Excise valuation rules, SIAM lauds Finance Ministry’s clarification

The Society of Indian Automobile Manufacturers, the nodal agency has lauded the Union Government’s (Finance Ministry) clarification on the implementation of excise valuation rules, following the Supreme Court order in a case, pertaining to FIAT India, according to a statement issued by the apex body.  According to SC ruling, the Indian arm of the Italian car maker, FIAT need to pay the excise duty on the basis of cost of production and a notional profit and not on the selling price, which ws lower than production cost, noted the report and added that the excise duty is payable on th etrascation value of a product.
According to SIAM, the SC order has spread panic among car manufacturers, fearing that they will have to pay duty on ‘whatever s higher, either production cost or selling price, which will have a major effect on passenger vehicle makers, who were selling their products offering humungous discounts in order to improve their fortunues at a time when market slowdown is gripping the industry.
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Vikram Kirloskar, President of SIAM stated in a release that the across-the-board implementation of excise duty valuation based on the cost of manufacture had trigerred widespread concern within the automotive firms as it made it cumbersome for the industry to price the products in tune with the market ralities and still pay excise duty based on the transaction value.
Representations
In fact, SIAM has made several representations consequent to which the Finance Ministry issued a circular on January 15, 2014. According to the Finance Ministry, the SC order on excise duty would apply only in the case of a car manufacturer, which sells its cars at a price below the production cost for a prolonged time to gain more market share. According Kirloskar, the member companies of SIAM welcomed the industry-friendly approach of the cirular issued by the Finance Ministry. What is more, the official said the clarification issued by the Ministry had substantially addressed the concerns of the automotive industry.
“We will continue the process of sustained dialogue between the industry and the MOF to enable a better understanding of the constraints facing the automotive industry as far as the product pricing is concerned, besides rationalising and harmonising the tax laws for the auto industry.

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