excise duty on yarn under Notf No 30/2004-CE

[harish kumar]

Respected Sir, 

I am manufacturing Polypropylene Multifilament yarn(800deniers)  from PP Granules being used as intermediate captively in the manufacture of narrow woven fabric. Narrow woven fabric is conditionally exempted subject to non availment of Cenvat credit on inputs. i.e.granules under Notf No 30/2004-CE .Previously I was availing cenvat credit on PP Granules and  paying excise duty on narrow woven fabric under  Notification No. 30/2004-CE dated 09.07.2004 and availing exemption on PPMF Yarn under Notif No 67/95-CE dated 01.03.1995. Now I want to pay duty on  intermediate product Polypropylene Multifilament yarn under Notif No 67/95-CE dated 01.03.1995 at the value of 110% of cost of production and avail  exemption on Narrow woven fabric under Notification No. 30/2004-CE. But Notification No. 30/2004 provides conditional exemption to Narrow woven fabric  subject to non availment of credit on inputs. But I want to avail Cenvat credit on inputs. It is clarified PPMF yarn is unconditional dutiable item not covered under Notification No. 30/2004-irrespective of availment on cenvat credit on inputs. Excise officers are asking me to not to avail Cenvat credit on inputs under new scenario and pay duty on PPMF yarn by PLA. My explanation is that I am using duty paid inputs into PPMF Yarn on which I will excise duty and PPMF Yarn is inputs  for Narrow woven fabric (exempted) .My question is whether I can avail cenvat on inputs i.e. granules and use in payment of duty on PPMF yarn and also avail exemption on Narrow woven fabric under Notification No. 30/2004 which is conditional notf does not allow cenvat credit to inputs if I clear NWF without duty.  PPMF yarn which is intermediate for Narrow woven fabric,can be treated as inputs for Narrow woven fabric to fulfil condition of Notification No. 30/2004 and to avail exemption on NWF.

Yours regards,

 Harish

AI Summary

Manufacturer Seeks Clarification on Excise Duty and Cenvat Credit for PPMF Yarn Under Notifications 30/2004-CE & 67/95-CE A manufacturer of Polypropylene Multifilament (PPMF) yarn, used in producing narrow woven fabric, seeks clarification on excise duty and Cenvat credit under Notifications No. 30/2004-CE and 67/95-CE. Previously, the manufacturer availed Cenvat credit on PP granules and paid excise duty on narrow woven fabric. The manufacturer now wishes to pay duty on PPMF yarn while availing exemption on narrow woven fabric. The response advises maintaining separate records for different manufacturing activities and suggests options for managing Cenvat credit and excise duties without contravening the conditional exemptions of Notification No. 30/2004-CE.