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Excise duty on cement

CA HARISH KUMAR (ACA, B.Com(Hons.)) (80 Points)

27 July 2011

Hi All,

Please solve my query:

In case of Sale of Cement in MRP bags from other than Mini Cement Plant, duty is 10% + Rs.80 PMT or Rs.PMT (on the basis of price.) About specific duty it is ok. Problem is in 10%, this 10% is to be calculated on which value. Example : We cleared cement from Factory in MRP 280 per bag, but there may be discount to the buyer after the despatches. Question is 10% duty to be calculated on MRP basis or on the basisi of Transactional value ?

Another query is Can we clear goods not for retail sale in Not for retail sale bags to customers at 10% duty of Assesable Value ?

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1 Replies

Dilip Kumar Agarwal (A) (128 Points)
Replied 07 August 2011

Prior to 2011-12 Budget, there was relevance of MRP. Post Budget, Excise Duty on Cement produced by Cement Manufacturing Units (other than Mini Cement Plants) attract Excise Duty as under (and there is limited play of MRP to decide whether fixed duty would be Rs. 80/- PMT or Rs. 160/- PMT) :

1. If MRP is upto Rs. 190/- Per Bag of 50 Kgs., the duty would be :

Rs. 80 Fixed Plus 10% of transaction Value

2. If MRP is greater than Rs. 190/- Per Bag of 50 Kgs., the duty would be :

Rs. 160 Fixed Plus 10% of transaction Value

For Example, If MRP is Rs. 160/- per Bag of 50 Kgs. but sale price is Rs.140/- per bag inclusive of all duties and taxes and if, suppose VAT is 13.5%, the duty would be calulated as under :

Sale Price = 140.00

Less VAT = 16.65

Balance = 123.35

Less :Fixed Duty = 4.00

Less :Cess on Fixed Duty = 0.12

Balance = 119.23

Duty & Cess @ 10.3% = 11.13

Assessable Value = 108.10

The above is not applicable for sale of cement in bulk (non-trade).

Regarding your second query, I would like to inform you that Cement not meant for retail sale can be sold in bags displaying such declaration and in all such cases duty would be 10%.

CA Dilip Kumar Agarwal