Material Purchase Under CT -3

[Asked by Guest]

Respected Sir / Madam

we are 100 % EOU We purchase Material against CT 3

My Querry is

1.Purchasing Material is IPA ,Central Excise Tariff No is - 29051220

Material received against CT -3 , 200 ltrs Drum

1 Drum Contains 200 Liters IPA WE USE IPA THE PACKING MATERIAL IS DRUM

CAN WE SALE DRUM WITH THE HELP OF CIRCULAR.NO 721/37/2003 DTD.06.06.2003.

THANKS & REGARDS

GORAKHNATH KHARADE

[Rajagopalan Ranganathan]

Sir,

What is your doubt? The circular has clearly stated that -

"The Apex Court has held that no duty could be demanded on the containers used for the packing of inputs, on which credit has been taken when cleared form the factory of the manufacturer availing credit as these containers could not be treated as scrap on waste arising out of the manufacturing process. Similarly, reversal of credit either on proportionate basis or otherwise is also not required as the utilization of input on which credit has been taken is not in dispute.

Accordingly, it is clarified that no duty shall be payable and no reversal of credit is also warranted on waste package /containers used for packing inputs, on which credit has been taken, when cleared from the factory of the manufacturer availing Modvat/CENVAT credit.

Therefore you can sell the empty drums without payment of duty/reversal of credit in which IPA was packed after utilizing the same in the manufacture of your final products.

Respected sir

Thank you sir you are 100 % Right.

but we are not taking a cenvat credit against IPA , WE are purchasing against CT-3, WITHOUT PAYMENT OF DUTY .we are taking credit of IPA as per circular no 76/99 customs dtd.17.11.1999. (WE ARE 100% EOU MANUFACTURERS)

as per Foreign Trade policy 2015-2020 para 6.15(d) Disposal of used packing material will be allowed on payment of duty on transaction value.

what will be action take against IPA DRUM SALE.

THANKS

GORAKHNATH KHARADE.

​

[Rajagopalan Ranganathan]

Sir,

Since you are receiving IPA without payment of duty, then the question paying duty on the used packing material will be governed by the FTP 2015-20. Therefore you have to pay duty on the drums on the transaction value since the drums are not subjected to duty when you purchase the IPA. Board's circular cited by me pertains to excisable goods manufactured in India and cleared on payment of duty within India and when such inputs procured in containers whose value is included in the transaction value on which excise duty is paid.

[SANJAY SURYAWANSHI]

Dear Gorakhnath,

If Purchase by 100% EOU against CT-3. Purchase without payment of duty. Duty is debited in B-17 Bond. Care of duty part care taken by B-17 Bond. Circular No. 721/37/2003 Dtd 6/6/2003 Clearly say no duty if sale Packing material of Input.

Diff. is in eou we are not taken a credit & in normal unit we taken a credit.

My view is no need to pay duty, in case of 100% EOU sale packing material of input.

Regards,

Sanjay V.S.

AI Summary

Disposal of duty-free packing material may attract duty under foreign trade policy on transaction value when inputs were duty-exempt.
For 100% EOUs receiving IPA under CT-3 without payment of duty and without taking CENVAT credit, disposal of used packing material (empty drums) is governed by the Foreign Trade Policy and requires payment of duty on the transaction value. The Board circular exempting containers from duty and reversal of credit applies where inputs were procured with credit and duty paid, not to duty free CT 3 receipts; practitioners note duty may be recorded against the B 17 bond but differ on practical effect.