LEVY OF EXCISE DUTY AND COMPLIANCE

[S.C. WADHWA]

We are manufacturers of food products falling under chapters 7,20 and 21.                                                                                         

items falling chapter 7 are of nil rate of duty.                                                                                                                       

we are paying duty on items falling under chapters 20 and 21 @2.06% and not availing cenvat on input.                                  

Now we want to trade in one item manufactured by a unit of the same group falling under chapter 19041090.                                     

They are paying duty @ 6% and availing cenvat on input. If they sold said item in loose then there is nil rate of duty.                         

We want to purchase the said product at nil rate of duty but being a food product in how much bulk packing the said                       

material be purchased so that the same may be treated as loose packing ( simply used plastic bags without any brand name.)

we will pack the material according to our requirement and fix MRP accordingly and pay duty @2% after getting abatement on MRP.

Please also advise whether it involves any compliance with excise authorities i.e. whether we are required                                          

to inform excise authorities.                                                                                                                                                       

 

[YAGAY andSUN]

In the Notification No. 01/2011-C.E.,Dated 01-03-2011, the tariff heading 19041090 has not been mentioned.  It means you would have to pay duty at normal rate by refering the third schedule to CEA,1944 less abatement if any.

 

[S.C. WADHWA]

Please further confirm in our case whether normal rate of duty is 6% or 12% with abatement 30% by quoting any notification or general exemption no.

 

S.C.WADHWA

[YAGAY andSUN]

Please refer Schedule III of the C.E.Tariff in te his regard.  The rate of tax will be 12.36% on the abated amount of the goods intended for sale.

[Vijay kumar]

As far as products covered under chapter sub-heading 19041090 are concerned, they are covered under 3rd schedule to Central Excise Act, 1944 (and not Central excise tariff act) and hence the process done by you amounts to manufacture. If your turnover is over Rs.1.5 crore (excluding the 2.06% goods which are treated as exempted goods) in terms of SSI exemption nofn. 8/2003-CE, you have to pay duty @ 12.36% under MRP valuation in terms of Section 4A of Central Excise Act, 1944 read with Nofn.49/2008-CE(NT). You may inform the excise authorities before starting payment of duty on the above terms.

[S.C. WADHWA]

Please help me for clerifying the followings:-

1. Our investment in machinery increased from five crore to 25 crore in last year ( Hence we not covered under SSI)

2. Our turnover in chapter 7 is more than 10 crore but excise duty is at nil rate, IN PREVIOUS YEAR.

3. Our turnover in chapter 20 and 21 is less than 4 crore in previous year on which we are paying duty @ 2% without getting any cenvat.

4. In R.K.Jain's Tariff 2012-13, at page no.282 general exemption no.49 at sr.no.6 shows duty rate 12% vide notification no.18/2012 where as at page 285 in general exemption 50 at sr.no.26 shows duty rate 6% vide not.no.12/2012 both dated 17.3.2012.

5. Supplier is also paying 6% duty and getting cenvat also. Now please advise at what rate we should pay the duty.

S.C.WADHWA

[Vijay kumar]

1. Investment has nothing to do with SSI exemption under central excise.

2 & 3. Both these turnovers are includible to compute the 4 crore limit in terms of para 2(vii) read with para 3A of Nofn.8/2003-CE. Accordingly, you are not eligible for SSI exemption during the current FY. 4 & 5.  notification no.18/2012 stands rescinded by Nofn.27/2012-CE dt.30.5.2012. Only Nofn.12/2012-CE is operative, according to which the effective rate for the goods in question is 6% + education cesses. According to sl.no.25 thereof, goods under chapter 1904, which are not put up in unit containers i.e. cleared in bulk attract NIL rate and according to sl.no.26, all goods falling under 19041090 attract 6% i.e. goods put up in unit containers. Thus in your case the effective rate applicable is 6% and the value shall be assessed under Section 4A, as already clarified.

[S.C. WADHWA]

Thanks a lot for giving reply at the earliest. We want to purchase goods not put up in unit container in bulk packing in plan poly bag containing how much quantity will be treated as bulk quantity. Please advise with some notification or case law in this regard.

 

S.C.WADHWA

[Vijay kumar]

Bulk has not been defined in the Central excise law.  As per the Section Notes under Section IV of CETA which covers chapter 19, "unit container" means a container, whether large or small (for example, tin, can, box, jar, bottle, bag or carton, drum, barrel or canister) designed to hold a predetermined quantity or number. U may decide your case accordingly.

[S.C. WADHWA]

Dear Expert,

Chapter 19041090 comes under 3rd schedule of c.excise act, 1944 and hence the process done amounts to manufacture. Now my query is that we are purchasing the material duty paid ( @6%) from supplier and after repacking the same in our unit, the same will be cleared from our factory gate after paying duty 2.06% as we are not getting cenvat is correct and if not, then we should also to pay duty @6%  which in case the double tax on same item which is not permissible in taxation laws as per my knowledge.  Please advise accordingly.

S.C.WADHWA

AI Summary

Unit container classification determines excise rate; goods in unit containers attract standard duty while loose bulk may be nil. Whether goods under sub heading 19041090 attract nil duty or the tariff rate depends on whether they are 'put up in unit containers'; unit container clearances fall under the Third Schedule and are valued under Section 4A using MRP rules with abatement where applicable, and may permit CENVAT for the supplier. The term 'bulk' is not defined and unit container status is a factual determination affecting duty liability and SSI exemption applicability under turnover aggregation rules.