Remission of Duty

[POLYPLEX CORPORATIONLTD]

Dear Experts

Please tell me time period for filing remission of duty application under rule 21?

As per notification No. 33/2007- CE (NT), dated 07.09.2007 - "the CENVAT credit taken on the inputs used in the manufacture or production of said goods and the CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods shall be reversed."

But the above is for finished goods, if scrap is destroyed due to fire then how to reverse the duty?

[KASTURI SETHI]

Scrap is also final product as per Central Excise Tariff Act.

[Suryanarayana Sathineni]

Dear Friend,

Rule 21 of CER,2002 deals with the provisions related to Remission of Duty. As such, this Rule not prescribed any time limit for making application for Remission of duty.

The above Rule facilitates for remission of duty on the manufactured goods/Finished Goods which are not fit for use/marketing etc.,

In terms of Cenvat Credit Rules,2004, on any goods if duty is remitted, then the assessee has to reverse the proportionate cenvat credit involved on the inputs used in such remitted goods at the time of destruction.

Further, the view expressed by shri. Kasturi Sethi Ji that scrap is also Final Product, I feel if any scrap that is generated during the course of manufacturer then it is subject to duty as if it is a final product. If it is otherwise, then scrap is not dutiable as it cannot be treated as final product.

Hope the issue is clarified.

Best Regards

Suryanarayana

[KASTURI SETHI]

Sh.Surya Narayana,

Sir, Thanks for detailed and clear reply. I agree with you in toto.

AI Summary

Remission of duty requires reversal of proportionate CENVAT credit when remitted goods, including scrap treated as finished product, are destroyed.
Rule 21 of the Central Excise Rules, 2002 contains no prescribed time limit for applying for remission of duty. When duty is remitted on destroyed or otherwise unfit manufactured goods, the assessee must reverse the proportionate CENVAT credit attributable to inputs and input services under the Cenvat Credit Rules, 2004. Scrap that is treated and classifiable as a finished product is subject to duty and therefore to the reversal obligation; scrap not treated as a finished product is not dutiable and does not attract reversal.