Circular by January 15 for levying excise on goods sold below cost: Finance Ministry
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The Finance Ministry has said it will come out with a circular by January 15 to implement a Supreme Court decision regarding valuation of goods sold below the cost price for levying excise duty.
The Supreme Court in a recent decision - in the case of CCE, Mumbai versus Fiat India (P) Ltd - held that where products are sold at considerable losses for an unduly long period of time for the purpose of market penetration, the transaction value cannot be accepted for levying excise duty.
Following the decision, field authorities of the excise department are asking assessees to furnish cost data of various products for the previous years.
"The modality of implementation of the decision of the Honourable Supreme Court is under consideration of a committee of Chief Commissioners. The Circular in this regard will be issued by January 15, 2014," the Finance Ministry said in a statement on Tuesday.
Last year, the apex court had dismissed the review petition of Fiat India and held that it would have to pay excise duty of over Rs. 300 crore for sale of cars below the cost price.
The dispute pertained to the valuation of car for levying the excise duty.
While the company insisted that it should be levied on the price being charged, the Revenue Department had calculated the duty on the basis of fair price.
The decision to issue the circular was taken by Finance Minister P Chidambaram, the statement said, adding that several issues concerning taxation came up for discussion at the forum for exchange of views between industry groups and government on tax related issues or disputes.
Mr Chidambaram had constituted the forum in July under the chairmanship of his adviser Parthasarathi Shome.
On service tax to be paid by reinsurance agents, the statement said the revenue department will seek inputs from the insurance industry to ascertain whether there is double taxation of the brokerage paid to reinsurance agents.
The ministry will issue circular, if necessary, for mitigation of double taxation, if any, it said.
The panel suggested that a process is being designed to get the importers to register with the tax department, who may then more easily pass on the CENVAT credit of counter-veiling duty to a manufacturer.
The new mechanism will be in place by December 31.
The statement said the guidelines will also be issued with regard to service tax refunds for exporters, distribution of CENVAT credit by input service providers and clarifications with regard to status holder incentive scheme. (PTI/NDTV)
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