EXCISE (1) BASIC CONCEPTS
1. If the goods were exempted from duty on the date of m/f but were dutiable on the date of their removal, they would be liable to duty. Wallace Flour Mills Co. Ltd.
2. If at the time of m/f there were no levy of SED then the goods m/f during the pd. cannot be subjected to SED at the time of removal. Vazir sultan tobacco Co. Ltd.
3. Goods will satisfy the test of marketability even if they are available from one source or from a particular market. Burden of proof that the goods are marketable is on the revenue. FGP Ltd.
4. Intermediate goods produced and used for captive consumption are not liable to duty if not marketable, notwithstanding the fact that they are specified in the tariff schedule. Modi Laminates P.Ltd.
5. Plant & machinery embedded to earth are not movable and hence not excisable goods. Quality steel tubes P. Ltd.
6. A factory shed set up by assembling at site various components supplied by the principal is not an excisable goods as it is immovable. Simplex Concreted piled India Ltd.
7. Paper making machine if assembled and erected at site and embedded in concrete base to ensure wobble free operation will not become an immovable property. The machine can be dismantled from its base and sold in parts. Sirpur paper mills.
8. Manufacture implies a change but every change is not m/f and yet every change of an article is the result of treatment, labour & manipulation. But something more is necessary and there must be transformation. A new and different article must emerge having a distinctive name, character and use. Delhi Cloth & general mills Co. Ltd.
9. The process of attaching the headers to lead and aluminium sheets amounts to m/f since by attaching headers, the lead and aluminium sheets are converted into electrodes which is a new product known in the market with a distinct name, character and use. Hindustan Zinc Ltd.
10. Process of obtaining silver choride by filtering sulphates from mixture of zinc choride, lead etc, amounted to m/f. Since the same could not be proved to be marketable in that condition, it was not liable to duty of excise. Hindustan Zinc Ltd.
11. Cutting/slutting of jumbo rolls of tissue paper into tissue of smaller size doesnΓÇÖt amount to m/f. S.R.Tissue p. Ltd.
12. A process would not amount to m/f unless at the end of it a commercially new and different article emerges.Parle products ltd.
13. Mere fact that the material, from which new goods are m/f, has suffered duty under a particular tariff item does not exclude the finished product from being excisable to fresh duty if the tariff act provides for it. Kapri international p. Ltd.
14. A process would amount to m/f when (i) by the said process a diff commercial commodity comes into existence or the identity of original commodity ceases to exist. And (ii) but for the said process, the already existing commodity will serve no purpose or will be of no commercial use. J.G. Glass Industries.
15. A customer gets the goods m/f according to his design and specifications or with his name or trade name then the job worker will be considered as m/f. M.M. Khambatwala.
16.
EXCISE (2) CLASSIFICATION
1. A product may be medicinal without having been prescribed by a medical practitioner. A product cannot be held to be cosmetic merely by reason of its outward packing. Meghdoot gramodyog sewa sansthan.
2. In the matter of classification, HSN along with explanatory notes, rules of interpretation of tariff and functional utility, design, shape and predominant usage, are more important than the names used in trade or common parlance. O.K. Play India Ltd.
3.
CENVAT CREDIT
1. Spares for ropeways used for bringing crushed limestone from the mines to the factory are capital goods and are, thus eligible for cenvat credit. Birla Corporation Ltd.
2. Goods must be used within the factory of production to qualify as Inputs for the purpose of availing the CENVAT credit. J.K.Udaipur Udyog Ltd.
[size=3. ]Where the duty paid by manufacturer of inputs is not stated in the documents then also the purchaser of such inputs can avail CENVAT cr. In respect of the same, provided he verifies the payment of ex duty by the m/f by credible evidence. What is to be examined at the time of allowing CENVAT cr is not the time at which the duty is paid by the m/f of the inputs but the actual payment of duty. CEGAT.[size= ]
VALUATION
1. Duty is chargeable at the rate and on the price prevailing on the date of actual removal of goods from the factory gate and subsequent reduction in the price even at the behest of the Govt. does not create a right in favor of the assessee for refund of duty on the reduction in the price. MRF Ltd.
2. Where cum duty price is charged, then in arriving at the assesaable value of the goods, the element of duty, which is payable, has to be excluded. Sale price realized by the assessee is to be regarded as the entire price inclusive of excise duty. Maruti Udyog Ltd.
3. Since glass sheets were delicate/fragile in nature and could not be moved in wholesale trade without being packed in wooden crates, therefore the wooden were meant to make the glass sheets marketable and thus, the cost thereof was includible in the A.V. of glass sheets. Hindustan Safety glass works Ltd.
4. Wooden crates are durable and returnable packing and thus, cost thereof is not includible in value of glass sheets even if they were not actually returned. It is sufficient that the seller is under a contractual obligation to take them back if buyer chooses to return them. Triveni Glass Ltd.
5. The value of operating software is not includible in the assessable value of the computers. Acer India Ltd.
6. While assessing the excisable value of the goods sold to sub stockiest the diff between the amount of discount given to the sub stockiest which has been passed on to the stockiest, will not be allowed to be deducted. Escorts Ltd.
7. Loading and unloading charges incurred by a distributor of the assessee are not includible in the A.V. of goods. Only those charges incurred for loading the finished goods within the factory of the assessee are includible. Poona Bottling Co.Ltd.
8. The goods m/f out of inputs supplied by principal m/f was retained by the job worker who sold them and retained the sale proceeds. Held that such sale proceeds will be additional consideration to the job worker for doing the job work and will form part of A.V. of goods. Nirma Ltd.
9. Where there is a free supply of components to the assessee by the buyer whose brand name goods are to be m/f then the A.V. shall be determined in accordance with rule 6 as price is not the sole consideration for sale. Dugar Electronics
10. subsidy received from the govt. is not an additional consideration while subsidy recd. From buyer of the goods is an add. Consi. Even if the same is recd. Under a policy of the govt. Mazagon Dock Ltd.
11. Where the sale is made from the depot the freight and insurance charges up to the depot will be includible while the fr & Ins. For delivery to the customer from the depot is not includible in A.V. Prabhat Zarda Factory Ltd.
12. In case of inter depot transfers the price prevalent at the latter depot i.e the last depot from where the goods are actually sold will be taken as the A.V. of goods. Brakes India Ltd.
13. The fact that two public companies have common directors does not render both the companies as related person. Alembic Glass Industries Ltd
14. Merely bcoz the buyer is the holding co. and a person related to m/f does not by itself show that the invoice price was influenced by such relationship, more so when the m/f is selling goods at same prices to other prices. Acorn Engg. Ltd.
15. The cost of material should be net of ex duty if CENVAT credit is availed in respect of such inputs. Duty paid on raw material which is allowed as CENVAT cr to be utilized towards payment of duty of excise Dai itci Karkaria Ltd.
16. Supplying 13 units of ex goods to a wholesaler at a price of only 12 units, is in the nature of trade discount by way of quantity discount. Further, in case of free supply there is no sale and thus, its value is not includible in the A.V. under sec 4A. Vinayak Mosquito Coil Mfg. Co.
17. When the goods falling under sec 4A are supplied free of cost with other products and the packet of such goods doesnΓÇÖt bear any MRP, then such goods will be assessed under sec 4 and not under sec 4A. Pepsi foods Ltd.
18. Even if free gifts are offered by the m/f to the buyer on the sale of ex goods, the retail sale price charges from the buyer will be the sole consideration for sale. Sony India Ltd.
19. The amount paid as compensation to customers for breakages or losses sustained during transit is not deductible as cost of transportation. Surya Roshni Ltd.
Dear Dhruv,
Thanks for sharing the information.
