Exemption of ADDL CVD

[Guest]

Dear Sir,

Under Customs notification no 21/2012 Sr.no 2 which enables us for exemption of ADDl CVD (4%) on pre-packed commodities with affixed MRP and which are intended for Retial Sale only.

Further if MRP pre-packed goods with affixed MRP on it if supplied for industrial use under EX-bond clearance from Customs, then even after affixing MRP on it whether we can claim exemption of ADDL CVD 4% duty.

Please explain and please give us any reference regarding this.Thanks & Regards.

[Surender Gupta]

As per the sr. no. 2 of the notification no. 21/2012 customs, the conditions is that, it must be "intended for retail sale".

The words "intended for" was under the scrutiny of the Supreme Court in the matter of JK. COTTON SPG. & WVG. MILLS CO. LTD. Versus SALES TAX OFFICER, KANPUR [1964 (10) TMI 2 - SUPREME COURT OF INDIA]

Accordingly, the scope of the "intended for" is not narrow. All the facts and circumstances are to be analyzed to see whether the conditions of the notifications have been fulfilled or not.

The decision of the apex court as above, have been followed in number of decisions specifically relating to Cenvat Credit and C-Forms in CST Act, 1957.

Apart from this, the Manufacturer may be eligible for Cenvat Credit of such 4% SAD.

Therefore, a careful and considered decision is required in view of factual details and circumstances.

[Surender Gupta]

Also see: Commissioner of Central Excise, Udaipur Versus M/s. Chambal Fertilizers and Chemicals Ltd. [2016 (8) TMI 935 - CESTAT NEW DELHI] wherein it was held that, " The benefit of notification to urea for use in fertilizer has to be decided at the time of clearance of the goods itself from the factory. In my view actual use of urea as fertilizer is not envisaged in the impugned notification. Since there is all the intention at the time of clearance that urea to be used as fertilizer and there is no intention that urea will not be used as fertilizers, hence the benefit of exemption to urea will apply to all quantity of urea even if some quantity of urea is subsequently destroyed or lost due to transportation, re-bagging and standardization."

AI Summary

Exemption of additional duty depends on whether goods were intended for retail sale at the time of clearance. Notification No. 21/2012 (Sr. No. 2) exempts additional countervailing duty for pre packed goods with affixed MRP that are intended for retail sale; the test of 'intended for' is fact sensitive and must be assessed at the time of clearance. Where goods bearing MRP are cleared ex bond for industrial use, entitlement to the exemption hinges on whether the requisite intention for retail sale existed at clearance; related authorities confirm that notification benefits are determined at clearance and may persist despite subsequent use or loss. Manufacturers may also consider Cenvat credit subject to factual analysis.