Supplies to Defense Exempted and SSI Turnover

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puneet

abc

28 Points Joined July 2009

Consider a scene where an SSI manufactures product which can be supplied to pvt. sector as well as to defense R&D institutes like DRDO which are exmpted from excise under Central Excise Tariff Notification No: 10/97-CE, dated 1-3-1997

We have following questions:

- SSI has aggregate turnover less than 1.5 Crore

- Aggregate includes defense and pvt sector supplies

- DOES THE SSI unit need to take excise duty exemption certificate from the DRDO lab to whom it will supply ? Reason we are asking is that since the SSI has aggregate turnover less than 1.5 Crore. In this case if excise ememption certifciate is demanded (ans SSI is not registered) a copy of the exemption certifciate is givn by DRDO to the excise authorities. Now will it not lead to unnecessary harassment since the SSI is not registered?

- In future it can happen that the aggregate turnover reaches 1.9 Crore. In this case defense supply (exempted) is around 60 Lacs and balance is pvt sector. Now does the SSI need to register with excise authorities? (Since the excisable turnover is 1.3 Crore) In this case

wbrgds

Puneet

Replies (3)

Rajesh Kumar

Advocate- Tax

7806 Points Joined December 2008

The exemption is subject to certain condition. A certificate from DRDO is the condition for exemption. If such certificate is not there, the goods are not exempted and had to be included in the turnover of 1.5 crores.

Thus you need certificates. Procure that before taking exemption.

puneet

abc

28 Points Joined July 2009

Originally posted by :Rajesh Kumar

Rajesh Ji,

Thanks for your swift reply.

- If we start taking exemption certificates from DRDO - is DRDo supposed to send a copy of the certificates to central excise? We guess so that when they issue exemption certificates they are supposed to send a copy of the same to central excise. Pls confirm

in this case excise authorities will come to know of our SSI. We want to avoid this situation till we cross 1.5 Crore

We are not sure whether this year aggregate turnover will cross 1.5Cr or not?

- If we start taking exemption certificates from DRDO now and suppose we do not cross 1.5CR aggregate turnover then the excise dept. will start interacting with us

- On the other hand if we do not take certificates and cross 1.5Cr aggregate then we will need to register mandatorily.

Can you propose how we should handle this situation?

wbrgds

Puneet

puneet

abc

28 Points Joined July 2009

Originally posted by :Rajesh Kumar
"	The exemption is subject to certain condition. A certificate from DRDO is the condition for exemption. If such certificate is not there, the goods are not exempted and had to be included in the turnover of 1.5 crores. Thus you need certificates. Procure that before taking exemption.	"

Rajesh Ji

One more query. There is a cluase in central excise act that manufacturing done without the use of power does not attract excise. Do the items in section 85 fall under the ambit of this clause.

Puneet