Removal of Goods without Payment of Duty / Concessional Rate of duty - Central Excise Practice Manual (OLD) - Central Excise

REMOVAL OF GOODS AT CONCESSIONAL RATE OF DUTY Buyer can obtain goods at nil or at concessional rate of duty if he follow the procedure as contained in Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001 (i.e. the exemption is based on end-use). The procedure for the buyer who intends to avail benefits of exemption notifications is as follows: 1. Application shall be made to AC /DC of Central Excise in quadruplicate in the prescribed form. 2. Separate application to be made for each supplier of such goods. 3. A bond should be executed in the prescribed form either with surety or with security. The amount of bond will be decided by the AC/DC according to the estimated duty liability. 4. The application will be counter-signed by AC/DC certifying that the necessary bond has been executed and the copies of application will be forwarded as follows: One copy to the jurisdictional Range Superintendent Two copies to the manufacturer (i.e. to the buyer of the goods) One copy will be retained by the AC/DC. 5. The manufacturer (or the buyer) will sent one of the copies of duly signed application to the supplier-manufacturer and than on the basis of such application supplier manufacturer will clear the goods and can avail benefits of exemption notification. Number and date of invoice Description of goods Quantity and value of goods Amount of duty paid at concessional rate. 6. Recipient-manufacturer is also required to maintain a simple account showing: Description of goods Opening balance Quantity received Quantity consumed Closing balance Value of goods received Nature quantity of goods manufactured 7. Recipient-manufacturer is required to file monthly return in the prescribed form giving above details by the 10 th of following month. Such goods can also be sent to another manufacturer, under the above procedure, registered under Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules. Such goods can be sent outside the factory, as such or after doing some process, on job work basis and returned to the factory for further processing but with the permission of the Commissioner. Cases where duty becomes payable: 1. When goods not used for the purpose as intended: Recipient-manufacturer will be required to pay differential duty (difference between the actual full duty and concessional duty already paid at the time of removal) along with the interest if goods are not so used as intended by the manufacturer. 2. When Goods are lost or destroyed during transport: Goods lost during transportation sent from supplier to the recipient-manufacturer or vice-versa during handling or storage it will be treated as 'not used for intended purpose' and hence duty liability (i.e. both differential duty and interest) becomes payable by the recipient-manufacturer. 3. Duty liability of intermediate goods: If some intermediate products 'get produced' which are used in manufacture of final products cleared under the Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules no duty will be payable on such intermediate products. But if some parts are 'manufactured within the factory', duty will be payable on such parts even if they are used in the manufacture of final goods which are cleared without payment of duty. Availment of Cenvat: 1.Buyer will not be allowed to avail cenvat credit since goods are cleared without payment of duty by the supplier-manufacturer. Therefore if he wants to avail cenvat credit he should pay full duty instead of availing concession. 2. If the final product is cleared under the Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules Cenvat availed by the supplier-manufacturer on the inputs used in the manufacture of such goods will get reversed or 'amount' of 10% of price will have to be paid as per cenvat provisions. 6. Supplier-manufacturer is required to record the removal details on the application such as: