CT-3 for RM and the final goods are exempted!

[VVFINDIA Taloja]

Dear Experts,

Pls help me to clarify, whether an 100% EOU can issue CT-3 to procure raw material to manufacture exempted goods? Please consider this particular raw material will be exclusively used in manufacture of exempted finished goods. This finished goods either will be exported or cleared in DTA market to the extent of DTA eligibility.

regards,

Vinayak

[PAWAN KUMAR]

Dear Sir,

As per my view, RM can be procured under cover of CT-3 for manufacturing goods by an 100%EOU meant for either export or DTA supply.

[VVFINDIA Taloja]

Thank you Mr. Pawan.

Here in general case issuing CT-3 will not be a problem. But when the finished goods are exempted whether CT-3 can be issued? When we look from the DTA angle, when finished goods are exempted, CENVAT credit on raw material is clearly denied. Any how thanks for your thoughts.

[VVFINDIA Taloja]

As per Notification No. 56/2001-Cus., dated 18-5-2001, As for DTA clearance of goods manufactured by the EOUs which are not excisable (e.g. cut flowers) the duty on inputs and consumables etc. procured/imported duty free under exemption notifications, which have gone into production of such non-excisable goods cleared into DTA, is recovered. Any other opinion for this?

[Kailash Singhal]

d/s

no exemption will be available in central sales against form c and cst has to be charged at the appropriate rate

regards

ca kc singhal

AI Summary

CT-3 issuance for input procurement by an EOU: allowed but DTA clearance of exempted goods may trigger duty recovery. An EOU may issue CT-3 to procure raw materials for manufacture of goods for export or permitted DTA clearance, but where the finished goods are excise exempt CENVAT credit on inputs is denied and duty recovery under the applicable notification may be required upon DTA clearance of non excisable or exempt goods; additionally, concessional central sales treatment against Form C may not apply and CST must be charged on such DTA supplies.