Use of partial material imported under import dealer code

[sachin shilamkar]

We are registered dealer under central excise for imported goods. We have imported 200 kg oil in 25kg packing. While selling the same to customers we are passing on ACD & CVD. Now we want to break one packing of 25kg and use 5kg of the material for retail sale in small packs.

We want to know if we do so

1) Can we be able to pass on ACD & CVD for the rest of material (175kg) to the customers who are purchasing the same from us under dealer import code.

2) Can we be able to pass on ACD & CVD for balance 20kg (from the packing which is opened) to the customers who are purchasing the same from us.

Regards

Sachin

[Rajagopalan Ranganathan]

Sir,

What is the name of the oil imported by you? According to Chapter Note 5 of Chapter 15 of first schedule to Central Excise Tariff Act, 1985 "labelling or relabelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to 'manufacture." Therefore if you open the 25 Kg. pack and repacking the same into 5 KG pack it will amount of manufacture. Therefore you have to take central excise registration and to follow excise procedures. However you are exempted up to the value of 1.5 crore under Notification No. 8/2003-CE dated 1.3.2003 as amended. Since you are going to open the 25 KG package even if you sell the remaining 20 KG it will amount to repacking and will amount to manufacture. However you can take credit of ACD and CVD and use the same for payment of duty on repacked goods. In the case of rest of the quantity you can pass on the credit of ACD and CVD.

[Ganeshan Kalyani]

Yes repacking of goods also amounts to manufacture and excise duty may be applicable.

[KASTURI SETHI]

Dear Sachin,

What is Chapter/Sub-heading no. of your product ? Pl. ensure whether it is covered under Third Schedule of Central Excise Tariff Act or not ?

[sachin shilamkar]

It is imported sandalwood oil (essential oil). We know that if we open any packing it will be treated as manufacturing but as we can avail exemption of 1.5 cr we are ready to add duty of 25 kg into our cost and do not pass on the same. We are concern about the ACD & CVD of balance 175 kg. Can we be able to pass it on to the customer as a dealer. Someone told us that if we open any one packing of the lot we are not able to pass on duty of the entire material which we have imported under the same bill of entry.

[sachin shilamkar]

It comes under chapter 33

AI Summary

Repackaging Imported Sandalwood Oil as Manufacturing: Dealers Can Pass on ACD and CVD Credits Per Central Excise Tariff Act. A registered dealer under central excise for imported goods inquired about the implications of repackaging imported sandalwood oil. They imported 200 kg in 25 kg packs and plan to use 5 kg for retail sale in smaller packs. The main concern is whether they can pass on Additional Customs Duty (ACD) and Countervailing Duty (CVD) for the remaining 175 kg and the 20 kg from the opened pack. Responses indicated that repackaging constitutes manufacturing under the Central Excise Tariff Act, requiring excise registration and procedures. However, they can pass on ACD and CVD credit for the repacked goods.