Deposition of duty amount

[pradeep kataria]

Co. X manufactures Guar Gum Powder from Refined Split. During Manufacturing process 16% of Split got wasted. Since Co. X is an 100% EOU, it applied for fixation of SION by claming 16% input base loss or 19% output base loss. The Adhoc Norms was also fixed considering process waste of 16% of Input but the Norms committee while admitting application, has fixed SION considering waste at 16% on output basis resulting in fixing of loss lower by 2.79% app. of input. It has been directed by Development Commissioner to deposit the custom/excise duty applicable on excess wastage cleared. Now the question arise at what value the duty is to be deposited & how much is to be deposited particularly when - 1.out of the 16% Input loss only 1% is visible & recoverable and rest is invisible and thus non recoverable. Further waste is also exempted by virtue of Notification. 2. Raw Material i.e. refined split is also exempted from excise duty by virtue of Notification.

[Mukesh Kumar]

Various things to be examined. Did you received the inputs free of customs duty (BCD)? If this is not the case, a general view can be framed that since the waste is exempt from duty, refined split (raw material) is exempt from duty, you need not to pay anything on the excess wastage. But, again a question arises, if all these conditions were existing, what was the need to get the SION norms fixed. What is the use of producing goods under EOU scheme. There must be something more which may be the guiding factor to decide the whole issue at once.

[pradeep kataria]

Dear Mukesh, First of all Thanks for reply.Here is reply of your queries:- 1. All inputs are indegenious and hence suffered no BCD. 2. The SION got fixed as someone told us that it is required to be fixed if your wastage is more than 2%. 3. There is income tax benefit in EOU and hence goods are produced in EOU. Further please note that all Raw Materials are being sourced from India only.

[RadheyShyam Mangal]

Remedy No. 1 :- You can take the benefit of Ntfn. No. 24/2003 CE for invisible waste. Remedy No. - 2:- The question of diffrential duty on waste beyond sion will arise from may, 2008 as amendement in relevant Notification of CE/CUS were made in may, 2008.

AI Summary

Co. X challenges duty on excess waste due to 16% production loss; seeks relief under SION and duty exemptions. Co. X, a 100% Export Oriented Unit (EOU), manufactures Guar Gum Powder and experiences a 16% input waste during production. The company sought to fix the Standard Input Output Norms (SION) to account for this waste. However, the norms committee set the waste at 16% on an output basis, reducing the allowable loss by approximately 2.79% of input. The Development Commissioner directed Co. X to pay duty on excess waste. Queries arose about the duty amount since the raw materials are exempt from excise duty, and most waste is non-recoverable. Respondents suggested examining duty exemptions and relevant notifications for relief.