2006 (10) TMI 170 - AAR - Central Excise

Whether the applicant entitled for concession under provision C.E. Notification No. 8/2003 dated 1-3-2003 despite of the fact that proposed equity of a Foreign Corporate Body is 96.875% (greater than 25%) and cannot be considered as a Small Scale Industrial Unit in view of Paragraph 2.5 page 9 of the Booklet of Foreign Direct Investment issued by Ministry of Commence and Industry? Whether the machinery is imported can we start claiming the Credit of the Counter Vailing Duty and Special Additional Duty the moment we pay excise duty at the factory gate on our production? Can we accumulate credit of the CVD & SAD paid on the machinery till we complete clearances of ₹ 100 lakhs?

Summary

Issues:
1. Entitlement to concession under C.E. Notification No. 8/2003 despite proposed foreign equity exceeding 25%.
2. Claiming Credit of Counter Vailing Duty (CVD) and Special Additional Duty (SAD) on imported machinery.

Analysis:

Issue 1:
The applicant, a private limited company engaged in designing and manufacturing plastic packaging, sought an advance ruling on entitlement to concession under C.E. Notification No. 8/2003 despite a proposed foreign equity of 97% in a joint venture. The Jurisdictional Commissioner confirmed that the applicant could avail the exemption under the Notification, even if it loses the status of a small-scale industry, subject to fulfilling the specified conditions. The Authority allowed the question, emphasizing that the applicant could benefit from the concession regardless of the high foreign equity percentage.

Issue 2:
Regarding the second question on claiming CVD and SAD credit on imported machinery, the Commissioner clarified that the exemption would apply provided the manufacturer does not utilize the credit of duty on capital goods under specified rules until clearances reach Rs. 100 lakhs. The applicant's representative concurred with the Commissioner's comments, supporting the entitlement to the relief sought. The Authority examined the relevant notification and ruled that the applicant could start claiming CVD and SAD credit upon exhausting the exemption limit and paying excise duty at the factory gate, accumulating the credit until clearances reach Rs. 100 lakhs.

In conclusion, the Authority pronounced its ruling on both issues, affirming the applicant's entitlement to the concession under C.E. Notification No. 8/2003 despite the high foreign equity in the joint venture and clarifying the conditions for claiming CVD and SAD credit on imported machinery, emphasizing the need to adhere to the specified rules for credit utilization.