EOU clearance of scrap in DTA, Goods and Services Tax - GST

[Ramaswamy S]

As per DGFT TN dated 30.06.2017 read with Customs Notification 59/2017, the EOU needs to pay back the customs duty foregone on DTA clearances. The exemption allowed under 52/2003 is withdrawn in Notification 59/2017.

Whether the EOU needs to pay the customs duty on Transaction Value of clearance of scrap or they need to repay the duty foregone proportionately.

Secondly, when the customs duty at the full rate is payable on the DTA clearances, whats the need for fixing the Norms. The Norms has lost its sanctity.

Request the experts views

Regards

S.Ramaswamy

Posts / Replies

[RAMESH PRAJAPATI]

As I understand, on imports BCD exemption is still available to EOU under Notification No 52/2003-Cus by following IGCRD 2017 [Notification No 68/2017-Cus(NT) dated 30.06.2017]. Excise duty exemption on DTA Clearance under Notification No 23/2003-CE is not there. EOU has to pay back the BCD exemption availed on the imports of Raw Material used in the manufacturing of the product being sold in DTA.

[Udhav Modi]

Pre GST regime EOU's would pay 50% of applicable BCD at the times of DTA clearance. what would be the scenario under the GST regime?

[R.S. Mangal]

As per amended exemption notification, there is no need to pay back the BCD on inputs used in process related to waste, scrap if it is within SION or as per norms approved by norms committee. Otherwise BCD on inputs is required to be paid.

[Abhijeet Bandal]

Query :

As per amended exemption notification, there is no need to pay back the BCD on inputs used in process related to waste, scrap if it is within SION or as per norms approved by norms committee. Otherwise BCD on inputs is required to be paid.

Reply:

As per para 6.08 (a) (v) of FTP 2015-20 there is no such provision to prevent BCD reversal on scrap or waste sale in DTA, if it is within SION or as per norms approved by norms committee. The relevant para of FTP is attached for your ready reference;

6.08 DTA Sale of Finished Products / Rejects / Waste/ Scrap / Remnants and By-products;

(v) The DTA sale by EOU/EHTP/STP/BTP units shall be subject to payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose of manufacturing of such finished goods (including by-products, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods). This reversal of Customs Duty would be as per prevailing SION norms or norms fixed by Norms Committee (where no SION norms are fixed).

We hope we have clarify the matter.