Amendments to Central Excise Rules 57A, 57C, 57D, 57F, 57G, 57H, 57J, 57Q, 57R, 57T, 57U, 173Q and insertion of Rule 57CC - 14/96 - Central Excise - Non Tariff

Amendments to Central Excise Rules 57A, 57C, 57D, 57F, 57G, 57H, 57J, 57Q, 57R, 57T, 57U, 173Q and insertion of Rule 57CC

Notification No. 14/96-C.E (N.T.)

Dated 23-7-1996

In exercise of the powers conferred by section 37 of the Central Excises and Salt Act, 1944 (1 of 1944), (hereinafter referred to as the said Act) the Central Government hereby makes the following rules further to amend the Central Excise Rules, 1944, (hereinafter referred to as the said Rules), namely :-

1. (i) These rules may be called the Central Excise (Third Amendment) Rules, 1996.

(ii) They shall come into force on the date of their publication in the Official Gazette except that the rules 4 and 6 shall come into force on the 1st day of August, 1996 and rule 7 shall come into force on the 1st day of September, 1996.

2. In the said rules, in rule 57A, -

(i) in the Explanation, in item (i), for the words "machines, machinery, plant, equipment, apparatus, tools or appliances", the words "machines, machinery, plant, equipment, apparatus, tools, appliances or capital goods as defined in rule 57Q" shall be substituted;

(ii) after sub-rule (1), the following sub-rule shall be inserted, namely :-

"(2) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the official Gazette, declare the inputs on which declared duties of excise or additional duty (hereinafter referred to as `declared duty') paid shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow the credit of such declared duty deemed to have been paid in such manner and subject to such condition as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer of final products declared in the said notification, but are contained in the said final products.

Explanation.- For the purposes of this sub-rule, it is clarified that even if the declared inputs are used directly by a manufacturer of final products, the credit of the declared duty shall, notwithstanding the actual amount of duty paid on such declared inputs, be deemed to be equivalent to the amount specified in the said notification and the credit of the declared duty shall be allowed to such manufacturer." :

3. In the said rules, in rule 57C, after the words "Software Technology Parks", the words "or supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excises, dated the 28th August, 1995" shall be inserted.

4. In the said rules, after rule 57C, the following rule shall be inserted, namely :-

"57CC. Adjustment of credit if final products are exempt. - Where a manufacturer ordinarily uses the inputs on which the credit of duty has been availed in the manufacture of any product [other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent Export-Oriented Unit or to a unit in an Electronic Hardware Technology Park or to a unit in Software Technology Parks or supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excises, dated the 28th August, 1995] which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty, the manufacturer shall pay an amount equivalent to twenty per cent of the value of such product at the time of clearance of the said product by adjustment in the credit account maintained under sub-rule (3) of rule 57G or sub-rule (5) of rule 57T or in the accounts maintained under rule 9 or sub-rule (1) of rule 173G or if such adjustment is not possible for any reason by cash recovery from the manufacturer availing of the credit under rule 57A.

Explanation.- For removal of doubts, it is hereby declared that the provisions of this rule shall apply notwithstanding the fact that the inputs on which credit has been taken are not actually used or contained in the products referred to in this rule.".

5. In the said rules, in rule 57D, in sub-rule (2), in the first proviso, after the words, "Software Technology Parks", the words "or supplied to the United Nations or an international organisation for their official use or supplied to their projects, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excises, dated the 28th August, 1995" shall be inserted.

6. In the said rules, in rule 57F,-

(i) In sub-rule (3), for the word "Notwithstanding", the words "Subject to sub-rule (3A) and notwithstanding" shall be substituted;

(ii) after sub-rule (3), the following sub-rule shall be inserted, namely :-

"(3A) Where a manufacturer intends to remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products to a place outside the factory for the purposes specified in sub-rule (3), the manufacturer shall do so after debiting an amount equivalent to the amount of credit of duty attributable to such inputs or the inputs contained in such partially processed inputs :

Provided that, notwithstanding anything contained in rule 57A, the manufacturer shall be eligible to avail of the credit of an equivalent amount after the inputs or the processed goods, as the case may be, have been received back in the factory of the manufacturer :

Provided further that the manufacturer shall not take credit under this sub-rule unless the inputs or the processed goods, as the case may be, are received in the factory under the cover of the document on which such inputs or partially processed goods were removed from the factory.".

(iii) in sub-rule (4),-

(a) in the first proviso, for the words, brackets and figure "sub-rule (2)", the words, brackets and figure "sub-rule (3)" shall be substituted;

(b) in the third proviso, after the words "Software Technology Parks", the words "or supplied to the United Nations or an international organisation for their official use or supplied to their projects, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excises, dated the 28th August, 1995", shall be added;

(iv) in sub-rule (6), for the words, brackets and figure "sub-rule (3)", the words, brackets and figure "sub-rule (4)" shall be substituted.

7. In rule 57G, in sub-rule (2), for the first proviso, the following proviso shall be substituted, namely :-

"Provided that, -

(i) no credit shall be taken unless the inputs are received in the factory under the cover of a document specified herein below :-

(a) an invoice issued by a manufacturer of inputs under rule 52A or 100E of the said rules;

(b) an invoice issued by the manufacturer of inputs from his depot;

(c) triplicate copy of a bill of entry;

(d) a certificate issued by an Appraiser of Customs posted in Foreign Post Office;

(e) an invoice issued by a first stage dealer of excisable goods, registered under rule 174;

(f) an invoice issued by a second stage dealer of excisable goods, registered under rule 174 duly authenticated by the proper officer;

(g) an invoice issued by a dealer (other than a first or second stage dealer) if such invoice has been issued on or before the 31st day of August, 1996;

(h) an invoice issued by an importer registered under rule 174 and duly authenticated by the proper officer;

(i) an invoice issued by a dealer of imported goods registered under rule 174 and duly authenticated by the proper officer;

(j) duplicate copy of a bill of entry generated on Electronic Data Interchange System installed in any customs or central excise commissionerate.

(ii) no credit of duty paid on inputs shall be taken after the 30th September, 1996 on inputs received in the factory under the cover of an invoice issued on or before the 1st day of September, 1996 by a dealer of excisable goods or imported goods other than a first stage or second stage dealer.

Explanation :- (1) "First stage dealer" means a dealer who purchases the goods directly from the manufacturer or the depot of the said manufacturer under the cover of an invoice issued under rule 52A or rule 100E.

(2) "Second stage dealer" means a dealer who purchases the goods from a first stage dealer.

8. In rule 57H of the said rules, for sub-rule (1), the following sub-rule shall be substituted, namely :-

"(1) Notwithstanding anything contained in rule 57G, the Assistant Commissioner of Central Excise may allow credit of the duty paid on inputs -

(i) falling within Chapter 24 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);

(ii) used in or in relation to the manufacture of fabrics other than inputs falling within heading No. 51.05, 51.06, 51.07, 52.05, 52.06, 53.06, 53.07, 53.08, 54.02, 54.03, 54.04, 54.05, 55.01, 55.02, 55.03, 55.04, 55.05, 55.06, 55.07, 55.09, 55.10, 56.04, 56.05, or 56.06 of the Schedule to the said Central Excise Tariff Act, received by a manufacturer, under any invoice or any document as may be prescribed by the Central Board of Excise and Customs, immediately before or after obtaining the dated acknowledgement of the declaration made under the said rule if he is satisfied that -

(a) such inputs at (i) above are lying in stock, or are received in the factory, on or after the 23rd day of July, 1996, or such inputs are used in the manufacture of final products which are cleared from the factory on or after the 23rd day of July, 1996, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification;

(b) such inputs at (ii) above are lying in stock, or are received in the factory, on or after the 1st day of August, 1996, or such inputs are used in the manufacture or packing of final products which are cleared from the factory on or after the 1st day of August, 1996, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification :

Provided that no credit under this sub-rule shall be allowed in respect of inputs at (i) or (ii) above received, or declaration made under rule 57G, on or after the 22nd day of August, 1996 or 31st August, 1996, as the case may be :

Provided further that such inputs are not used in the manufacture of final products which is exempt from the whole of the duty of excise leviable thereon or is chargeable to Nil rate of duty.".

9. In the said rules, in rule 57-I,

(i) in sub-rule (1), for the proviso the following proviso shall be substituted, namely :-

"Provided that where such credit has been taken by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the provisions of this sub-rule shall have effect as if for the words "six months", the words "five years" were substituted.";

(ii) after sub-rule (3), the following sub-rules shall be added, namely :-

"(4) Where the credit of duty paid on inputs has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed as determined under clause (ii) of sub-rule (1), shall also be liable to pay a penalty equal to the credit so disallowed.

Explanation I. - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), Customs, Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the penalty shall be payable on such reduced amount of credit disallowed.

Explanation II. - Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), Customs, Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the penalty shall be payable on such increased, or further increased, amount of credit disallowed.

(5) Notwithstanding anything contained in clause (ii) of sub-rule (1) or sub-rule (3), where the credit of duty paid on inputs has been taken wrongly on account of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed, as determined under sub-rule (2), shall also be liable to pay interest at such rate as may be fixed by the Board under section 11AA of the Act from the first day of the month succeeding the month in which the credit was wrongly taken, till the date of payment of such amount.

ExplanationI. - For the removal of doubts, it is hereby declared that the provisions of this sub-rule shall not apply to cases where the credit disallowed became payable before the commencement of this rule.

Explanation II. - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), Customs, Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such reduced amount of credit disallowed.

Explanation III. - Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), Customs, Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such increased, or further increased, amount of credit disallowed".

10. In the said rules, in rule 57Q, -

(i) in sub-rule (1), for the Explanation, the following Explanation shall be substituted, namely :-

"Explanation. - For the purpose of this section, -

(1) `capital goods' means, following goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer, namely:-

(a) all the goods falling under Chapter 84 (other than those falling under heading No. 84.07 to 84.09, Compressors falling under heading No. 84.14 and of a kind used in refrigerating and air-conditioning appliances and machinery, heading or sub-heading Nos. 84.15, 84.18, 8422.10, 84.24, 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.74, 84.76, 84.78, expansion valves and solenoid valves falling under sub-heading No. 8481.10 of a kind used for refrigerating and air-conditioning appliances and machinery);

(b) all goods falling under Chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.39 and 85.40);

(c) all goods falling under heading No. 90.11 to 90.13, 90.16, 90.17, 90.22 (other than for medical use 90.24 to 90.31 and 90.32), (other than of a kind used for refrigerating and air-conditioning appliances, and machinery);

(d) components, spares, and accessories of the goods specified against items (a) to (c) above;

(e) moulds and dies;

(f) refractories and refractory materials;

(g) tubes and pipes of iron or steel or copper or Aluminium used for coveying inputs, on which credit of duty is taken, intermediate goods or final products in the factory; and

(h) pollution control equipment.

(2)"specified duty" means duty of excise or the additional duty under section (3) of the Customs Tariff Act, 1975.";

(ii) in sub-rule (2), for clause (i), the following clause shall be substituted, namely:-

"(i) no credit of the specified duty paid on capital goods (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 23rd day of July, 1996) shall be allowed if such capital goods were received in the factory before the 23rd day of July, 1996.";

(iii) in the Annexure, clause (iii) and the entries relating thereto, shall be omitted.

11. In the said rules, in rule 57R, for sub-rule (5), the following sub-rule shall be substituted namely :-

"(5) No credit if the specified duty paid on the capital goods shall be allowed, if such manufacturer, claims depreciation under section 32 of the Income Tax Act, 1961 (43 of 1961), or as revenue expenditure under any other section of the said Income Tax Act, in respect of that part of the value of capital goods which represents the amount of specified duty on such capital goods."

12. In the said rules, in rule 57T, after sub-rule (3), the following sub-rule shall be inserted, namely:-

"(3A) Notwithstanding anything contained in sub-rule (3), a manufacturer may take credit of the capital goods received in the factory on the basis of the original invoice, if the duplicate copy of invoice has been lost in transit, subject to the satisfaction of the Assistant Commissioner".

13. In the said rules, in rule 57U,-

(i) in sub-rule (1), for the proviso the following proviso shall be substituted, namely:-

"Provided that where such credit has been taken on account of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the provisions of this sub-rule shall have effect as if for the words "six months", the words "five years" were substituted",

(ii) after sub-rule (4), the following sub-rules shall be added, namely :-

"(5) Where the credit of duty paid on capital goods has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed as determined under sub-rule (2), shall also be liable to pay a penalty equal to the credit so disallowed.

Explanation I . - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), Customs Excise and Gold (Control) Appellate Tribunal, or as the case may be, the Court, the penalty shall be payable on such reduced amount of credit disallowed.

Explanation II.- Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), Customs Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the penalty shall be payable on such increased, or further increased, amount of credit disallowed.

(6) (1) Notwithstanding anything contained in sub-rule (2) and sub-rule (4), where the credit of duty paid on capital goods has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed, as determined under sub-rule (2), shall also be liable to pay interest at such rate as may be fixed by the Board under section 11AA of the Act from the first day of the month succeeding the month in which the credit was wrongly taken, till the date of payment of such amount.

ExplanationI. - For the removal of doubts, it is hereby declared that the provisions of this sub-rule shall not apply to cases where the credit disallowed became payable before the commencement of this rule.

Explanation II. - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), Customs Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such reduced amount of credit disallowed.

Explanation III. - Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), Customs Excise and Gold (Control) Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such increased, or further increased, amount of credit disallowed".

14. In the said rules, in rule 173Q, in sub-rule (1), for the words "If any manufacturer", the words, brackets, figures and letters" Subject to the provisions contained in sub-rule (4) of rule 57-I and sub-rule (5) of rule 57U, if any manufacturer" shall be substituted.

15. In the said rules, clauses (iii), (iv), (vi), (vii), (xii) (xiii) and (xiv) of rule 2, rules 15, 16, 17, 18, 19, 20, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 33, 34, 35, 36, 37, 37A, 38, 39, 40, 41, 42, 53A, 80, 81, 92A, 92B, 92C, 92D, 92E, 92F, 95, 96-I, 96J, 96K, 96L, 96M, 96MM, 96MMM, 96MMMM, 96MMMMM, 96N, 96O, 96P, 96Q, 96R, 96S, 96T, 96U, 96ZW, 96ZX, 96ZY, 96ZZ, 96ZZZ and 96ZZZZ, 102, 103, 104, 105, 106, 109, 110, 111, 111A, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137 and 138 shall be omitted.