4.
M/s.YAGAY AND SUN,
Dear Sirs,
With due respect, I agree with your views to the extent that no Central Excise duty is leviable on the sale/clearance of empty poly bags, empty corrugated box, wooden pallet scrap i.e. packing/packaging material, (in which cenvatable inputs were received and on which credit has been taken) from the factory, in terms of Board’s Circular No. 721/37/2003-CX., dated 6-6-2003 based on the judgement of Supreme Court in the case of M/s. West Coast Industrial Gases Ltd. Vs.CCE. Reversal of credit is also not warranted.
But these are not non-excisable goods as you have mentioned. On the basis that non-excisable goods are included in the definition of ‘Exempted Goods’, you have arrived at the conclusion that an amount of 6% is to be paid under Rule 6(3) of Cenvat Credit Rules, 2004, this is not correct inasmuch as all these goods are excisable and duty-paid.The cost of packing material/packaging material/containers i.e. empty poly bags, empty corrugated box, wooden pallet scrap was included in the price of inputs (Cenvatable) and cenvat was availed on that value portion also.
.Neither CE duty is to be paid on these nor proportionate cenvat is to be reversed at the time of clearance/sale of these from the factory in terms of Board's Circular No. 721/37/2003-CX., dated 6-6-2003 which is appended below:-
Circular No. 721/37/2003-CX., dated 6-6-2003
This Board's Circular is still in force.
As per Section 2 (d) of Central Excise Act, “excisable goods” means goods specified in [[the First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986)] as being subject to a duty of excise and includes salt; irrespective of the fact that whether CE duty is chargeable NIL by virtue of tariff rate or through any notification. Non-excisable goods are those which are not specified in the First Schedule and Second Schedule of the Central Tariff Act, 1985 (5 of 1986)
Since the said goods i.e. empty poly bags, empty corrugated box, wooden pallet scrap i.e. packing/packaging material are NOT non-excisable goods and hence do not fall in the definition of 'exempted goods' cleared for a consideration from the factory, payment of an amount equal to 6% of the value of exempted goods is not required under Rule 6(3) (1) as amended vide Notification no.6/15-CE(NT) dated 1.3.2015.
To cap it all, Board's circular should prevail.
Dear Sir, Pl. let me know if I am in the wrong.