Sale or dispatch of excisable goods under shis scheme

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

13 August 2013  

Dear Experts, One of my client engaged in manufacturing activities i.e. manufacturing of Hydraulic Machines & duly registered as Manufacturer under Excise Law. Now he going to dispatch/sale of said machines to a Renowned Customer under SHIS Scheme by virtu of Notification No 33/2012 dated 09/07/2012 as per law.

The Value of Excisable Goods nearly Rs.100.00 Lacs. As per above notification my client is not supposed to charge Excise duty @ 12.36% at the time of removal of Goods under the SHIS Scheme subject to submission of Certain documents as prescribed under this scheme prior to dispatch from the customer.

However as explained to us by concerned jurisdictional Excise Authority that my client has to reverse 6% of Basic Sales value of Goods to be dispatched at the tome of Removable of Goods as per Cenvat Credit Rules,2004 .

However my client not having cenvat credit balance as on the date of dispatch so he has to pay the amount through PLA Account.This comes to nearly Rs 6.00 Lacs.

Now query is whether this tenable as per law or not as in purchase order from customer this was not mentioned therein hence this is not going to borne by them & My client says that even my margin is not to the extent of RS.6.00 Lacs if i am going to bear the same. What's the factual position as per law & reply accordingly. Regards