Exemption of excise for ssi

862 views 9 replies

Naman Munjal

Others

33 Points Joined March 2015

Dear Sir,

My question is regarding the excise excemption to SSI units.

Suppose if a company has a turn over less than 30 lacs in the previous financial year, then how it can avail the benefit of cenvat exemption

Does it requires any registraions for claiming the excise paid on input goods purchased for manufacturing products.

For example,

A is the manufacturer of the raw material and charges excise duty to B.

B is the manufacturer of the product and its turn over is less than 30 lacs previous year,

C is the purchaser of the goods manufactured by B.
SO, how B will settoff the excise paid on the raw material purchased from A, so that the excise paid by B does not encounters its cost price.

If SSI units are excepted from central excise duty upto 1.5 crores, then how to avail this exemptions and buy the raw material

Thank You

Replies (9)

Excise duty payable can be set off against cenvat credit, in case of manufacturers.In this case, B cannot offset excise duty paid on purchases as B is not charging excise duty. In such senario, there will be cascading effect of duty. For more details on excise duty exemption for SSI units please refer /articles/ssi-units-exemption-under-central-excise-23104.asp#.VRvbavmUfGA

Naman Munjal

Others

33 Points Joined March 2015

@ poornima Thank you the article explains the senario. All i need to know is that how to obtain this exemption. Do i need to register it somewhere? Also while buying raw material how should I ask my vendors for the exemption?

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

You need to register with central excise dept only when turnover exceeds ₹150 lacs. You can avail cenvat credit only after that. At present, you cannot avail cenvat credit and there will be cascading effect (tax on tax) till u reach the limit.

Naman Munjal

Others

33 Points Joined March 2015

ok. Then what about the exemption of excise for ssi?

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

Once you reach the limit of 150 lacs, u need to register with central excise dept and pay excise duty over and above this limit till the end of the FY. The benefit of exemption comes into picture only after registration and till then, as u do not cross the limit, u can bill all sales without ED.

Let us assume that X Co's first year turnover for FY14 was 160 lacs. Till 150 lacs, the company billed without ED and on reaching the limit, it got registered and the remaining turnover was billed with ED. In this case, X Co. can avail cenvat credit on opening stock of goods (on date of reaching the limit) + on further purchases. For the next year i.e. FY15, the same company can avail SSI exemption till 150 lacs (i.e. can bill without ED and not avail cenvat credit) after reversing the cenvat credit on closing stock. After reaching the limit of 150 lacs in FY15, the company has to bill with ED and avail cenvat credit as mentioned above.

Hope this is clear.

Naman Munjal

Others

33 Points Joined March 2015

so should I ask the material vendors for excise exemption until I reach 150 lac? I understood the cenvat credit after 150 lac, all i am asking is about the exemption untill 150 lac, so that the amount of duty paid by us on purchase of raw material is exempted

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

Until 150 lacs u dont get any exemption for purchase of materials. I have told this to u twice already. You have to pay excise duty and buy materials and charge customers the same which is known as cascading effect.