need to calculate duty at the factory gate is price prevailing at the depot at the time of removal of goods from factory. The duty at the factory is to be paid based on price prevaling at the depot at the time of removal.

You need to correct your system.

Anoop Garg

FCA

83 Points Posted on 06 March 2009

That means true charecter of indirect tax that is the burden of tax is transferred to ultimate consumer got disappeared in IInd and IIIrd case as the burden will be born by manufacturer and no buyer will agree to purchase at higher tax rate of 14%.

But I completely agree with Mr Rajesh.