Hey experts
i have a problem in excise
Please suggest
Suppose Mr. A purchase goods(X) worth Rs. 500 and pay excise duty of Rs. 50 on it
Now Mr. A want to purchase a finished good from Mr. B and that finished good require the input of X
Mr. A gives X to Mr. B
Mr. B invoiced to Mr. A for Rs. 2000
Now on what value Mr. B charge excise duty?
What is the treatment of excise duty of Rs. 50 paid by Mr. A for input X????????
and tell what is the treatment if Mr. b is job worker???/
Case 1 When Mr.B is a independent manufacturer : As per Rule 6 of Valuation Rules, Mr. B is required to pay excise duty on Rs 2500 (2000+500).
As per Rule 3(5) of Cenvat Credit Rules, 2004 : On removal of X from A's factory, A is required to reverse the CENVAT credit of Rs. 50 and such removal shall be under cover of an invoice [Rule 3(6)] and Mr. B will take credit on X on the basis of such invoice.
Case 2 When Mr.B is a job worker :
(a) Mr.B is availing the benfit of N/N - 214/86, then Mr.B is not required pay Excise Duty. Mr. A will pay Excise duty on 2500 and he can utilise credit of Rs.50 on payment of such duty.
(b) Mr. B is not availing benefit on N/N - 214/86 : then the consequences will be same as per CASE 1
- Ruben Balooni
Murali and Sumeet Chartered Accountant
Bengaluru
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