rate of duty for empty metal drums

[Guest]

Sir

We are receiving chemicals in metal barrels after using the material, we are selling the empty drums as scrap,

Kindly clarify the following :-

1. Whether duty to be collected while clearing.

2. What is the percentage applicable.

3. We already collected 6 % for clearing in the month of January, 2017.

[MUKUND THAKKAR]

No excise duty payable on empty drums / barrels please refer enclosed circular which has self Explanatory...

Board’s Circular No. 721/37/2003-CX., dated 6-6-2003

[YAGAY andSUN]

In our view on transaction value an amount @ 6% under Rule 6 of the CENVAT credit Rules, 2004 needs to be paid as there was a change in 2015 Budget.

[KASTURI SETHI]

M/s. YAGAY AND SUN,. Dear Sirs, Wlii you PL be oblige me by mentioning specific provision of Rule 6 of Credit Rules, which requires reversal or payment. Really I could not trace out. Thanks & Regards

K. L.Sethi.

[YAGAY andSUN]

Dear Sir,

Please refer Explanation 1 of Rule 6(1) of the CENVAT credit Rules 2004 which was inserted vide Notifcation No. 6/2015-C.E. dated 01-03-2015 and it enumerates that for the purpose of this rule, exempted goods or final products as defined in clauses d and h of rule 2 shall include non-excisable goods cleared for a consideration from the factory.

This is just for your kind information and records.

Regards,

YAGAY and SUN

[KASTURI SETHI]

M/S. YAGAY AND SUN,. Dear Sirs, Thanks a lot for clarifying and devoting your precious time for me. However, the issue requires further x-ray.

[KASTURI SETHI]

Sh.Ganeshan Subramanian Ji,

After analyzing Board's Circular dated 6.6.2003 viz-a-viz Rule 6(1) of Cenvat Credit Rules,2004 as amended in the year 2015 and Rule 2 (d) & (h) of Cenvat Credit Rules, 2004, I go with reply dated 13.2.2017 of Sh.Mukund Thakkar, Sir.

[Ganeshan Kalyani]

No excise duty payable. Thanks Sri Kasturi Sir for clearing the air.

[YAGAY andSUN]

Revenue Department has issued SCN on such matters under amended Rule 6. Even Top Law firms have the same view after the amended Rule 6.

[KASTURI SETHI]

Dear Sirs,

In my view such SCN would be termed as 'Lame' SCN.

[KASTURI SETHI]

Dear Querist,. Even top law firms are not guarantee of quality. During my tenure in adjudication, I have seen serious mistakes in the replies to SCN filed by top law firms.

[YAGAY andSUN]

However, the success rate in 70% for the lawyers and 30% for department and where the matters were pending for almost for 15% for unknown reasons, the revenue department had withdrawn all such matters in the line of Ease of Doing Business in India. 

[KASTURI SETHI]

Dear Sirs,

I have read somewhere success rate for the department is 5% only.

[YAGAY andSUN]

This 5% success rate of the Revenue Department seems good for our fraternity i.e. for Tax Consultants.

[KASTURI SETHI]

M/s.YAGAY AND SUN,

Yes Sir. I agree with you in toto.

[Suryanarayana Sathineni]

Dear Fririend,

I agreed with the views of SMukund Thakkar and Shri. Kasturi Sethi Ji, for the simple reason over and above their views that Provisions of Rule 6 of CCR,2004 wiil be applicable for only to the manufactured goods and not for the drums since they are manufactured by the input supplier and the value of which already included in the assessable value on which duty was padi by the input supplier/manufacturer. The question of non excisible goods as per the proviso inserted in 2015 according to me has no applicatin in this case.

[Guest]

With due respect to all I thank you for the replies made.

[VaibhavKumar Jain]

In my view no Central Excise duty is payable 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 as these are not non-excisable goods which requires payment of duty under Rule 6(3) of Cenvat Credit Rules. The packing scrap 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 above circular which still holds good.

Section 2(d) of the CEA defines “excisable goods” which means goods specified in [[the First Schedule and the Second Schedule] of the Central Excise Tariff Act, which are 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 . 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, these do not fall in the definition of 'exempted goods' and thus 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 06/2015 dated 1^st March 2015.

AI Summary

Excise duty on empty metal drums: administrative view denies fresh duty but amended Rule 6 has prompted departmental challenges. No excise duty is usually payable on clearance of empty containers and packing scrap from the factory where the cost was included in assessable value and Cenvat credit taken; administrative guidance treats such clearance as not requiring duty payment or proportionate credit reversal, but the 2015 amendment to Rule 6 of the Cenvat Credit Rules has led to departmental show cause notices invoking Rule 6 for certain non-excisable/exempted goods, producing a contested position on applicability.