The changes now made to section 4 of the Central Excise Act seek to fix the assessable value of goods sold from the depot at the price in which they are dispatched. While the amendment does not specifically states so, industry sources understand that transport and other charges will not be deductible from the assessable value.
Representations have been made by trade, industry and bodies like the Confederation of Indian Industry to the finance ministry calling for a review of the changes. Senior officials, however, maintained that the changes were proposed to plug the loopholes wherein manufacturers were using the sales depot to evade excise duties.
Citing an MRF judgement in 1995 which allowed transport and other charges to be deducted from the permissible value of goods cleared from the depot, trade sources say the move will give rise to a controversy. In this instance, it was allowed as they were considered post-manufacturing expenses.
Amendment to section 4 of the Central Excise Act was proposed to legally extend the expression place of removal to godowns and depots as well. The net impact is that for goods which are cleared at the factory gate, the assessable value is the price at which the goods are sold at the factory gate.