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Transaction value-based excise assessment from today

Our Bureau

NEW DELHI, June 30

THE `transaction value-based excise assessment', announced in the 2000-01 Budget, will come into effect from Saturday, with the Finance Ministry outlining the manner in which value will be determined in cases, where excisable goods do not fall under the ambit of the new system.

A special dispensation, however, has been provided for price-sensitive commodities such as petro products, with the Revenue Department prescribing that status quo be retained in respect of price-administered products such as diesel, motor spirit and kero sene.

This is to ensure that there is no price increase on these products due to any probable enhancement in the assessable value on account of the interpretation of valuation rules. A directive has been issued to field formations that pre-July assessable valu e be adopted in cases where there is any increase in the assessable value.

The salient features of the valuation rules, applicable to those goods which are not covered by the new Section 4 (1)(a) of the Central Excise Act, include specification that excisable goods used for captive consumption will attract valuation equivalent to 115 per cent of the cost of production or manufacture of such goods.

The Revenue Department maintained that the new system would provide clarity and simplicity contrary to apprehensions expressed by trade and industry that unsettling of the existing practices would lead to operational problems.

Under the new dispensation, it is immaterial whether the goods are sold by the assessee in wholesale or retail and each transaction is valued on its own merits. Different transaction values for goods sold on a commercial basis are permissible.

The rules also provide that the cost of transportation from the factory to the place of delivery, if charged in addition to the price for the goods and shown separately in the invoices, will not form part of the assessable value.

Goods transferred to depots will be assessed to duty at normal transaction value prevailing at the depot. Discounts allowed as per trade practice and passed on to buyers, will be excluded from the transaction value.

Interest charged on delayed payment as per trade practice and on the agreement between the buyer and the seller shall not form part of the assessable value.

As regards application of valuation rules to `inter-connected undertakings' - who will be construed as `related persons' - a provision has been made that even if the assessee and the buyer are interconnected undertakings, the transaction value will be r ejected only when they are `related' in the sense of Clauses (ii), (iii) or (iv) of Section 4 (3)(b) or the buyer is a holding company or a subsidiary company of the assessee.

Transaction value could then form the basis of valuation provided that the other two conditions namely, price is for delivery at the time and place of removal and price is the sole consideration for the sale are satisfied.

In essence, notwithstanding the change in definition of related persons in the new Section 4, for practical applications, its scope has been curtailed and but for minor variations it would not be much different from that covered under the old Section 4 d efinition.

Although a specific reference has not been made for packing charges, officials said it does not mean that charges relating to packing will not form part of the assessable value. Whatever amount is charged from the buyer for packing, and if not already in cluded by the assessee in the price payable for the goods, will be included while determining transaction value of the goods.