Interes or penalty leviable on Duty not paid within a time limit

[Asked by Guest]

Dear Sir,

we have started manufacturing unit since october -14 , after management decided not to avail SSI exemption then we applied for Excise Registration and we got a RC. on 25 th Nov-14 , still we have purchased raw material with excisable as well as non excisable since october-14 now we want to paid all duty in current date so my questions are below.

1) still we are covered under SSI UNIT ? and payment and return mode on Quarterly.?

2) Can we take cenvat on my raw material purchase and same we can utilise my duty payment .

3) what is the role of interest and penalty.? and how much percentage?

pls. guide ....

regards,

Manan V Pandya

Cell: +919510018659

Ahmedabad.-

[PAWAN KUMAR]

Dear Sir,

As per my view, The point wise reply is as under :

1.No If you obtain central excise registration, you are now non-ssi. Return and duty payment now on monthly basis.

2.Yes, You can avail cenvat on all rm lying in stock, in process and contained in finished goods lying in stock and starts paying duty on all clearances of finished goods.

3.No such penalty requires as also no such interest arises. During the month of getting excise registration, you need to pay duty and accordingly avail the cenvat. If duty not paid, you need to pay with interest and penalty.

[YAGAY and SUN]

Dear Manan

For availing the SSI Exemption one should be registered as SSI unit on the basis of Investment criterion in capital goods etc.

Regards,

Neelam Taneja - Executive Consultant

(YAGAY and SUN, Management, Business and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Dear Manan V. Pandya,

Query No.1.: -

If your total turnover during previous financial year is ₹ 400 lakhs or less you will be treated as SSI Unit. If you have established a new factory then you will be treated as SSI unit if the total turnover during the current financial year is not likely to exceed ₹ 400 lakhs.

Query No.2: -

As per Para 2 of Notification No. 8/2003-CE dated 1.3.2003 as amended (i) a manufacturer has the option not to avail the exemption contained in this notification and instead pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting his first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year; (ii) while exercising the option under condition (i), the manufacturer shall inform in writing to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise with a copy to the Superintendent of Central Excise giving the following particulars, namely:-

(a) name and address of the manufacturer;

(b) location/locations of factory/factories;

(c) description of inputs used in manufacture of specified goods ;

(d) description of specified goods produced;

(e) date from which option under this notification has been exercised;

(f) aggregate value of clearances of specified goods (excluding the value of clearances referred to in paragraph 3 of this notification) till the date of exercising the option;

Therefore if you opt for payment of duty on the excisable goods cleared by you you can credit of duty paid on inputs/capital goods and service tax paid on input services availed by you. However, if you opt for availing SSI exemption from 1st April of the next financial year the credit available in your book of accounts on 31st March of the previous financial year will lapse.

Query No.3: -

Question paying interest arises only if pay duty beyond the prescribed date. The prescribed date is 5 of the month following the quarter to which the duty payable relates. If you pay duty in electronic mode, that is, through net banking the due date is 6th of the month following the quarter to which the duty payable relates. For SSI unit duty is payable every quarter and not every month. Penalty is leviable only when you violate provisions of Central Excise Act, 1944 or the rules made thereunder. Rate of interest at present is 18%.

[Mahir S]

Yes, very well explained in detailed by Rajagopalan Ranganathan ji.

dear experts,

thank you so much for your guidance.

AI Summary

SSI status and option to pay duty: opting out allows cenvat credit but triggers periodic duty payments and interest.
Registration as a central excise assessee ends entitlement to the SSI exemption; exercising the option to pay normal duty must be done before first clearances and notified to excise officers. Once the option is exercised, cenvat credit on inputs, input services and capital goods may be availed and utilized against duty on clearances. Duty payment periodicity depends on SSI status, with interest on late payment and penalties for statutory violations.