Duty calculation on mrp products

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yuvraj kalambe

accounts

55 Points Posted on 12 February 2012

Dear All Members,

I have one doubt regarding MRP products kindly clarify.

We are charging ED on after taking abatement 35% (if MRP is 100 then ED will be 6.69 calculate on 65) and if these products are sales to end user(industrial consumer) that time ED to be charged on basic contract price not on 65 Pls comment it is correct or not.

eg: MRP = 100/-

Contact sales price = 45/-

Duty calculate as per following two method:-

if customer is dealer then charged on 65/- ED will be 6.69 (10.30%)

[45+6.69=51.69 is turnover for tax]

if customer is end user industrial consumer then ED will be charge on 45/- instead of 65/-

[45+4.63=49.63 is turnover tax]

Is it correct ?

Replies (3)

CA Ankit Gulgulia (Jain)

B.COM (H) FCA CIFRS CBV R-ID (IICA)

4639 Points Posted on 12 February 2012

The provision relating to duty based on MRP is dealt in section 4A.The section further states that the Government
may notify such of the aforesaid categories of goods to which the revised principle of excise valuation would apply.Thus the goods, which are coved under this new principle, would be required to discharge excise duty on the basis of the MRP instead of the basis of the wholesale selling price.

Note: The retail sale price has been defined to mean the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer inclusive of all taxes and expenses and price is the sole consideration for such sale. So In Both the Above Cases 10.3% of Rs 65/- shall be value of ED Leviable.

HS Negi

Senior Executive- F&A

617 Points Posted on 13 February 2012

Dear Youraj

If the goods falls in third schedule and means for retail sale then MRP(Section 4A) shall be applicable . In that case formula you have suggested is coorect.

And if the goods meant for industrial consumer means does not reltail sale then section 4A shall not be applicable. In that case trasaction value shall be applicable.

Hope the query is solved now.

Regards

HS Negi.