Payment of Duty - manufacturer

[pravinchandra salian]

The Rate of Excise Duty has been reduced from 10% to 8% wef 24.02.09. In case of a manufacturer manufacturing dutiable and exempted goods and not maintain separate accounts of cenvat credit availed, the manufacturer shall pay an amount equal to 10% of the value of exempted goods in terms of Rule 6(3) of  CCR, 2004. In the issue under consideration inspite of reversing 10% whether the manufacturer can pay duty @8% on the value of exempted goods. The goods are exempted by virtue of Notification and not by tariff itself.

[pravinchandra salian]

Replace the word "inspite" with instead of reversing 10%

[Mukesh Kumar]

Yes, it is well settled that the exemptions notifications are optional. You can pay duty of central excise appropriate rate (8% or so) on clearance of those goods. In that there would not be any requirement to apply the provisions of rule 6 of cenvat credit rules 2004 with respect to these goods.

AI Summary

Optional exemptions allow payment of the applicable excise rate on clearance of exempted goods instead of cenvat reversal rules. Where a manufacturer fails to maintain separate accounts for cenvat credit and clears goods exempted by notification, the discussion concludes that because such exemptions are optional the manufacturer may elect to pay the applicable excise duty on clearance of those goods rather than apply the cenvat credit reversal provision that prescribes a deemed payment based on the value of exempted goods.