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Originally posted by : rashmi |
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hellooo mythreya.......Thank you for the answer but wat i wanted to clear is like how we have limits in service tax of Rs. 10 lacs beyond which only the service provider becomes liable.....similarly dont we have ceiling in case of large units whose turnover may be very high but value of excisable goods consumed is nominal..like in case of bhushan wherein he said dat the ice cream turnover is exempt from tax but the almonds captively consumed are taxable....
N secondly and more IMPORTANTLY if u have time do go thru our second query in service tax forum on which der are just 2 replies........soo m sure it wont be really difficult for u to identify... ;) ;) |
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If the captive consumption is nominal,then the question of it beign excisable does not arise.
However such an exemption is for SSI units and Bhushanji has clearly stated that the company is not an SSI.
Various concessions are given to small-scale industries to encourage their growth and also on account of administrative convenience. Since Excise is a duty on manufacture, it is payable even by a small unit manufacturing the goods. However, it is Government''s policy to encourage growth of small units. Moreover, it is administratively inconvenient and costly to collect revenue from numerous small units. Applying the ABC principle, the revenue collected from small units would be negligible compared to the efforts and administrative costs involved. The Govt. has therefore, given various concessions to small-scale industries (SSI). The most important notification, giving these concessions, are notification Nos. 8/2003 and 9/2003 dated 1-3-2003. SSI units whose turnover is less than Rs. 3 crores are eligible for the concessions. If the SSI unit does not avail Cenvat on inputs, turnover upto Rs 100 lakhs is fully exempt. If SSI unit avails Cenvat on inputs, it has to pay 60% of normal duty, upto turnover of Rs 100 lakhs and normal duty for subsequent clearances.
Rashmiji, you must also note here that certain goods dont have this SSI concession.Many goods, manufactured by SSI, are eligible for the concession. However, some items are not eligible (some of the items not eligible for SSI exemption are eligible for exemption under different notifications. Some are not exempt at all). Thus, SSI exemption is available only if the item is covered in this notification.
Broadly, items generally manufactured by SSI (except in tobacco, matches and textile sector) are eligible for SSI exemption. Some items like pan masala, matches, watches, some textile products, tobacco products, etc. are specifically excluded, even when these can be manufactured by SSI. Some items like automobiles, primary iron and steel etc. are not eligible, but anyway, these are beyond capacity of SSI unit to manufacture.
Also what if the ice-cream(Final product) is exempt?
Answer: If goods which are not eligible for SSI concession are manufactured by SSI unit for captive consumption, duty will be payable, even if final product is eligible for SSI concession, as correctly held in Super Polyfabriks Ltd. v. CCE 1999(114) ELT 1019 (CEGAT).
And in the case of a non-SSI,it is dutiable again too as well know(to be read with the Finance Act,amendment to sec.2 )
So Bhushanji is right on both counts.
Further,the principle being tested here is the ratio in the Phil Corporation judgement mainly.I was talking from an exam-point of view for this question.
CCus. & CEx. v. Phil Corporation Ltd. 2008 (223) ELT 9 (SC)
The respondent processed cashew nuts, peanuts, almonds etc. by dry roasting, oil roasting,
salting, seasoning, packed them in different containers and cleared the same under its brand
name. The respondent did not register with the Central Excise Authorities and cleared these
goods without payment of excise duty on the ground that such goods were agricultural
product classifiable under “Chapter 8- Edible Fruit and Nuts; Peel of Citrus Fruit or Melons”
of the Central Excise Tariff and chargeable to nil rate of duty.
However, the Department claimed that such goods were classifiable under “Chapter 20 –
Preparation of Vegetables, Fruit, Nuts or Other Parts of Plants” of the Central Excise Tariff on
the ground that Notes to Chapter 20 of Harmonised System of Nomenclature (HSN) provide
that Chapter 20 includes “almonds, ground nuts, areca (or betel) nuts and other nuts, dry-
roasted, oil roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt,
flavours, spices or other additives”.
56
The Supreme Court observed that the Central Excise Tariff Act was broadly based on the
system of classification from the international convention called the Brussels’ Convention on
the Harmonised Commodity Descripttion and Coding System (Harmonised System of
Nomenclature) with necessary modification. HSN contained a list of all the possible goods
that were traded (including animals, human hair etc.) and as such the mention of an item had
got nothing to do whether it was manufactured and taxable or not.
The Supreme Court reiterated that the HSN was a safe guide for the purpose of deciding
issues of classification. In the present case, the HSN explanatory Notes to Chapter 20
categorically stated that the products in question were so included in Chapter 20. The HSN
explanatory Notes to Chapter 20 also categorically stated that its products were excluded
from Chapter 8 as they fell in Chapter 20. Thus, the Apex Court held that processed cashew
nuts, peanuts, almonds etc. manufactured by dry roasting, oil roasting, salting, and seasoning
and packed in different containers and cleared under respondent’s brand name would be
classifiable under Chapter 20 of Central Excise tariff and not under Chapter 8 in view of HSN
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