Status Holder Incentive Scrip (SHIS), Central Excise

[Rishit Mevada]

Dear Sir,

We are a textile machinery manufacturer, and some of our customers required machines under SHIS.

As per their opinion, if we sell them the machines under SHIS, they didn't pay us excise amount,but instead of that they give us SHIS certificate, so my question is then from where we will pay excise to government?

Please Help...Thanks in advance...

 

Posts / Replies

[Pradeep Khatri]

Regarding exemption under Status Holder Incentive Scrip (SHIS) scheme please refer following Notification:-

[PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 33 / 2012 - Central Excise

 

New Delhi, dated the 9^th July, 2012

Ashadha 18, 1934 SAKA

 

G.S.R. 545 (E).– In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts capital goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), when cleared against a Status Holder Incentive Scheme duty credit scrip issued to a Status Holder by the Regional Authority in accordance with paragraph 3.16 of the Foreign Trade Policy (hereinafter referred to as the said scrip) from,-

(i) the whole of the duty of excise leviable thereon under the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);

(ii) the whole of the additional duty of excise leviable thereon under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); and

(iii) the whole of the additional duty of excise leviable thereon under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978).

2. The exemption shall be subject to the following conditions, namely:-

(a) that the said scrip has been issued by the Regional Authority to a Status Holder against exports of the products of the sectors namely, leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding iron and steel, nonferrous metals in primary or intermediate forms, automobiles and two wheelers, nuclear reactors and parts and ships, boats and floating structures), plastics and basic chemicals (excluding pharma products) made during 2009-10, 2010-11, 2011-12 or 2012-13 or against exports of the following products made during 2010-11, 2011-12 or 2012-13, namely:-

(i) the chemical and allied products (other than bulk minerals, granite or stones, processed minerals, cement, clinkers and asbestos) of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), namely, rubber products covered under headings 4001 to 4010 and 4014 to 4017; paints, varnishes and allied products covered under headings 3208, 3209 and 3210; glass and glassware covered under Chapter 70; plywood and allied products covered under Chapter 44; ceramics or refractories covered under Chapter 69; paper, paper boards and paper products covered under Chapter 48; books, publications and printings covered under Chapter 49; animal by-products covered under headings 35030030, 05069099, 05079010, 05079020, 05079050, 23011010, 23011090, 96062910, and 96063010; ossein and gelatine covered under headings 05061039 and 35030020; graphite products covered under headings 3801, 85451100 and 85451900 and explosives covered under headings 3601, 3602 and 3603; products covered under headings 3201, 32029010, 32030010, 3604, 3605, and 38021000;

(ii) electronic products;

(iii) sports goods and toys covered under Chapter 95 and headings 420321, 650610 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);

(iv) the engineering products covered under Chapter 72 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), namely, (i) iron and steel (ii) pipes and tubes (iii) ferro alloys:

 

Provided that, the following exports shall not be considered for computation of entitlement under the scheme, namely:-

 (1) export oriented units or electronic hardware technology parks or biotechnology parks, which are availing direct tax benefits or exemption;

 (2) export of imported goods covered under para 2.35 of the Foreign Trade Policy;

 (3) exports through transhipment, meaning thereby that exports originating in third country but transhipped through India;

 (4) Deemed exports;

 (5) Exports made by Special Economic Zone units or Special Economic Zone products exported through Domestic Tariff Area units;

 (6) Export of items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS);

 (7) The exports made by the Status Holders during a particular year, if benefits are availed under the Technology Upgradation Fund scheme of Ministry of Textiles in that year:

 Provided further that the said scrip has not been issued in violation of the condition contained in sub-paragraph (4) of paragraph 2 of notification No. 102/2009-Customs, dated the 11^th September, 2009 pertaining to Zero Duty EPCG scheme or sub-paragraph (5) of paragraph 2 of notification No.101/2009-Customs, dated the 11^th September, 2009 pertaining to Zero Duty EPCG scheme for Common Service Providers, as the case may be;

 (b) that the benefits under this notification shall not be available to clear the item listed in Appendix 37B of the Handbook of Procedures, Volume I;

 (c) that the benefits under this notification shall not be available to goods or items, the imports of which are not permitted against the said scrip;

 (d) that the said scrip shall be non-transferable and shall be used for clearance of capital goods relating to sectors specified in condition (a):

Provided that the said scrip shall be transferable amongst status holders subject to the condition that the transferee status holder is a manufacturer and such transfer is endorsed by Regional Authority during the period of validity of the said scrip, mentioning the sectors for which the transferee has manufacturing facility and for which transfer is granted:

 Provided further that upon such transfer, the validity of the said scrip shall remain unchanged;

(e) that the capital goods cleared against the said scrip shall be subject to actual user condition;

(f) that the said scrip is registered with the Customs authority at the port of registration (hereinafter referred as the said Customs authority);

(g) that the holder of the scrip, who may either be the person to whom the scrip was originally issued or a transferee-holder, presents the said scrip to the said Customs authority along with a letter or proforma invoice from the supplier or manufacturer indicating details of its jurisdictional Central Excise Officer (hereinafter referred as the said Officer) and the description, quantity, value of the goods to be cleared and the duties leviable thereon, but for this exemption;

 (h) that the said Customs authority, taking into account the debits already made towards imports under Notification No. 104/2009-Customs, dated the 14^th September, 2009 and this exemption, shall debit the duties leviable, but for this exemption in or on the reverse of the said scrip and also mentions the necessary details thereon, updates its own records and sends written advice of these actions to the said Officer;

(i) that at the time of clearance, the holder of the scrip presents the said scrip debited by the said Customs authority to the said Officer along with an undertaking addressed to the said Officer that-

(A) in case of any amount short debited in the said scrip he shall pay on demand an amount equal to the short debit, along with applicable interest.

 

(B) he shall comply with the actual user condition and that in case of non compliance of this condition he shall pay on demand an amount equal to the duty leviable, but for the exemption contained herein together with applicable interest.

 

(j) that based on the said written advice and undertaking, the said Officer endorses the clearance particulars and validates, on the reverse of the said scrip, the details of the duties leviable, but for this exemption, which were debited by the said Customs authority, and keeps a record of such clearances;

 

(k) that the manufacturer retains a copy of the said scrip, debited by the said Customs authority and endorsed by the said Officer and duly attested by the holder of the scrip, in support of the clearance under this notification;

 

(l) that the said holder of the scrip, to whom the goods were cleared, shall be entitled to avail the drawback or CENVAT credit of the duties of excise leviable under the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), against the amount debited in the said scrip and validated at the time of clearance.

 

Explanation - For the purposes of this notification, -

(A) “capital goods” means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological up gradation or expansion. It also includes packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector;

 

(B) “Foreign Trade Policy” means the Foreign Trade Policy, 2009-14, published by the Government of India in the Ministry of Commerce and Industry, vide notification No.01 (RE 2012)/2009-2014, dated the 5^th June, 2012.

 

(C) “Handbook of Procedures Volume1” means the Handbook of Procedures Volume 1, 2009-14, published by the Government of India in the Ministry of Commerce and Industry, vide Public Notice No. 01 (RE 2012)/2009-2014, dated the 5^th June, 2012.

 

(D) ”Regional Authority” means the authority competent to grant a scrip or Authorisation under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992).

 

(E) “Status Holder” means the person having status category of ‘Export House’ or ‘Star Export House’ or ‘Trading House’ or ‘Star Trading House’ or ‘Premier Trading House’, as the case may be, as mentioned in para 3.10.2 of the Foreign Trade Policy.

[F. No. 609/12/2012-DBK]

 

(Rajesh Kumar Agarwal)

Under Secretary to the Government of India

 

[Rishit Mevada]

Dear Sir,

Thank you for your prompt reply. But again my question is, I am domestic company, selling product in domestic market, and not collect any excise from my customer under SHIS. 

Can you please answer in layman langauge? As even our tax consultant get confused over following issue:

1) If we sell product underSHIS, the  custome will credit the excise amount to our buyer but what about central excise department? Where can we pay the exisable amount of goods we sell?

[Pradeep Khatri]

Please check the para (i), (ii) and (iii) of the Point No. 1 of the Notification No. 33 / 2012 - Central Excise , where is duty of excise has been exempted.

Please ask your consultant to read not just the line but between the lines.  No need to get confused.  For further clarification you may contact to your jurisdictional Central Excise Department.

[Rishit Mevada]

Dear Sir,

Thank you very much for your help, this will help a lot.

Regards,

Rishit Mevada

[Rishit Mevada]

Dear Sir,

As I had already mentioned we are a machine manufacturer.

So if I will supply machinery under SHIS how can we take the payment of credit which collected in our excise account for buying raw material.

I mean when will we buy the raw material, we paid some excise amount.

regards, Rishit Mevada

[manas dash]

Dear Sir,

at the time of purchasing capital goods through SHIS license, whether supplier calculate CST on including Excise duty or excluding excise duty.

Maanas

9109914120

[YAGAY AND SUN]

Dear Maanas,

CST is required to be calculated on Taxable Amount. Taxable Amount would be the sum total of Basic price + Excise Duty(deemed paid in case of CG procured against debit of SHIS Scrip).

Regards,

YAGAY AND SUN

(Management, Business and Indirect Tax Consultants)