AS SUCH CLEARANCE - CLARIFICATION REQUESTED - REG.

[R MURALI R MURALI]

Dear sir,

I have some doubt regarding ours unit Manf. of Boiler components and we are despatching our products to Mega power project on behalf of BHEL, TIRUCHY. At the time of we are purchasing huge quantity our Raw materials (BEAM, ANGLE, CHANNEL,ROD, ROUDS, PLATE) and still lying some portion idle after completing our BHEL order. Hence we are planning to sale our Raw materials AS SUCH. Dept., refusing to sale , due to rare case you may sale your RM , but it is not continue to sale AS SUCH.

As per rule simply they indicate manufacturer also sale RM as such. But it was not indicated continue to sale or not?

Please give your suggestion.

With Regards.

R.MURALI

ranemurali@gmail.com

[MUKUND THAKKAR]

Sir,

You may ask dept. where it is mention in central excise rules regarding " rare case you may sale your R.M , but it is not continue to sale AS SUCH" you can not sales as such on higher price. clear your goods as such without any hesitation.

.

[YAGAY and SUN]

Dear Murali,

Department intentions as we understood from your query is to treat this transaction as Trading. As Trading provisions under Central Excise may overlap the provisions of removal as such. These provisions are very well incorporated in the Central Excise Laws. Department is rightly catching up the assessee in such matters. So, be Alert!

Regards,

YAGAY and SUN

Management, Business and Indirect Tax Consultants

[Rajagopalan Ranganathan]

Sir,

If you are selling to another manufacturer like you it can be treated as removal as such and while selling to such manufacturer you can reverse the credit of duty paid on such materials and clear it with any further duty liability. If you sell to a trader or some other persons then it will be treated as trading and you are not eligible to avail the credit. Therefore while selling you have to reverse the credit taken by you.

The observation of the Department that only in rare cases you can remove the raw materials as such is not supported by Central Excise Act or CENVAT Credit Rules, 2004.

Please note that the department can not restrict your activities, if those are related to your business calls. So many reasons will be there to reject/remove/sale your materials due to quality, or may not be required that much of surplus quantity. There may be good market for your inputs. Hence, no reason is stipulated in Central Excise Rules to stop for as such removal. But, the law is very clearly stating what rules you have to adopt at the time of removal of inputs and capital goods. Pl see the CCR 2004 Sub Rule (5) of Rule 3 you are required to reverse the CENVAT amount whatever taken at the time of purchase of such goods. The equal amount of cenvat has to be reversed by way of giving reference to the department to check. If you are decided to give as free of cost or 200% of value that has no relevance to the Department. If you are intended to remove these goods for export then, it is very clear you need not to reverse such cenvat taken amount also. Further, if have done your exports on payment of duty, in such case you can claim the rebate of such amount. Finally the department can not control your business activities. Simply they are eligible to examine your transactions to know any procedure deviation or any duty short payments.

AI Summary

Removal of inputs as such permitted but requires CENVAT credit reversal when not retained for manufacture.
Surplus raw materials may be sold "as such"; the department cannot bar such disposals. If sold to another manufacturer for use in manufacture, treat as removal as such and reverse any CENVAT credit availed, addressing any duty liability. If sold to traders or non-manufacturers, treat as trading and reverse the credit, as trading sales do not allow retention of CENVAT. CCR provisions mandate credit reversal and specify procedural/documentary compliance. Exports of such inputs generally do not require reversal and may allow rebate where duty was paid. The department may scrutinise transactions for compliance but cannot impose a blanket prohibition.