What rate of duty to be charged in case of price differentia

1. As per section 4 of the Act, Transaction Value, inter alia, includes any amount paid or payable by buyer to seller i.e., it includes even future payments.. So the price differential received subsequently is chargeable to duty.

Duty is leviable at the rate in force on the date of removal of goods. Hence, the price differentia shall be chargeable to duty @ 14.42% i.e., at the rate applicable at the time of removal.

It is recommended to issue a debit note for the price differentia rather than invoice since there is no removal of goods.

2. It has been held in number of cases that the transaction value shall be the value as at the date of removal of goods. Any subsequent price reduction, even at the prerogative of govt., shall not entitle the assessee to refund. However, if at the time of removal of goods, it is likely that there will be price reduction in future but the quantum is not known, the assessee can request the AO for provisional assessment.

Rate of duty is relevant at the time of removal, when the goods leave the factory gate.