Question on Subsequent Sale - Excise part

Dear All,

 Let me ask you all question through an example. This is with regards to case of Mr A in Karnataka.

Persons involved: Supplier in Maharastra, Mr A in Karnataka, Customer in Uttar Pradesh.

Mr A enters into a transaction with Supplier in Maharastra. He charges him Rs 3,00,000 and excise duty of Rs 24,000 on it. Mr A inturn wants the goods to be moved to Customer in Uttar Pradesh directly. So, he asks Suppler to move it to Customers premises in UP. So the Supplier prepares an invoice wherin the goods are billed in Mr A's name & Shipped to Mr Customer. 

Mr A subsequently raises an invoice on Customer for Rs 5,00,000 and shows 24,000 as excise reimbursable.

The question is, Is it correct on part of Mr A to charge excise only for Rs 24,000 and not on 5,00,000 i.e. Rs 40,000?

Replies (2)

First of all I would like to inform you that you cannot raise a bill of Rs. 2,00,000 margin, which is almost 40%. This will make you liable for under valuation and liable for duty and penalty.

The difference of 5-10% is acceptable and in that case there can be a straight away transfer from Maharashtra to UP and the customer can take credit on the Cenvat invoice issed by the supplier.

Thanks Bashista,

But can you please tell based on what premise have you said that it is undervalued, Can you please elaborate with reference to some case law, section no etc.

 

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