SSI Exemption - Determination of Turnover of the previous year of 4 crores, Central Excise

[Rama Krishana]

As per the Paragraph no. 3A of the Notification no. 8/2003 CE dated 1.3.2003 for the purpose of Calculation of Rs. four hundred lakhs (4 crores) of the previous year, certain amount shall be excluded. Other than excluded items, all turnover of excisable goods shall be included.

My query is related to the term "excisable goods" used in the SSI exemption notification above.

As per Section 2(d) of the Central Excise Act, 1944, (d) "excisable goods" means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt;

Now my query is whether the value / turnover of the goods where Goods are specified in the Tariff itself with empty tariff rate (e.g. Goods falling under Chapter 12 of CETA) and with Nil tariff rate (e.g. heading 53.01 of CETA) are "excisable goods" as being Subject to duty of excise.

Because if these are "excisable goods", the value shall be included in the turnover of the previous year and if these are not "excisable goods", the value shall not be included in computing the limit of 4 crores.

I have no doubt that goods exempted under a notification are "excisable goods" and are liable to be included as above.

But the doubt arises in respect of goods where tariff rate itself is empty or tariff rate itself is Nil.

Posts / Replies

[Rama Krishana]

Dear All Experts

Now on one point Mr. Kasturi Sethi Ji is agreed with me that, Where rate of duty is left Blank would not be excisbale goods at all. The relevant portion of his reply is as under:

"Still I am of the view that where the column of rate of duty has been left blank the goods are not excisable and where NIL rate of duty has been prescribed the goods are treated as excisable goods being subject to duty of excise..."

I hope, all may agree on the first part of the issue that where rate of duty column has been left blank would not be treated as excisable at all as per the definition given u/s 2(d) since there is no duty of excise has been prescribed.

On the second part of the issue, I do agree with the argument that an Exemption notification cannot make an Excisbale goods as Non Excisable Goods but I have doubt that, whether "NIL" rate of duty as per the tariff entry itself, would make the goods as excisable goods.

Since last few days, I tried to get the answer to this query, and I got a lot from the replies of all the experts for further brainstorming. Please give me some more time to analysis the issue.

Though we have some difference of opinion but it shows the sportsmen spirit and we will continue with the same. I will, certainly, come with my final view on the basis of your suggestions and views.

I am happy that all the experts have made this forum live and useful.

Once again thanks to all with core of my hearth.

[CS SANJAY MALHOTRA]

Dear Friends,

HSN has been substituted over BTN to align Central Excise & Customs Tariff and hence all ITC codes specified in Customs has been brought in Central Excise Tariff.

Important aspect which can't be ignored to reiterate is the Additional Note 1(c) of General Notes on Interpretation to Central Excise Tariff Act, which included Goods with 8 digit code having Blank rate as a "TARIFF ITEM" & hence the higher Appellate authorities decision are based upon considering even Blank Rate as "Excisable Goods". Important aspect is that if the activity does not amount to manufacture, then the goods are not Excisable even if they are defined in Tariff as NIL/Blank /Specified Rate.

Section 2(d) of Central Excise Act should be read with Additional Note 1(c) to General Notes of Tariff Interpretation to arrive at conclusions. This is what higher Courts has followed in their citations.

[KASTURI SETHI]

CS SANJAY MALHOTRA JI,

Thanks a lot for enrichment of my knowledge, Sir. Your views are full of substance that goods must be manufactured and should also be marketable to qualify the definition of "excisable goods" under Section 2(d) & (f) of the Central Excise Act. Suppose if the finished goods are not marketable, the assessee would not remove the same from the factory and CE duty has to be paid at the time of removal or we may say on clearance from the factory.