Excise duty Exemption under Notification 10/97

[Vivek anandhan]

Dear Experts

We are a manufacture of Generators, we have received an order from Research Institute for supply of Generator under Excise duty exemption. Customer has given exemption certificate obtained from Department of Atomic Energy. Whether we can supply Generator set under this notification. Also whether we need to give reversal of CENVAT at 6% for this exempted sale under Cenvat credit rule..

[MUKUND THAKKAR]

Issue Id: -2898 Dated: -16-03-2011 By:-Vivek anandhan
Excise duty exemption under notification 10/97
We are going to despatch our product without payment of duty under notification 10/97(Research Instute - Public funded), whether we have to reverse 5% of duty under theCenvat Credit Rule, 2004(rule 6) Can any body explain me. V.Vekanandhan Sunbeam Generators Pvt ltd., Dated: -16-03-2011 By: -Mangesh Lokre Yes, You have to reverse an amount (and not the Duty) equal to 5% of the Value of the exempted goods, if you have not maintained the seperate account for dutiable and exempted goods. Example : If the Value of the Exempted Goods is ₹ 100, then you have to reverse ₹ 5. This will Non Cenvatable and Cost to you. This value will not reflect on the Excise Invoice hence not recoverable from the Customer.

[PAWAN KUMAR]

Dear Sir,

As per my view, you need to reverse the six percent amount as per rule 6(3)(i) of value of exempted goods i.e. generators. This amount should be shown on invoice as per trade notice of Indore Commissionerate. Although it is not the duty of excise, It will not be charged to customer.

[Mahir S]

Yes sir, as explained above, you have to reverse 6% of the total value of the exempted goods.

Previously it was 5% but substituted to 6 % vide notification no. 3/2011 CE(NT) dated 1.3.2011 w.e.f. 1.4.2011,

AI Summary

Cenvat reversal obligation requires a prescribed percentage of exempted supply value under rule 6(3)(i), not recoverable from customer. Supply under Notification 10/97 to a qualifying research institute is exempt from excise, but manufacturers must reverse from Cenvat an amount equal to a prescribed percentage of the value of exempted goods where separate accounts for dutiable and exempted goods are not maintained; the reversal is an amount (not duty), non-cenvatable, a cost to the manufacturer, may be shown on invoice per trade guidance, and the applicable percentage is that fixed by current notification.