XYZ Ltd., sold machinery to ABC at a price of ₹5 lacs on 18th August, 2016 which was removed from its factory at Jaipur. The rate of excise duty applicable is 12.36% on the date of removal. ABC refused to take delivery o
CS Professional · Advanced Tax Laws and Practice · PYQS · June 2017
XYZ Ltd., sold machinery to ABC at a price of ₹5 lacs on 18th August, 2016 which was removed from its factory at Jaipur. The rate of excise duty applicable is 12.36% on the date of removal. ABC refused to take delivery of the machine when it reached destination. Meanwhile XYZ Ltd. increased the price of the same type of machinery to ₹6 lacs with effect from 19th August, 2016. The machinery as refused to by ABC has been sold on 26th August, 2016 to Mr. Lal at the revised price of ₹6 lacs. The excise duty including education cess applicable when the machine was sold to Mr. Lal was 15.45%. Explain the following with reasons: (iii) The Central Excise Officer is demanding the duty on the price of ₹6 lacs at the time of sale to Mr. Lal. Is he right in his approach?
Answer & Explanation:
The approach adopted by the Central Excise officer is not right as the duty is chargeable on the goods when it is removed from the factory i.e. 18th August, 2016 and not the date when the goods were sold to Mr. Lal i.e. 26th August, 2016.
Topics: Central Excise Law
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