SSI Exemption and Deemed Manufacture in relation to Parts of Automobiles, Plant Growth Regulators and Toothbrush

[Surender Gupta]

The following goods have been brought into Excise Net with effect from 1-6-2006, by inserting into Third Schedule of the Central Excise Act, 1944.

Heading	Item
Any heading	Parts, components and assemblies of automobiles
3808 30 40	Plant-growth regulator
9603 21 00	Toothbrush

The following processes shall be termed as manufacturing process with in the meaning of Section 2(f)(iii) of Central Excise Act, 1944: - Any process: -

"which, in relation to the goods specified in Third Schedule involves packing or re-packing of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer."

Simultaneously, the amount of excise duty shall be calculated on the basis of MRP affixed on the above said goods. For this purpose Notification No. 11/2006 CE (NT) dated 29-5-2006 has been issued to amend notification no. 2/2006 CE(NT) dated 1-3-2006.

In the background of these changes two questions arises: -

Question 1: - Whether SSI exemption is available for the above goods. And if yes, how to avail the exemption?

Question 2: - What is the manner of calculation of excise duty and sales tax?

Both the questions are being answered as under:

(1) Whether SSI exemption is available and how the avail the exemption?

The deemed manufacturers are allowed to avail the Exemption upto Rs. 1.00 Crores of the value of goods cleared from the premises provided the turnover of the previous year is not exceeding Rs. 4.00 Crores [See notification No. 08/2003 CE dated 1-3-2006]

Since the above said goods have been brought into Excise Net as deemed manufacture first time with effect from 1-6-2006, the turnover of the previous year is not possible to determine with in the meaning of notification no. 8/2003, therefore, every person who is liable to pay excise duty, would be entitled to avail the Exemption in the current year.

Further, no turnover from 1-4-2006 to 31-5-2006 shall be taken into account for the purpose of calculation of turnover of Rs. 1.00 Crores for the Current Year. Turnover shall be calculated with effect from 1-6-2006 for the purpose of SSI exemption.

(2) What is manner of calculation of excise duty and sales tax?

This can be understood with an example:

Suppose Mr. A affixes MRP on the parts of automobile as Rs. 150, but actually selling the same to the wholesale dealer at Rs. 90.  Rate of rebate under excise is 33.5% and rate of sales tax is 12.5%.

Excise duty shall be determined as:

MRP:	Rs.150
Less Rebate: 33.5% of 150	Rs. 50.52
Balance:	Rs. 99.48
Excise duty: 16% of 99.48	Rs.15.92

Commercial Value for the purpose of Sales tax would be:

Sales price:	Rs. 90
Add Excise duty:	Rs. 15.92
Sub Total	Rs. 105.92
Sales Tax @ 12.5%	Rs. 13.24
Total	Rs. 119.16

Surender Gupta