Exemption of Rs. 1.5 crore from excise duty

[manoj gupta]

W.e.f. 01.03.2011, excise duty is leviable on ready made garments. An exemption of Rs. 1.5 crores is also available under the act. Now, whether excised duty is leviable on a firm which has done sales of Rs. 2.10 crores upto Feb. 2011. Will it be liable to central excise on any sales done after that as the sales upto date exceeds Rs. 1.5 crores. or it is so that the exemption of 1.5 crores will be available on sales done after levy of duty i.e. 01.03.2011. Suppose it does further sale of Rs. 25 lacs from 01.03.2011 to 31.03.2011. Will it be liable to pay excise duty on this Rs. 25 lacs or it will be entitled to exemption upto Rs. 1.5 crores on this sale. Pls. clarify

[vishnu mohandas]

In my view If the exemption is 1.5 crores you will be liable to pay excise duty on the balance of 60+25 lacs

[Radha Arun]

In computing Rs 1.5 crores, the exempted goods are excluded.

However pl note that there is an eligibility condition for the SSI exemption, that is, the previous financial year's turnover of the manufacturer should not exceed Rs 4 crores. In this 4 crores, exempted goods are included.

[Santosh Kumar]

Dear sir,

aggregate value of clearances of all excisable goods in preceding financial year should be less than Rs. 4 crore then exemption will be available.  Now, for the month of March 2011, the year 2009-10 is to be seen. If the aggregate value of clearances is less than Rs. 4 crore in year 2009-10 then exemption of 1.5 crore is available. For computing these 1.5 crore, only dutiable goods is to be seen. This limit of Rs. 1.5 crore will be available for March 2011 as the goods cleared prior to March 2011 were exempted and will not be considered in calculating the same. Thus, the exemption is available in March 2011 also.

[Sathish Kamath]

Another view is that the assessee is eligible for exemption of Rs.12.50 lakhs only for the month of March, 2011 because the exemption of Rs.1.50 crores is for the full year. Accordingly, if the taxable turnover exceeds Rs.12.50 lakhs for the month of March, 2011 then he is liable to Excise Duty on the excess turnover of Rs.12.50 lakhs. Please comment

[Radha Arun]

I beg to disagree with Mr Satish Kamath.The manner of calculating Rs 1.5 crores is specified in paragraph 3 of the notification itself (notification 8/2003-CE). It does not include exempted goods.

However, to be eligible for th 1.5 crore exemption, one should not have crossed Rs 4 crores in the previous financial year. This figure of Rs 4 crores is calculated by including exempted gods. This too is specified in the notification, in paragraph 3A.

AI Summary

Exemption threshold for excise applies to dutiable clearances; prior-year turnover calculation includes exempt goods for eligibility. The exemption applies to the value of dutiable clearances and excludes exempted goods when computing the exemption amount; eligibility requires that aggregate clearances in the previous financial year not exceed the specified turnover ceiling, and that prior-year figure is calculated including exempted goods. The notification's specified computation rules determine treatment of prior exempt sales and whether a pro rata monthly approach applies.