Excise Liability on 100% EOU on clearance to rest of India

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Arvind Sharma

ACA

1432 Points Joined May 2009

Hello Everybody.,

Please reply to this post...

What duties shall be levied on 100% EOU on clearance to other place in India..??

there are three ans that I got., which are as below:-

As per Proviso to Sec 3 of CEA, 1944,

["duties of excise

which shall be levied and collected

on any excisable goods which are produced or manufactured

by a hundred per cent export-oriented undertaking and allowed to be sold in India

shall be an amount equal to the aggregate of the duties of customs"]

as per this proviso, duties will be.,

Assessable Value xxxxx

a. BCD (50% exempt - EN issued by CG) xxx

b. CVD u/s 3(1) of Custom Act [ ED + Excise Cess*] xxx

c. Custom Cess on (a+b) xxx

d. Sp. CVD on (AV+ a+b+c) xxx

e. Total Custom Duty (a+b+c+d) xxx (Which is Excise Duty as per Proviso to Sec 3 of CEA, 1944)

f. Excise Cess on (e) xx (as EC & SHEC has to be charged also)

Now., the confusion is that., at point (b) as well as point (f), we are charging two time Excise Cess..., is it justifiable...??

there is also a Case Law "Sarla Performance Fibers Ltd. (formerly Sarla Polyester Ltd) [Tribunal]" and w.e.f. Sep 2009, it has been clarified that Cess at point (f) shall be charge...

Now plz let me know,. whether, at point (b) Excise Cess will be chargeble or not...??

and another que is about availability of CCR of above duties, which duties are eligible for CCR to buyer...???

Replies (5)

Princes

CA Final

243 Points Joined July 2010

Arvind you are correctly point out that "we are charging two time Excise Cess" and it is justifiable.

Because

Section 3(1) Duty is the countervailing duty which balance the excise duty payable on this article if it produced in india. it mean it that article is produced in india then what is the effective rate of excise?

obviously, ED+Cess. that why we added it in point (b).

Amount calculated in (e) is ED as per Proviso to Sec 3 of CEA, 1944 and we are charging cess on this ED.

Yes, Cenvat credit is available on CVD portion (i.e.on point (b) )Calculated on the basis of formula given in CCR rule

Arvind Sharma

ACA

1432 Points Joined May 2009

Hi Ishika..,

Thanks for reply.....

I agree but have you check that Case I mentioned...???

R u sure that there will be two time Excise Cess...???

Princes

CA Final

243 Points Joined July 2010

First you tell from whom you taken classes?

Arvind Sharma

ACA

1432 Points Joined May 2009

Manoj Batra Sir..., Bright Professional...

C.V.R.SARMA

SERVICE

90 Points Joined September 2010

Yes, Tribunal in the case of Sarla Polyesters case has upheld the charging of CVD cess i.e., Excise cess two times. However, it is not legally correct. When the goods from a 100% EOU have been sold in DTA, then the customs duties are to be charged on par with the like goods when imported into India. While charging the Customs duties at the time of importation, nowhere it is being charged the Excise cess two times. It is also learnt that an appeal has already been filed against the Tribunal's judgement. As regards to the availment of Cenvat credit, Cenvat Credit Rules,2004 provides a formula for availing the credit , which specifies that Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value.