Section 73(b) of the Finance Act, 2011 as applicable to Spare parts and Components of Construction Equipment - Regarding. - Central Excise - F. No. 341/33/2011-TRU

Instruction Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi dated 12-9-2011 Subject : Section 73(b) of the Finance Act, 2011 as applicable to Spare parts and Components of Construction Equipment - Regarding. A meeting of the Jurisdictional Commissioners of Central Excise was held on 10-8-2011 at 11 AM in Kalpvriksha, North Block, chaired by Joint Secretary, TRU in pursuance of the decision taken regarding the retrospective levy of excise duty on packing, repacking of parts, components and assemblies of goods falling under tariff item 8426 41 00 , 8427 , 8429 , 8430 10 vide Section 73(b) of the Finance Act, 2011. 3. The records of the discussion held in the meeting and the decision taken is enclosed for implementation and necessary action. This issues with the appeal of JS (TRU-I). Enclosure Record of Discussion in the Meeting on the Section 73(b) of the Finance Act, 2011 issues as applicable to spare parts and components of construction equipment held on 10th August 2011 at North Block, New Delhi A meeting of Commissioners of Central Excise having units manufacturing auto components in their jurisdiction was held on 10-8-2011 at 11 AM in Kalpvriksha, North Block to discuss the modalities for implementing the decision to retrospectively levy excise duty on packing, repacking of parts, components and assemblies of goods falling under tariff item 8426 41 00 , 8427 , 8429 , 8430 10 vide Section 73(b) of the Finance Act, 2011 . The meeting was chaired by Shri Vivek Johri, Joint Secretary (TRU). 2. The list of participants is annexed. 3. While initiating the discussion, JS, TRU welcomed all the participants and circulated a brief background of the issue. He apprised all the members regarding the representations received from the industry and associations and invited discussions on the difficulties, if any, in implementation of the retrospective levy of excise duty on the spares/parts/components of automobiles falling under tariff item 8426 41 00 , 8427 , 8429 , 8430 10 w.e.f. 29th April, 2010. In brief, the industry association had raised apprehensions that the field formations may not permit input credit to them on the ground that the factories where the deemed manufacturing processes of packing, repacking etc., had taken place were not registered under Central Excise law at the material time. They have also sought clarifications about the nature of documentation that they would be required to produce in support of their credit claim and the manner/modalities for verification of their stocks of inputs final products at the material time. 4. The first issue raised by the concerned industry association is that if duty is charged on the packing, repacking, labelling, re-labelling other such activities retrospectively, credit of duty paid on inputs brought into the factory during the period and used in or in relation to manufacture of that products that were cleared during the period from 29th April, 2010 to 8th April 2011 should also be permitted. It was agreed by all the participants that CENVAT credit is available subject to the production of necessary duty paying documents prescribed in the Rules. The credit of eligible duties can then be utilized for payment of excise duty on final products in terms of section 73(b) of the Finance Act, 2011. 5. As regards the exclusion of opening stocks of spare parts as on 29th April, 2010 from excise levy or the availability of CENVAT credit on such opening stocks or making a pro rata arrangement based on closing stocks as on 31st march, 2010 for availment of CENVAT credit a consensus was arrived that the MRP based excise duty under section 4A of the. Central Excise Act would be applicable on parts of equipment falling under chapter 8426 41 00 , 84.27 , 84.29 , 84.3010 for the goods cleared on or after 29th day of April, 2010. The stock of such goods lying in stock as on the midnight of 28th/29th April 2010 shall be declared by the manufacturer concerned based on internal records duly authenticated/certified by a Chartered Accountant. The CENVAT credit of inputs will be allowed to be taken on the inputs contained in the said goods on the basis of the available duty paying documents/invoices issued at the time of purchase/imports. The onus to provide a certificate regarding the authenticity of such transactions maintained in their books of account would lie on the manufacturers duly authenticated/certified by the registered Chartered Accountant and the directors/proprietor of the company. Since the manufacturers would be required to discharge their duty obligations on a monthly, they should produce monthly statements indicating production clearance of final products; the duty payable the opening balance, input credit taken, during the month, credit untitled and closing balance of credit. In case, such duty paid bought out goods had been supplied to another warehouse or godown as stock transfer, supplementary invoice/challans indicating central excise duty on such transferred goods shall be issued and such supplementary invoices can then be used by the manufacturers for the purpose of availing the CENVAT credit. 6. The members also deliberated regarding the exclusion of parts, which are not packed/labeled but may have been affixed with an identification tag, from excise levy. It was decided that Parts/components and sub-assemblies which are cleared as Original Equipment to be used by the Industrial/Institutional users units would be governed by the transaction/contractual value under section 4 of the Central Excise Act , whereas spare parts/components sold as retail sale would be governed by Section 4A of the Central Excise Act , Accordingly while giving details of month-wise goods manufactured and cleared, the manufacturers would segregate the goods whose assessable value is to be determined under Section 4 and those covered under Section 4A . 7. On the issue regarding the demand of interest on the duty paid retrospectively, it was pointed out by participants that the existing provisions of Central Excise law do not permit any waiver or relaxation. [F. No. 341/33/2011-TRU]