PAYMENT OF DUTY & TAX FOR SCRAP QTY OVER DUTY FREE IMPORTED GOODS

[CHANDRU RAMACHANDRAN]

I wish to know the applicability of duties & taxes on scrap disposal from the production inputs imported under duty exemption scheme (EOU). As per my opinion, customs duty & IGST is payable on the overall value of scrap qty to be disposed in DTA. The percentage of duty payable is as per rate prevailing at the time of disposal of scrap. Please confirm if my opnion is correct.

[CHANDRU RAMACHANDRAN]

Those who have any opinion/knowledge about this issue may please throw in your inputs for better understanding, as quickly as possible.

[Shilpi Jain]

Yes, the duty would be payable... However, no duty would be payable if the scrap is destroyed after intimation.

[Shilpi Jain]

The destruction should happen within the unit

[CHANDRU RAMACHANDRAN]

Thanks for your revert Ms Shilpi Jain. By the way, I would like to get it confirmed whether the tax payable is based on the value of transaction for which the scrap is to be sold in DTA (or) the value at which the inputs were imported at duty free. Would be thankful if you could post your opinion on this aspect as I believe that it should be based on the value of transaction of scrap to be disposed in DTA.

[Shilpi Jain]

In case the scrap is arising out of goods which are manufactured and exported then the value will be the value at which the scrap is sold

[Shilpi Jain]

Incase the scrap is arising out of goods which are manufactured and domestically cleared the value on which the duty would have to be paid would be the value of the imported goods

AI Summary

Duty on scrap from duty free inputs payable on domestic disposal; in unit destruction avoids duty; valuation depends on export vs domestic.
Duty and IGST are payable when scrap from inputs imported under a duty exemption scheme is disposed into the domestic market; destruction within the unit after intimation avoids duty. If the manufactured goods were exported, the value for duty on scrap sold domestically is the sale transaction value; if the manufactured goods were domestically cleared, the value for duty is the value of the imported inputs.