Exempted Item

[Mridul Sethi]

An item was exempted from Excise when it was produced. When it was sentout of factory the central government withdraws the exemption. Whether excise duty will be payable on it or not?

 

Regards,

 

Mridul Sethi

[MANDAVILLI RAMAKRISHNA]

s. the point of time of taxability is not at manufacture time but at clearance point of time.

[YAGAY and SUN]

You would have to pay central excise duty on the goods (which were exempted and subsequently made dutiable) at the time of removal since excise duty is applicable on the manufacturing of goods but is being collected at the time of removal.

 

AI Summary

Excise duty arises at the time of removal; withdrawal of exemption before clearance makes duty payable.
Taxability is determined at removal: if an item manufactured while exempt has its exemption withdrawn before clearance, excise duty is payable on removal because excise liability attaches to manufacture but is assessed and collected at the point of clearance.