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TMI BlogSPECIAL PROCEDURE FOR SPECIFIED GOODSX X X X Extracts X X X X X X X X Extracts X X X X ..... . No. Item Rate of Duty per cold rolling machine per month (1) stainless steel patties or pattas Rs.15,000 (ii) Aluminium. circles produced from sheets manufactured on cold rolling machines (a) where the length of the roller is 30" or less Rs. 7,500 (b) where the length of the roller is more than 30" Rs. 10,000 .2.2 The rate of duty is fixed subject to the condition that no credit of duty paid on any raw materials, component part or machinery or finished products used for cold rolling of Stainless steel pattis/pattas, or Aluminium circles under CENVAT Credit Rules, 2004 shall be taken and further that the specified procedure is followed. 3. Application to avail special procedure 3.1 The manufacturer shall make an application in the form specified to the Superintendent of Central Excise for this purpose and the Superintendent, may grant permission for the period in respect of which the application has been made. 3.2 The application shall be made so as to cover a period of not less than twelve consecutive calendar months, but permission may be granted for a shorter period for reasons t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s installed by or on behalf of such manufacturer in one or more premises at any time during three calendar months immediately preceding the calendar which the application under the said notification is made. 4.4 The sum shall be tendered by the manufacturer along with the application. 5. Manufacturer's declaration and accounts 5.1 The manufacturer who has been granted the required permission make an application in the form specified in Annexure 29 (See Part 7) to the said notification to the Superintendent in charge of the factory for permission to the Stainless steel pattis/ pattas, or Aluminium circles from his premises the ensuing month, declaring the maximum number of cold rolling machines installed by him or on his behalf, in one or more premises at any time during three calendar months immediately preceding the said calendar month in which such application is made. 5.2 If such application is not made to the Superintendent of Central Excise within the specified time limit, the manufacturer shall, unless, otherwise directed by the Deputy/Assistant Commissioner of Central Excise, and in exceptional circumstances, be liable to pay duty on his entire production of in1ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said notification, the Additional/Joint Commissioner of Central Excise may, at his discretion, for reasons to be recorded in writing, and subject to such conditions as he may deem fit, apply the provisions contained in the said notification to a manufacturer who has failed to avail himself of the special procedure, or to comply with any condition laid down in this notification. 9. Provision regarding factories ceasing to work or opting for the normal procedure 9.1 Where a manufacturer who had availed himself of the special procedure contained in the said notification ceases to work (i.e. for more than one or two shifts only) or reverts to the normal procedure, the duty payable by him in the month during which he has availed the procedure shall be calculated on the basis of the maximum number of cold rolling machines installed during the last month in the prescribed manner and the amount already paid for the month shall be adjusted towards the duty so calculated. If on such adjustment if there is any excess payment it shall be refunded to the manufacturer and any deficiency in duty shall be recovered from him. 10. confiscation and penalty 11.1 If any manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the job worker shall intimate to the said person, the date and time of the clearance of goods for completion of the particulars by the said person in the triplicate copy of the invoice. (3) The said person may supply or cause to supply to a job worker, the big goods, namely:- (a) inputs in respect of which he may or may not have availed CENVAT credit in terms of the CENVAT Credit Rules, 2002, without reversal of the credit thereon; or (b) goods manufactured in the factory of the said person without payment of duty; under a challan, consignment note or any other document (herein after referred to as "document") as described in sub-rule (4), duly signed by him or his authorized agent. In case the job worker has undertaken to pay the duty then the duty paying document shall be endorsed in the name of the said job worker. (4)(a) The document shall be in duplicate, in printed (including computer printed) format, having printed running serial numbers on a financial year basis. The document, before it is issued shall be signed by the sender, of the goods referred to in sub-rule (3) or his authorized representative, as the case may be. Before making use of the said documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sable goods shall be removed except under an invoice: Provided that the goods may be sent under a proforma invoice in terms to sub-rule (1) of rule 11. (8) The provision of rule 128, mutatis mutandis, be applicable to the pods in the nature of the waste, by-products or like goods arising during the course of manufacture of the goods mentioned in sub-rule (1). (9) Nothing contained in Central Excise Rules, 2002 shall apply to the sent from or to an export oriented unit or a unit located in a special I zone. Explanation 1. - For the purposes of rule 12B, "job worker" means a person engaged in manufacture or processing on behalf and under the instructions of the said person from any inputs or goods supplied by the said person or by another job worker or by any other person authorized by the said son, so as to complete a part or whole of the process resulting ultimately in manufacture of 1 or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or readymade garments falling under Chapter 61 or 62 or made up textile articles falling under Chapter 63 of First Schedule to the Tariff Act and the term "job work" shall be construed accordingly. Explanation 2. - For the removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, he can do so. In such cases, after taking registration, he can also authorize the trader/supplier to make payment of duty on his behalf. • The procedure for registration (for those who would be paying duty) has been simplified. There is no need for the assessee to visit Central Excise office for this purpose. The help of the office bearers of the trade associations is solicited in this regard. Individual assessee can collect the forms from the associations, fill the same and hand it over to the office bearers. The office bearers can approach the jurisdictional Commissioners for instant registration of the units. A special cell for this purpose has been opened in all Commissionerates. Normally no verification of premises by the officers would be conducted. Assessees not having Income Tax PAN would also be granted registration. [This relaxation is not required now and therefore the assessees should follow normal procedure available for other assessees]. • A simplified procedure for filing of return has been prescribed. Those manufacturing yarn preparatories (i.e. twisting, warping, doubling of yams), unprocessed fabrics and readymade garments can file quarterly return in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of records) would rest with the person who gets yarns, fabrics or ready made garments manufactured or processed on job work. Such person would normally be the owner of the raw material who gets finished products manufactured on of job charges. He can take credit of the goods which are used in job work. In such a case, the job worker (such as power looms, hand processor and power processors) would be totally free from the duty burden as well as from the procedural requirements. The job worker, however, at his option, can take upon himself to comply with the excise law and pay duty. He can also do so on behalf of the owner of the goods working as his agent. Conversely, such a registered job-worker can authorise a broker/arhatia to pay duty on his behalf. Such persons, who manufacture goods or get goods manufactured on job work basis, registered and pay duty, would be treated at par with actual manufacturer. (b) The rules also provide for situations when the goods move from one worker to another during the course of completion of its manufacture. Such r would be under simple Challans which would contain certain minimum information and would be printed (including computer print ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, would be paid on monthly basis. (h) Processors who undertake job work and also do processing on their own and obtain dye and chemicals under invoice issued in his name, can take credit of duty paid on such dyes and chemicals to pay duty on his dutiable clearances, even though some of these inputs were used for making goods cleared without payment of duty under the job work scheme. (i) Credit of duty paid on capital goods can be taken only by the manufacturer in whose premises the capital goods are installed. (j) As the manufacturer and traders are expected to have stock of inputs as on 31.03.2003, for which they may not be in a position to produce documents evidencing payment of duty, provisions are being made to give a one time credit for the inputs and/or inputs contained in the finished products lying in stock as on 31.03.2003. This facility would be available to all such persons, who would be required to pay duty or pass on the credit i.e. manufacturers, persons getting the goods manufactured on job work and registered dealers. All such persons would declare the stock of inputs (including those contained in process or are in stock of finished product) giving descripti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making adjustments in respect of the goods rejected and returned by the buyer. The proforma invoice and the invoice would have cross reference to each other by way of mention of their serial numbers. (m) The special procedure for textiles and textile articles is not applicable to Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs). 4. There will be no visit to the premises of the new assessees, to verify the stock or premises (except in respect of traders), unless there is a specific intelligence. Such verification, if any, will be done only with the approval of the jurisdictional Assistant /Deputy Commissioner , who will record the reasons for such verification in Writing. 5. The application for registration for these new registrants would be in the same format prescribed under the existing rules. However, the information regarding PAN (if they do not have such number), details of boundaries, property holding rights, estimated investments, bank account number, business transaction number, business transaction numbers obtained from other government agencies, details about owner, partners etc. at the intial stages, if it is difficult for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed exemption i.e. full exemption upto first annual clearance of Rs. 25 lakhs, have represented that a mechanism may be devised so that they can pass on the credit even if their exempted final products, made from a single consignment of yarn and covered under single invoice, is sold to more than one user. The Board, having considered the issue, have devised the following procedure: • This will be an optional scheme for independent weavers of unprocessed fabrics falling under Chapters 51, 52, 54, 55, 58 or 60. • The person opting for the scheme shall file an application in the similar simplified format (See Annexure-1A in Part 7 to notification No. 35/2001-CE (NT), dated 26th June, 2001, as amended) as that in case of registration of textile manufacturers. (Please see notification No. 53/2003-CE (NT) dated 9th June amending notification No.36/2001-CE (NT) dated 26th June, 2001. The weavers may take assistance of trade association for filing such application. • Instead of granting registration to the person, he shall be allotted (within 24 hours of the receipt of the application) a declarant code which will be 12 digit code i.e. first two digit for Cominissionerate, 3rd and 4th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that where these goods are cleared by one or more manufacturers from a factory, the will apply to the aggregate value of clearance from such factory and not separately for each manufacturer. In this regard, doubts have arisen regarding the application of this condition and scope of the term 'factory'. It has been reported that in certain cases a number of manufacturers of these items put up their sewing machines or looms in the same premises. In such cases, they share the manufacturing premises while having their individual manufacture and clearances not linked to each other. The manufacture is carried out by different legal entities. In this regard, it is clarified that in such cases, the entire premises having several manufacturers undertaking individual manufacturing activity should not be treated as a single factory. There may not be any physical separation between the different units but the fact that the machines/looms belong to different individuals/legal entities who carry out manufacturing unrelated to each other, gives them a distinct identity. Therefore, it is clarified that in such cases, the machines/looms belonging to a specific manufacturer should be treated as a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is no obligation provided under the Cenvat Credit rules, 2002 where under the trader has to necessarily bring the goods to his registered premises before selling the same. In many cases, these goods are sold even without unloading from transport or even during transit. Thus, it is clarified that there is no requirement for the traders to necessarily bring the goods to their premises before they are being sold. Such resale can take place from the transporters premises or before such goods are unloaded from the vehicle or even during the transit of the goods. The registered dealer is, however, under obligation to maintain account of all the goods purchased, sold or have under stock. He is also required to maintain the accounts regarding the credit on the goods received by him and the credit that has been passed on to the subsequent buyer. Issue No.4: Whether the exemption of Es. 30 lakhs/Rs. 25 lakhs vide notification nos. 34/2003-CE and 35/2003-CE, both dated 30.04.2003 is available to a person (trader) who is getting readymade garments/grey fabrics, manufactured by a job-worker and the total value of turnover of the job-worker is more than the exemption limits i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer i.e. the job worker. (d) Doubts have also been raised as to whether for calculating the clearance value under notification nos. 34/2003-CE or 35/2003-CE, the value of clearance of goods, cleared on job work should also be taken into account. In this regard, it is clarified that the clearance value limits prescribed in these notifications include value of all clearances, whether it is of goods manufactured on job work or as independent weaver. Further, for all clearances, the value will be determined under Section 4 of the Central Excise Act and rules made there under (and not merely the job charges in case of job work clearances). (e) In case a weaver/garment manufacturer who either does job work (of one person or more than one persons) or makes clearances as independent weaver/manufacturer, there is no duty liability till he reaches the total clearance level of Rs.25 lakhs or Rs. 30 lakhs as the case may be. Consequently, till then, the trader, who is getting his goods manufactured on job, work, need not follow the Rule 12B procedure. It is relevant to note that Rule 12B authorizes the trader to pay the duty leviable on the job worker. Once the job worker is no long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arances. • A trader 'A' gets grey fabrics manufactured by job workers' 'Y' and 'Z' and the total clearance value of each of these workers is below Rs.25 lakhs. All the clearances from the workers are within the exemption limit for individual units. The trader has no obligation to register himself or pay duty terms of Rule 12B. In other words, he is out of the scope of the provisions of Rule 12B. Issue No.5: M/s A, M/s B and M/s C (three separate legal entities) purchase fabrics, cut them in their premises to the required shape for making readymade garments. The cut fabrics are sent to one job worker, M/s JW for stitching a packing. The packed fabrics are received back by M/s A, M/s B and M/s C. All three persons are availing benefit of Rs.30 lakhs exemption under notification No. 34/2003-Ce individually. M/s A, M/s B and M/s C claim that they are I manufacturers of readymade garments since they are cutting the fabrics required shapes and are individually eligible for exemption of the said notification, even though the total value of clearance of M/s JW is Rs.90 lakhs. Whether M/s B and M/s C are eligible for such exemption? Clarification: Cutting fabrics to required sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as package containing such pre - commodity. Therefore, only when such pre-packed commodities are sold in retail packages, the provisions of Standards of Weights Measures Act and rules regarding declaration of the retail sale price (and consequently valuation of the goods based on such RSP) arises. Many times, garments are cleared in bulk where the manufacturer neither packs the same nor declares the retail sale price therein. Such garments are ultimately displayed in the retailer's outlets, which may or may not attach a price tag thereto. Some times the dealer/retailer packs, r-packs, labels or re-labels the goods, which may result in such goods fall within the purview of Standards of Weights and Measures (Packaged Commodity) Rules. However, in such cases central excise valuation is not important, as such activities undertaken on duty paid goods are fully exempt vide notification No. 38/2003-CE dated 30.04.2003. Thus, it is clear that in such cases, the manufacturer of the garments is under no legal obligations to declare the retail sale price while clearing the garments from his factory in bulk and in unpacked condition. - Manuals - Ready reckoner - Law and practice - Referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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