Excise Manual
Excise Manual
Excise Manual
NUMBER
1. Introduction
1.1 For the administration of the Central Excise Act, 1944 and the Central Excise (No.2)
Rules, 2001 (hereinafter referred to as the ‘said Rules’) manufacturers’ of excisable goods or
any person who deals with excisable goods, with some exceptions, are required to get the
premises registered with the Central Excise Department before commencing business.
2.1 In accordance with Rule 9 of the said Rules and Notifications issued under rules 18
and 19 of the said Rules, as the case may be, the following category of persons are required
to register with jurisdictional Central Excise Officer in the Range office having jurisdiction over
his place of business/factory:
This is neither an exhaustive list of indicators nor each indicator is necessarily in each case.
The Commissioner has to decide the issued from case to case.
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2.3 Separate Registration is required for each depot, godown etc. in respect of persons
issuing Cenvat invoices. However, in the case liquid and gaseous products, availability of
godown should not be insisted upon.
2.4 Registration Certificate may be granted to minors provided they have legal guardians
i.e. natural guardians or guardians appointed by the Court, as the case may be, to conduct
business on their behalf.
3.1 The Central Board of Excise and Customs (CBEC), by Notification No. 36/2001-CE
(NT) dt.26.6.2001, has exempted specified categories of persons/premises from obtaining
registration, as follows:
(i) Persons who manufacture the excisable goods, which are chargeable to nil rate of
excise duty or are fully exempt from duty by a notification.
(ii) Small scale units availing the slab exemption based on value of clearances under
a notification. However, such units will be required to give a declaration
(Annexure-1)once the value of their clearances touches Rs.90 lakhs.
(iii) In respect of ready-made garments, the job-worker need not get registered if the
principal manufacturer undertakes to discharge the duty liability.
(iv) Persons manufacturing excisable goods by following the warehousing procedure
under the Customs Act, 1962 subject to the following conditions:
(a the said excisable goods and any intermediary or by-product including the
) waste and refuse arising during the process of manufacture of the said goods
under the Customs Bond are either destroyed or exported out of the country
to the satisfaction of the Assistant Commissioner of Customs or the Deputy
Commissioner of Customs, in-charge of the Customs Bonded Warehouse;
(b the manufacturer shall file a declaration in the specified form annexed hereto
) in triplicate for claiming exemption under this notification;
(c) no drawback or rebate of duty of excise paid on the raw materials or
components used in the manufacture of the said goods, shall be admissible.
(v) The person who carries on wholesale trade or deals in excisable goods (except
first and second stage dealer, as defined in Cenvat Credit Rules, 2001).
(vi) A Hundred per cent Export Oriented Undertaking, or a unit in Free Trade Zone or
Special Economic Zone licensed or appointed, as the case may be, under the
provisions of the Customs Act, 1962.
(vii Persons who use excisable goods for any purpose other than for processing or
) manufacture of goods availing benefit of concessional duty exemption notification.
3.2 The Drugs and Cosmetics Rule 1945 recognises the concept of loan licence in the
manufacture of P or P medicines. As a result the system of accepting the said concept is still
prevalent under excise law. In such cases the procedure prescribed under Notification
no.36/2001-CE (NT) dated 26/6/2001 has to be followed. The principal manufacturer who has
under-taken to comply with the procedural formalities will have to maintain separate accounts
in respect of goods manufactured on his own account and goods manufactured on behalf of
the loan licensee. However, the principal manufacturer has to aggregate the clearances made
by him together with clearances made on behalf of the loan licensees with regard to eligibility
as well as exemption limit. In other words the clearances made on behalf of the loan licensee
have to be clubbed with that of the principal manufacturer (by the manufacturer from one or
more factories and from the factory by one or more manufacturers).
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4. Application for Registration
4.1 Under authority of Section 6 of the Central Excise Act, 1944 read with rule 9 of the
said Rules, the CBEC has prescribed the format for Application as well as Registration
Certificate. The application has to be made to the jurisdictional Central Excise Officer.
4.3 When a manufacturer who is exempt from the registration is required to file a
declaration, the same will be filed with the Assistant Commissioner of the jurisdictional Central
Excise Division.
5.1 The manufacturers who are exempted from the operation of Rule 9 by virtue of
Notification no. 36/2001-Central Excise (NT) dt.26/6/2001 have to file a declaration with the
Assistant Commissioner of the respective Divisions. Such declarations received from the
assessee will have to be filed separately, tariff head-wise in the Divisional office. The details
should be entered in the register to be maintained in the Divisional office in the enclosed
proforma. Genuine delay in filing the required declaration need not be viewed seriously and
the assessee may be allowed to enjoy the exemption from the operation of Rule 9 as well as
from the payment of duty provided the conditions stipulated in the respective exemption
Notifications have been duly fulfilled.
6.1 Under the section 6 of the Central Excise Act, 1944 read with rule 9 of the said Rules,
the CBEC, by notification, has specified the format for Application as well as Registration
Certificate (Annexure 2 and 3, respectively). The format of application is common to
manufacturers, private warehouse holders, and registered dealers issuing CENVATABLE
invoice and persons who obtain goods by availing end-use based exemptions, including
manufacturers or processors of export goods.
6.2 In the application for Registration, the applicant has to submit ground plan. Under the
Central Excise (No.2) Rules, 2001, there is no stipulation of any specified marked area for
storing the finished goods (traditionally called the ‘bonded store room’). Thus there is no need
for marking such area in the ground plan. The only verification that the jurisdictional officers
should conduct that the premises mentioned in the application for registration, are genuine
and are intended for the purposes for which the application has been made. Assessee,
however, shall be responsible for proper storage and accountal of goods manufactured in his
factory at any point of time.
6.3 The verification shall be made by the Inspector or Superintendent of Central Excise
having jurisdiction over the premises (Range Officer) in respect of which the applicant has
sought registration, within 5 working days of the receipt of application. As per the
rules/notification, the registration certificate shall be issued within 7 working days. The Range
Officer (Superintendent) either himself or through the Sector Officer (Inspector) shall verify
whether the declared address and operations (intended) are genuine and the declarations
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made in the application are correct. If found in order, he will endorse the correctness of the
same and append his dated signature on the office copies of the Registration application and
the copy of the application with the registrant. If any deviations or variations are noticed
during the verification, the same should be got corrected. Any major discrepancy, such as
fake address, non-existence of any factory etc. shall be reported in writing to the Divisional
Officer within 3 working days and the Range Officer shall initiate action to safeguard revenue.
7.1 All Registrations of each type should be numbered in a single series for the Range as
a whole , commencing with serial no. 1 for each calendar year . The issuing authority should
make every effort to complete all formalities and grant the Registration Certificate within 7
days of receipt of application in his office. Every Registration Certificate granted / issued by
the registering authority shall be under his signature. He should also countersign the ground
plan accompanying the Registration Certificate. The Registration Certificate and the duplicate
copy of the plan should be returned to the registered person who shall exhibit his Registration
Certificate or a certified copy thereof in a conspicuous part of the registered premises. The
Registering authority in a permanent file shall keep the application as well as the ground plan.
7.2 In case of partnership firms, the Registration Certificate which is granted in the name
of the said firm [which is registered or not under the Partnership Act] shall contain the names
of all the partners.
8.2 In the case of limited company, death of a director would not affect the status of
Registration, since Registration is issued to the body corporate recognizing the same as a
legal person. In the case of partnership firms also normally no difficulty would arise with
regard to succession, since the surviving partners will continue either in the same name or
with the change of name the business. However, in the case of proprietary business when the
proprietor dies, the successor in estate has to apply for a fresh Registration. Ordinarily fresh
Registration would be issued to the person who happens to be in the actual possession of the
business. However, grant of fresh Registration to the successor in estate shall not be
regarded that the Government has accepted the said person as the legal successor/heir to
the deceased.
9.2 Registration Certificate may be cancelled by the Registering authority when the
registered person voluntarily surrenders the Certificate due to closure of business.
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9.3 As per rule 17 of the said Rules Registration Certificate may be revoked or
suspended by the Deputy/Assistant Commissioner of Central Excise, if the holder or any
person under his employ has committed a breach of any condition of the Central Excises Act
or the rules made thereunder or has been convicted of an offence under Section 161 read
with Section 109 or Section 116 of the Indian Penal Code [45 of 1860].
Annexure-3
To
The Superintendent of Central Excise,
(Address of the Range)_____________
_____________________________________
Subject: Surrender of Registration Certificate –
I/We, _________________________________ of M/s ________________________,
duly authorised in this behalf by the proprietor/ firm/company declare that we do not require
registration with the Central Excise and therefore hereby surrender and deposit with you the
original copy of the Registration Certificate No. ________________________ issued to me on
_______________ (date) in terms of the provisions of rule 9 read with notification No.
___________________ dated ___________ .
I/We further declare that duty has been paid in respect of all excisable goods manufactured and
remaining in the factory, which are liable to duty.
I/We also declare that there is no government due pending against us and that there is no
demand pending against us under Central Excise Act, 1944 (1 of 1944) and rule made thereunder
pending as on the date of surrendering the Registration Certificate.
Signature of the Registrant or the authorised signatory
with full name, date and seal.
Acknowledgement
I hereby acknowledge receipt of “Registration Certificate No.____________________ in original.
Surrender of registration shall be subject to correctness of the declaration made above.
Superintendent of Central Excise
10.1 When a Registration Certificate is reported to be lost, the registered person shall
submit a written application to the Range Officer for issuing a DUPLICATE REGISTRATION
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CERTIFICATE. The same shall be issued after making necessary entries in the record or logs
in the computer data.
An importer who intends to issue invoice under Cenvat Credit Rules, 2001, will have to
Register himself in the manner specified earlier.
Annexure-II
Original (for applicant)
Duplicate (for Division)
Triplicate (for Range)
FORM RC
Proforma of Registration Certificate
Sr. No.
Range:
Division:
Commissionerate:
Registration Certificate to cure, produce, manufacture, carry on wholesale
trade/business/broker or commission agent or otherwise deal in excisable goods, act as a
user of excisable goods for special industrial purposes (See Rule 9)
(Delete the letters/words not applicable)
1. ....................... of ..................... having undertaken to comply with the conditions prescribed
in the Central Excise Rules, 2001 and any orders issued thereunder is hereby certified to
have been registered with the Central Excise Department to undertake activities as detailed in
the Schedule.
2. Certificate is valid only for the premises and purposes specified in the Schedule and for no
other purposes and premises.
3. Registration certificate is not transferable.
4. No corrections in the certificate will be valid unless ordered and attested by the
Superintendent of Central Excise.
5. This certificate shall remain valid till the holder carries on the activity for which a certificate
has been issued or surrenders the certificate whichever is earlier.
6. The grant of this certificate shall be without prejudice to the rights of any other person over
the registered premises or purpose to which such person may be lawfully entitled.
SCHEDULE TO REGISTRATION CERTIFICATE
1. Name and address of the person to whom the registration certificate has been granted:
2. Address and specification of the premises :
3. Sl. Description of Purpose for Remarks No. Excisable goods which registered
__________________________________________________________________________
___
Place:
Date :
Signature of the registering Authority
Annexure III
To
The Superintendent of Central Excise,
(Address of the Range)_____________
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_____________________________________
Subject: Surrender of Registration Certificate –
I/We, _________________________________ of M/s ________________________,
duly authorised in this behalf by the proprietor/ firm/company declare that we do not require
registration with the Central Excise and therefore hereby surrender and deposit with you the
original copy of the Registration Certificate No. ________________________ issued to me
on _______________ (date) in terms of the provisions of rule 9 read with notification No.
___________________ dated ___________ .
I/We further declare that duty has been paid in respect of all excisable goods manufactured
and remaining in the factory, which are liable to duty.
I/We also declare that there is no government due pending against us and that there is no
demand pending against us under Central Excise Act, 1944 (1 of 1944) and rule made
thereunder pending as on the date of surrendering the Registration Certificate.
Signature of the Registrant or the authorised signatory
with full name, date and seal.
Acknowledgement
I hereby acknowledge receipt of "Registration Certificate No.____________________ in
original. Surrender of registration shall be subject to correctness of the declaration made
above.
Superintendent of Central Excise
with full name, date and seal.
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Notification No.36/2001-Central Excise(N. T.)
In exercise of the powers conferred by sub-rule (2) of the rule 9 of the Central Excise (No.2)
Rules, 2001, the Central Board of Excise and Customs, being satisfied that it is necessary
and expedient in the public interest so to do, -
1. hereby exempts from the operation of rule 9 of the said rules, -
i. the persons who manufacture the goods specified in the First Schedule to the
Central Excise Tariff Act, 1985 (5 of 1986) which are chargeable to nil rate of
duty or remain fully exempt from the whole of the duty of excise leviable
thereon subject to conditions specified in that notification and other conditions
as specified below:
a. the manufacturer makes a declaration in the specified form annexed
hereto while claiming exemption under this notification:
b. that where the exemption from the whole of the duty of excise
leviable on the said goods is granted, based on the value of
clearances made in a financial year (hereinafter referred to as "full
exemption limit"), no such declaration shall be filed, if the aggregate
value of the said goods cleared -
i. by a manufacturer from one or more factories, or
ii. from any factory by one or more manufacturers,
for home consumption, was less than the specified limit during the preceding financial year or
in case of a new factory or manufacturer, such value of clearances is estimated to remain less
than the specified limit during the current financial year;
ii. every manufacturer who gets his goods manufactured on his account from any other
person subject to the conditions that the said manufacturer authorises the person,
who actually manufactures or fabricates the said goods to comply with all procedural
formalities under the Central Excise Act, 1944 (1 of 1944) and the rules made
thereunder, in respect of the goods manufactured on behalf of the said manufacturer
and, in order to enable the determination of value of the said goods under section 4
or section 4A of the said Act, to furnish information including the price at which the
said manufacturer is selling the said goods and the person so authorised agrees to
discharge all liabilities under the Act and the rules made thereunder:
Provided that in respect of goods falling under Chapter 62 of the First Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986), the manufacturer shall authorize the job worker, who has
been authorized to pay the duty of excise leviable on such goods on his behalf under sub rule
(3) of rule 4, to furnish information including the retail sale price at which such goods are sold
in order to enable determination of tariff value of such goods under sub-section (2) of section
3 of the Central Excise Act, 1944 (1 of 1944) or any notification issued thereunder.
Explanation.- For the purposes of this notification, "retail sale price" means the maximum
price at which the excisable goods may be sold in packaged form to the ultimate consumer
and includes all taxes, local or otherwise, freight, transport charges, commission payable to
dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as
the case may be, and the price is the sole consideration for such sale;
iii. the persons manufacturing excisable goods by following the warehousing
procedure as required by or under the Customs Act, 1962 (52 of 1962)
subject to the following conditions: -
a. the said excisable goods and any intermediary or by-product
including the waste and refuse arising during the process of
manufacture of the said goods under the Customs Bond are either
destroyed or exported out of the country to the satisfaction of the
Assistant Commissioner of Customs or the Deputy Commissioner of
Customs, in-charge of the Customs Bonded Warehouse;
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b. the manufacturer shall file a declaration in the specified form
annexed hereto in triplicate for claiming exemption under this
notification;
c. no drawback or rebate of duty of excise paid on the raw materials or
components used in the manufacture of the said goods, shall be
admissible.
iv. the person who carries on wholesale trade or deals in excisable goods
except first stage dealer or second stage dealer as defined in CENVAT Credit
Rules, 2001;
v. the person who uses excisable goods for any purpose other than for
processing or manufacture of any goods availing benefit of exemption
extending concessional rate of duty;
vi. every job worker, who undertakes job work in respect of final products falling
under Chapter 62 of the First Schedule to the Central Excise Tariff Act, 1985
(5 of 1986), on behalf of any other person who shall pay the duty or duties of
excise leviable on the said goods, under sub-rule (3) of rule 4 and comply
with all procedural formalities and discharge all liabilities under the Central
Excise Act, 1944 (1 of 1944) and the rules made thereunder, in respect of the
goods manufactured on behalf of the said other person:
Provided that the above exemption shall not apply to the job worker who may be authorised to
pay the duty of excise leviable on such final products manufactured by him on behalf of such
other person in accordance with the proviso to sub-rule (3) of rule 4 of the said rules.
Explanation.- For the purposes of this proviso, the expression "job worker" shall have the
meaning assigned to it in sub-rule (3) of rule 4;
2. hereby declares that where a hundred per cent export oriented undertaking, or a unit
in Free Trade Zone or Special Economic Zone, is licensed or appointed, as the case
may be, under the provisions of the Customs Act, 1962, such hundred per cent export
oriented undertaking or unit in Free Trade Zone or Special Economic Zone shall be
deemed to be registered for the purposes of rule 9 of the Central Excise (No.2) Rules,
2001.
3. hereby declares that if two or more premises of the same factory are separated by
public road, railway line or canal, the Commissioner of Central Excise may, subject to
proper accountal of the movement of goods from one premise to other and such other
conditions and limitations, allow single registration.
Explanation. - For the purpose of this notification, the expression "specified limit" shall mean
full exemption limit minus ten lakh rupees.
Annexure
Declaration Form
To
The Assistant Commissioner/ Deputy Commissioner,
Central Excise,
I/We……………………………………….declare that to the best of my/our knowledge and
belief the information furnished in the Schedule below is true and complete.
I/We undertake to apply for a Central Excise registration certificate in the proper form as soon
as the value of the goods, mentioned in the said Schedule, cleared for home consumption in
a financial year, reaches the full exemption limit.
I/We undertake to apply for a Central Excise Registration in the proper form as soon as the
goods mentioned in the Schedule become chargeable to duty.
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I/We undertake to maintain such records and follow such procedure as may be prescribed by
the Commissioner in relation to the exempted goods.
I/We also undertake to intimate any change in the information furnished in the said Schedule.
THE SCHEDULE
1. Name(s) and address(es) of the proprietors/all partners/Directors of the company owning
the factory.
2. Name and address of the factory.
3. Name and addresses of other factories/manufacturers (producing such goods) in whom the
manufacturer claiming the exemption has proprietary interest.
4. Full description of the goods (heading-wise) manufactured by the factory.
5. Value/quantity of the goods cleared during the preceding financial year.
6. Value/quantity of the goods estimated to be cleared in the current financial year.
7. Heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985
(5 of 1986) under which the goods are classifiable.
8. (a) Reference to the heading/sub-heading of the said Schedule Section 5A of the Central
Excise Act, 1944 (1 of 1944), the case may be (under which the goods are exempted from the
whole of the duty of excise leviable thereon).
(b) Ground of exemption under the said heading/sub-heading or the said notification
9. Process of manufacture.
(SIGNATURE OF THE APPLICANT)
Note.-Portion of the Form/Schedule that is not relevant to a particular manufacturer may be
deleted.
2. This notification shall come into force on the 1st day of July, 2001.
F. No. 201/12/2001-CX.6
(P.K. Sinha)
Under Secretary to the Government of India
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INVOICE SYSTEM
1. Introduction
1.1 An invoice is the document under cover of which the excisable goods are to be
cleared by the manufacturer. This is also the document which indicates the assessment of the
goods to duty. No excisable goods can be cleared except under an invoice. The invoice is the
manufacturers own document and though the Department has specified the entries thereon,
the format etc. is left to the manufacturer’s choice.
2.1 Rule 11 of the Central Excise (No.2) Rules, 2001 (hereinafter referred to as the said
Rules) provides that no excisable goods shall be removed from a factory or a warehouse
except under an invoice signed by the owner of the factory or his authorized agent.
2.2 In case of cigarettes, which is under physical control, the Factory Officers are posted
by rotation in the factory. If the factory is operation 24 hours, the officers are posted 24 hours.
They check the operations of the assessee as per instructions, mutatis mutandis, contained in
Commodity Manual for Cigarettes. Accordingly, in the case of cigarettes, each invoice shall
also be countersigned by the Inspector of Central Excise or the Superintendent of Central
Excise before the cigarettes are removed from the factory.
3.1 The invoice shall be serially numbered and shall contain the registration number,
description, classification, time and date of removal, rate of duty, quantity and value, of goods
and the duty payable thereon. The serial number shall commence from 1st April every year
[beginning of a financial year].
3.2 The serial number can be given at the time of printing or by using franking machine.
But when the invoice book is authenticated in the manner specified in sub-rule (5) of rule 11,
each leaf should contain serial number. Hand written serial number shall not be accepted.
4.1 The invoice shall be prepared in triplicate in the following manner, namely:-
4.2 The above requirement is mainly for Central Excise purposes. However, the
assessee may make more than three copies for his other requirements. But such copies shall
be prominently marked "NOT FOR CENVAT PURPOSES’.
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5. Number of Invoice book
5.1 The rule 11 of the said Rules provides that only one invoice book shall be in use at a
time, unless otherwise allowed by the Deputy/Assistant Commissioner of Central Excise in
the special facts and circumstances of each case.
5.2 The Board has decided that where assessee requires two different invoice books for
the purposes of removals for home-consumption, and removals for export they may do so by
intimating the jurisdictional Deputy/Assistant Commissioner of Central Excise.
5.3 Wherever, an assessee is allowed to keep more than one invoice book, he should be
asked to keep different numerical serial numbers for the different sets.
5.4 In case of running stationary used in computers, the bound book shall not be insisted
upon provided the stationary is pre-printed with distinctive names and marks of the assessee.
After the invoices are prepared, the triplicate copy shall be retained in bound-book form.
Where invoices are to be typed written, the leafs have to be first taken out from the book for
typing. In such cases also the triplicate copy shall be retained in bound-book form.
6.1 The rule provides that owner or working partner or Managing Director or Company
Secretary shall authenticate each foil of the invoice book, before being brought into use.
However, in order to facilitate the trade it has been decided that any person duly authorised in
this regard by the Company, owner or working partner may also authenticate invoices. Copy
of the letter of authority should be submitted to the Range office.
7.1 Before making use of the invoice book, the serial numbers of the same shall be
intimated to the Superintendent of Central Excise having jurisdiction over the factory of the
assessee. This can be done in writing by post/e-mail/fax/hand delivery or any other similar
means.
8.1 The amount of duty being shown in invoices issued under rule 11 of the said Rules
should be rounded off to the nearest rupee as provided for under Section 37D of the Central
Excise Act, 1944 and the duty amount so rounded off should be indicated both in words as
well as in figures.
9.1 Where the part consignments traveling in a convoy or separately do not constitute
"complete machinery" falling under a single heading or sub-heading, each such consignment
will be classified on merits, say, as ‘parts’ and also a separate invoice showing the separate
value arrived at under Section 4 of Central Excise Act, 1944 and the duty amount, must
accompany each such consignment.
ANNEXURE - A
Undertaking For Availing Special Procedure
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I / We ________________________ hereby undertake that only those components of
a ‘complete machinery’ in terms of rule 2(a) of the interpretative rule to CETA which have first
been assembled and constitute complete machinery falling under a single heading or sub-
heading, and which are later dis-assembled only for the convenience of transport shall be
cleared under this procedure on payment of entire duty as per the classification of such
machinery / equipment and no ‘parts’ not satisfying this criterion shall be transported with
such components unless appropriate Central Excise duty is paid as prescribed for ‘parts’
under the Central Excise Tariff Act, 1985.
10. Preparation of invoices when goods dispatched through more than one vehicle
because of their size
(i) The manufacturer will intimate, on case to case basis, his option to avail this special procedure
in writing for the complete machinery sought to be cleared in a number of individual part
consignments after first being assembled to the jurisdictional Deputy/Assistant Commissioner
of Central Excise with a copy to the jurisdictional Superintendent of Central Excise along with
the description of such machinery/ equipment giving its tariff classification and list of
components of such machinery/equipment in dis-assembled form and its value and an
undertaking. These intimations shall be given at least 48 hours prior to the removal on any
working day.
(ii) Though separate verification need not necessarily be made for each and every consignment,
before the removal of the first consignment Assistant Commissioner should verify that the
various part consignments are indeed constituents of the complete machinery which has been
first assembled.
(iii) A separate invoice shall be made out for in respect of each conveyance on which the part
consignment is loaded.
(iv) The manufacturer will pay the entire duty on the first such invoice (hereinafter referred to as
"Parent Invoice") on the basis of entire value of the machinery unit/equipment. This parent
invoice shall be prepared quoting all vehicle numbers, total value / duty of the consignment. An
inventory shall be annexed to the invoice giving detailed item-wise description as loaded in
different vehicles.
(v) The details of removals and duty payment shall be entered in Daily Stock Account.
(vi) Photocopy of the duplicate copy of the parent invoice duly attested by the authorised signatory
of the Company shall accompany each conveyance.
(vii CENVAT Credit, if any, shall be taken only on receipt of parent invoice and the entire
) consignment.
11. Cancellation of invoices:- When an assessee is compelled to cancel invoice, the following
actions should be taken:-
(i) Intimation of a cancelled invoice should be sent to the range Superintendent on the same
date, whenever possible. However, in case of exceptional circumstances beyond the control
of assessee should this not be possible, the intimation should be sent on the next working
day;
(ii) Along with the intimation of the cancelled invoice sent to the range Superintendent the original
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copy of the cancelled invoice should also be sent.
(iii Triplicate copy of the cancelled invoice may be retained by the assessee in the invoice book
) so that the same can be produced whenever required by audit parties, preventive parties and
other visiting officers.
General
1. Introduction
1.1 The conditions and procedure relating to export without payment of duty (i.e. duty
under the Central Excise Act, 1944, the Additional Duties of Excise (Goods of Special
Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile
Articles) Act, 1978 (40 of 1978); and special excise duty collected under a Finance Act) are
contained in Notification Nos. 42/2001-Central Excise (N.T.) to 45/2001-Central Excise (N.T.),
all dated 26th June, 2001 issued under rule 19 of the Central Excise (No.2) Rules, 2001
(hereinafter referred to as the said Rules). The new rule 19 corresponds to rule 13 of the
Central Excise Rules, 1944.
1.2 Some important changes have been introduced under the present procedure, which
are mentioned below and explained in detail subsequently: -
(i) Export of finished goods without payment of duty under bond or undertaking.
(ii Export of manufactured/processed goods after procuring raw material without
) payment of duty under bond.
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Part-II
1. Introduction
1.1 Procedures and conditions for export to all countries except Nepal and Bhutan are
specified in notification No. 42/2001-CE(N.T.) dated 26.6.2001. The details are mentioned in
this part.
2. Conditions
2.1 An exporter shall furnish bond in Form B-1 and obtain certificate in Form CT-1. A
manufacturer-exporter may furnish annual Letter of Undertaking (no CT-1 is required in this
case). The export shall be subject to the following conditions"
(i) The goods shall be exported within six months from the date on which these were
cleared for export from the factory of the production or the manufacture or
warehouse or other approved premises within such extended period as the
Deputy/Assistant Commissioner of Central Excise or Maritime Commissioner may
in any particular case allow;
(ii) When the export is from a place other than registered factory or warehouse, the
excisable goods are in original packed condition and identifiable as to their origin;
(iii The exports of mineral oil products falling under Chapter 27 of the First Schedule
) to the Central Excise Tariff Act, 1985 (5 of 1986) as stores for consumption on
board of an aircraft on foreign run shall be subject to conditions and limitations, to
be applied mutatis mutandis, as notified in the Notification No.40/2001-Central
Excise (N.T.) dated 26th June, 2001 issued under rule 18 of the said Rules.
3.1 ARE.1 is the export document for export clearance (Annexure-14), which shall be
prepared in quintuplicate (5 copies). This is similar to the erstwhile AR.4. This document shall
bear running serial number beginning from the first day of the financial year. During this year,
for the sake of continuity, the serial number, as started from 1.4.2001, may continue. The
stationary for AR.4 Form may be used with modified name "ARE.1" during this financial year.
On A.R.E.1, certain declarations are required to be given by the exporter. These should be
signed by the exporter or his authorised agent. The different copies of ARE.1 forms should be
of different colours indicated below:
Original White
Duplicate Buff
Triplicate Pink
Quadruplicate Green
Quintuplicate Blue
15
3.2 It will be sufficient if the copies of ARE.1 contain a color band on the top or right hand
corner in accordance with above color scheme.
3.2 An invoice shall also be prepared in terms of rule 11 of the said Rules. It should be
prominently mentioned on top "FOR EXPORT WITHOUT PAYMENT OF DUTY".
3.3 The Letter of Undertaking is to be furnished in the Form UT-1 specified in Annexure-
15 to Notification No. 42/2001-Central Excise (N.T.), supra. Any manufacturer, who is an
assessee for the purposes of the Central Excise (No.2) Rules, 2001, shall furnish a Letter of
Undertaking only to the Deputy/Assistant Commissioner of Central Excise having jurisdiction
over his factory from which he intends to export. The Letter of Undertaking should not be
furnished to the Maritime Commissioner or any other officer authorised by the Board. A ‘Letter
of Undertaking’ shall be valid for twelve calendar months provided the exporter complies with
the conditions of the Letter of Undertaking, especially the procedure for ‘acceptance of proof
of export’ under this instruction. In case of persistent defaults or non-compliance causing
threat to revenue, the manufacturer-exporter may be asked to furnish bond with
security/surety. For the sake of clarification, it is mentioned that this Letter of Undertaking
should not be taken for each consignment of export.
3.4 The obligation of the manufacturer flows from statutory requirement of exporting the
goods within six months or such extended period as the Deputy/Assistant Commissioner of
Central Excise may allow. Failing this, the exporter is required to deposit the requisite sum
(duty and interest) suo moto, considering that the manufacturer has to do ‘self-assessment’.
Any non-payment within 15 days of expiry of the stipulated time period, shall be treated as
arrears of revenue and the Department will proceed to recover the same as ‘sum due to
Government’. Suo moto payment within 15 days of expiry of the stipulated time period will not
be treated as ‘default’.
3.5 On repeated failure of the manufacturer-exporter to comply with the conditions of the
Letter of Undertaking or the procedure for ‘acceptance of proof of export’ under this
instruction, the Deputy/Assistant Commissioner of Central Excise may direct him in writing
that the letter of undertaking is not valid and he should furnish B-1 Bond with sufficient
security/surety.
3.6 The Letter of Undertaking shall not be discharged unless the goods are duly
exported, to the satisfaction of the Assistant Commissioner of Central Excise or the Deputy
Commissioner of Central Excise within the time allowed for such export or are otherwise
accounted for to the satisfaction of such officer, or until the full duty due upon any deficiency
of goods, not accounted so, and interest, if any, has been paid.
3.7 Though any exporter (Manufacturer-exporter or merchant-exporter) can furnish bond,
the merchant-exporters are necessarily required to furnish bond in the B-1 Form specified in
Annexure-16 of notification no. 42/2001-Central Excise (N.T.), supra with such security or
surety as may be specified by the concerned bond accepting authority. The bond shall be in a
sum equal at least to the duty chargeable on the goods for the due arrival of export goods at
the place of export and their export therefrom under Customs or as the case may be postal
supervision. The officer who will accept the bond, will also be responsible for discharging that
bond upon furnishing proof of export by the exporter.
3.8 The bond shall not be discharged unless the goods are duly exported, to the
satisfaction of the Deputy/Assistant Commissioner of Central Excise or Maritime
Commissioner or such other officer as may be authorised by the Board on this behalf within
the time allowed for such export or are otherwise accounted for to the satisfaction of such
officer, or until the full duty due upon any deficiency of goods, not accounted so, and interest,
if any, has been paid
16
3.9 Certificate ‘CT-1", as specified in Annexure-17 have to be obtained by merchant-
exporters for procuring goods from a factory or warehouse. Such certificates need not be
obtained for each consignment but will be given in lot of 25.
(i) The Deputy/Assistant Commissioner of Central Excise having jurisdiction over the
factory or warehouse or any other premises approved by the Commissioner for
storing non-duty paid goods;
(ii) Maritime Commissioners at Mumbai, Chennai, Kolkata, Paradeep, Kandla,
Tuticorin, Visakhapatnam and Cochin.
(iii The Deputy/Assistant Commissioner of Central Excise(Export) as officers
) authorised by the Board for this purpose.
4.2 Exporters are required to clearly indicate on the ARE.1 the complete postal address
of the authority before whom the bond is executed and to whom the documents are to be
submitted/ transmitted for admission of proof of export.
5.1 Wherever bond is taken, sufficient security or surety is also required as the per the
notifications issued under rule 19 of the said Rules. In 1996, Board had taken a decision that
in respect of exporters having good track record may be allowed to furnish bond with nil
security or surety. The Board in Circular No.284/118/96 dated 31.12.1996 issued an
instruction. Now, since the manufacturer-exporters, who are also assessee of the Central
Excise Department, have an option to furnish ‘Letter of Undertaking" (without any security or
surety), the question of furnishing of ‘security or surety’ is mainly relate to merchant-exporters
who are not assessees of the Central Excise Department. In this scenario, the Board has
decided that security (Bank Guarantee or Cash Guarantee or Cash Security) or surety need
not be insisted upon from Super Star Trading Houses, Star Trading Houses, Trading Houses
and Export Houses provided that –
(i) the exporter has not come to adverse notice of the Central Excise or Customs
Department in last three years from the date under consideration;
(ii) all the formalities required under Central Excise Act and rules made thereunder
are regularly complied with by the exporter, especially regarding timely submission
of proof of export and deposit of duty with interest in time where proof of export is
not received within stipulated time frame;
(iii A self-attested copy of the proof of Status (Super Star Trading Houses, Star
) Trading Houses, Trading Houses and Export Houses) from concerned authority
(Ministry of Commerce and Industry – Directorate General of Foreign Trade) is
submitted.
5.2 Other exporters shall be required to furnish surety equal to full bond amount or
security equal to twenty five percent. (25%) of the bond amount, along with the bond.
5.3 The bond shall be furnished on non-judicial stamp paper of the value as applicable in
the State in which bond is being furnished.
17
5.4 Where export is effected by merchant-exporter, the bond has to be necessarily
furnished. It is open for the manufacturer to furnish bond on behalf of the merchant-exporter.
It is clarified that in such cases, the manufacturer will not take a stand that since he is
responsible for the duty liability, the export should be allowed on the basis of the ‘Letter of
Undertaking’, which he has already furnished to the Department. In such circumstances, the
application in Form ARE.1 will be in the name of the manufacturer who executes the Bond. All
other procedures for admission of the proof of export would be the same as in the case of
manufacturer-exporters.
5.5 It should be noted that once a manufacturer furnished bond for exports by merchant
exporters, it would be his responsibility to account for the export goods.
5.6 It may be noticed that only General bond (B-1) has been specified. Even where bond
is required for only one consignment, the Form will remain the same. The exporter may get
the bond redeemed immediately after he completes the exports and obtains the proof of
export.
5.7 In case of B-1 general bond a running bond account in proforma of Annexure-18 shall
be maintained by the exporter because he is responsible for debit the bond before
preparation of ‘certificate’ for obtaining goods for export. He shall also take self-credit in the
manner specified in this instruction.
5.8 For the sake of clarity it is informed that the concept of ‘Block Transfer’ has lost its
relevance in the context of self-debit and self-credit of bond and the new system of
acceptance of proof of export [to be explained in subsequent paragraphs] by the exporter.
5.9 It is further mentioned that where the merchant exporter executes bond, it shall be
necessary that both the merchant-exporter and the manufacturer sign the ARE.1.
6.1 A Manufacturer-exporter who has furnished a Letter of Undertaking will prepare the
export documents (A.R.E.1 and invoice under rule 11) for clearance from his factory of
production.
6.2 A Merchant-exporter who has furnished a bond shall be provided sufficient number of
certificates (CT-1), duly signed/certified, in multiples of 25 copies, normally covering a period
of one to three months, depending upon the track record of compliance by the exporter. The
‘bond accepting authority’ shall be responsible for verifying and accepting the proof of export
and in case of any defaults by the exporter, to recover the sum and enforcing the bond. The
certificate should be provided according to the volume of exports projected by the exporter
(which should also reflect in the amount of bond). The compliance of the exporter in
submitting the requisite documents towards ‘proof of export’ shall be another criterion.
6.2.1 The second part of CT-1 is very important. The exporter shall determine the
description of goods for procurement from a particular factory or warehouse or an approved
place of storage, quantum, value of procurement (provisional figures) and duty involved
therein (provisional figures – but based on correct rate of duty and contracted transaction
value). This ‘duty’ element will be debited provisionally. The exporter shall ensure that at the
time of debit, sufficient credit is available at that point of time to cover the said debit. The
provisional debit shall be converted into final debit within a period of seven days form the date
of removal of goods on A.R.E.1, based on the ‘duty payable’ in goods cleared for export
reflected in the said A.R.E.1 and invoice.
6.2.2 The manufacturer shall record the clearance in his Daily Stock Account indicating,
inter alia, the invoice number/date, A.R.E.1 number/date and duty payable but foregone under
rule 19.
18
6.3 The exporter has two optional procedures regarding the manner in which he may
clear the export consignments from the factory or warehouse or any other approved
premises, namely: -
7.1 The exporter is required to prepare five copies of application in the Form ARE-1. The
Form is specified in Annexure-I to notification No. 42/2001-Central Excise (N.T.) dated
26.6.2001. The goods shall be assessed to duty in the same manner as the goods for home
consumption, though duty is not required to be paid considering clearance is meant for export
without payment of duty. The classification and rate of duty should be in terms of Central
Excise Tariff Act, 1985 read with any exemption notification and/or the said Rules. The value
shall be the "transaction value" and should conform to section 4 or section 4A, as the case
may be, of the Central Excise Act, 1944. It is clarified that this value may be less than, equal
to or more than the F.O.B. value indicated by the exporter on the Shipping Bill.
7.2 The duty payable shall be determined on the ARE.1 and invoice and recorded in the
Daily Stock Account as "duty foregone on account of export under rule 19".
7.3 The exporter may request the Superintendent or Inspector of Central Excise having
jurisdiction over the factory of production or manufacture, warehouse or approved premises
for examination and sealing at the place of despatch 24 hours in advance, or such shorter
period as may be mutually agreed upon, about the intended time of removal so that
arrangements can be made for necessary examination and sealing.
7.4 In case of exports under Duty Exemption Entitlement Certificate Scheme (DEEC),
Duty Exemption Pass Book Scheme (DEPB) and claim for Drawback, the Superintendent of
Central Excise shall also examine and seal the consignment and sign the documents in token
of having done so. In exceptional cases, where the exporter has unblemished track record of
compliance (Central Excise) and where there is non-availability of Superintendent of Central
Excise due to leave, vacant post or other reasonable causes, the jurisdictional
Deputy/Assistant Commissioner of Central Excise may permit examination and sealing by
Inspector. All other types of export may be examined and sealed by the Inspector of Central
Excise.
7.5 The Superintendent or Inspector of Central Excise, as the case may be, will verify the
identity of goods mentioned in the application and also verify whether the duty self-assessed
is appropriate and that the particulars of the duty payable has been has recorded in the Daily
Stock Account. If he finds that the declaration in ARE.1 and the invoices are correct from the
point of view of identity of goods and its assessment to duty, he shall seal each package or
the container ensuring that the goods cannot be tampered with after the examination.
Normally, individual packages should be sealed by using wire and lead seals and an all-sides-
closed container by using numbered One time Lock/Bottle seals or in such other manner as
may be specified by the Commissioner of Central Excise by a special or general written order.
Thereafter, the said officer shall endorse and sign each copy of the application in token of
having such examination done and put his stamp with his name and designation below his
signature;
8. Distribution of ARE.1 in the case of export from the factory or warehouse
Original The said Superintendent or Inspector of Central Excise shall return to the exporter
immediately after endorsements and signature
19
Duplicate The said Superintendent or Inspector of Central Excise shall return to the exporter
immediately after endorsements and signature.
Triplicate Sent to the bond sanctioning authority, either by post or by handing over to the
(Third Copy) exporter in a tamper proof sealed cover after posting the particulars in official records.
Quadruplicate Retain for official records
Quintuplicate Optional copy - The said Superintendent or Inspector of Central Excise shall return to
(Fifth Copy) the exporter immediately after endorsements and signature.
9. Distribution of ARE.1 in the case of export from other than factory or warehouse
9.1 Where goods are not exported directly from the factory of manufacture or warehouse,
the distribution of A.R.E.1 will be same as above except that the triplicate copy of application
shall be sent by the Superintendent having jurisdiction over the factory of manufacture or
warehouse who shall, after verification forward the triplicate copy in the manner specified
above.
10.2 The said Superintendent and Inspector of Central Excise shall verify the particulars
of assessment, the correctness of the amount of duty paid or duty payable, its entry in the
Daily Stock Account maintained under rule 10 of the Central Excise (No.2) Rules, 2001 (the
manufacturer or warehouse owner will be required to present proof in this regard),
corresponding invoice issued under rule 11. If he is satisfied with the particulars, he will
endorse the relevant A.R.E. 1 and append their signatures at specified places in token of
having done the verification. In case of any discrepancy, he will take up the matter with the
assessee for rectification and also inform the jurisdictional Assistant/Deputy Commissioner.
Once verification is complete and the A.R.E. 1 is in order, he shall distribute the documents
(A.R.E. 1) in the following manner:
20
Triplicate (Third Send to the bond accepting authority, either by post or
copy) by handing over to the exporter in a tamper proof
sealed cover after posting the particulars in official
records. Where manufacturer has given LUT, triplicate
shall be retained and will be forwarded to the
Deputy/Assistant Commissioner of the Division along
with Statement, after matching them with original
copies of A.R.E.1s.
Quadruplicate Retain for Range records (The notification does not
(Fourth copy) specify this distribution of this copy)
11.1 In case of export by parcel post after the goods intended for export has been sealed,
the exporter shall affix to the duplicate application sufficient postage stamps to cover postal
charges and shall present the documents, together with the package or packages to which it
refers, to the postmaster at the Office of booking.
12.1 The place of export may be a port, airport, Inland Container Depot, Customs Freight
Station or Land Customs Station.
12.2 The exporter shall present together with original, duplicate and quintuplicate
(optional) copies of the application (A.R.E. 1) to the Commissioner of Customs or other duly
appointed officer – normally goods are presented in the designated export shed.
12.3 The goods are examined by the Customs for the purposes of Central Excise to
establish the identity and quantity, i.e. the goods brought in the Customs area for export on an
A.R.E. 1 are the same which were cleared from the factory. The Customs authorities also
examine the goods for Customs purposes such as verifying for certain export incentives such
as drawback, DEEC, DEPB or for determining exportability of the goods.
12.4 For Central Excise purposes, the Officers of Customs at the place of export shall
examine the consignments with the particulars as cited in the application (A.R.E. 1) and if he
finds that the same are correct and the goods are exportable in accordance with the laws for
the time being in force (for example, they are not prohibited or restricted from being exported),
shall allow export thereof. Thereafter, he will certify on the copies of the A.R.E. 1 that the
goods have been duly exported citing the shipping bill number and date and other particulars
of export and distribute in the following manner:
(i) The officer of customs shall return the original and quintuplicate (optional copy for
exporter) copies of application to the exporter and forward the duplicate copy of
application either by post or by handing over to the exporter in a tamper proof
sealed cover to the officer specified in the application, from whom exporter wants
to claim rebate.
(ii Quintuplicate A.R.E. 1 is the Export Promotion Copy and the exporter shall use this
) copy for the purposes of claiming any other export incentive.
13. Procedure relating proof of export and to re-credit against such proof
13.1 The procedure relating to acceptance of proof of export or the ‘validation’ of actual
export has been simplified. The original and duplicate copies of A.R.E. 1 are presented to the
Customs authorities at the place of export [with option for exporter to also present
21
quintuplicate copy]. The Customs authority certify the actual export on these documents and
distributes the copies as specified.
13.2 The exporter shall submit a Statement, at least once in a month, in Form specified in
Annexure-19 along with the Original copies of A.R.E. 1 with due certification of export (Pass
for Shipment Order) by Customs authorities at the place of export to the Divisional office
(through Range)or in the office of the bond-accepting authority. Other supporting documents
shall also be furnished, namely, Self-attested photocopy of Bill of Lading and Self-attested
photocopy of Shipping Bill (Export Promotion Copy). The Range office or the Office of the
bond-accepting authority immediately on receipt shall acknowledge the Statement.
13.3 The exporter is permitted to take credit in his running bond account on the basis of
copy of the Statement referred to above, duly acknowledged the Range office or the office of
the bond-accepting authority
13.4 It shall be the responsibility of the Range Office and Division Office or the other
bond-accepting authority to verify the correctness of Statement and A.R.E.1 furnished by the
exporter within the shortest possible time. The Statement and A.R.E.1 will be tallied by the
Range Officers with the triplicate copies of A.R.E.1 already with them and the A.R.E.1 or its
summary received directly from the place of export (hard copies or electronic summary or e-
mail) within 15 days of the receipt. The Divisional Officer shall accept the proof of export or
initiate necessary action in case of any discrepancy.
13.5 In case of other bond-accepting authority, their office will do this work. The bond-
accepting authority shall accept the proof of export or initiate necessary action in case of any
discrepancy. He will also intimate about the acceptance of proof of export or any other action
to the Deputy/Assistant Commissioner of Central Excise from whose jurisdiction goods were
cleared for export.
13.6 In case of non-export within the six month from the date of clearance for export (or
such extended period, if any, as may be permitted by the Deputy/Assistant Commissioner of
Central Excise or the bond-accepting authority) or discrepancy, the exporter shall himself
deposit the excise duties along with interest on his own immediately on completion of the
statutory time period or within ten days of the Memorandum given to him by the
Range/Division office or the Office of the bond-accepting authority. Otherwise necessary
action can be initiated to recover the excise duties along with interest and fine/penalty. Failing
this, the amount shall be recovered from the manufacturer-exporter along with interest in
terms of the Letter of Undertaking furnished by the manufacturer. In case where the exporter
has furnished bond, the said bond shall be enforced and proceedings to recover duty and
interest shall be initiated against the exporter.
13.7 In case of any loss of document, the Divisional Officer or the bond accepting
authority may get the matter verified from the Customs authorities at the place of export or
may call for collateral evidences such as remittance certificate, Mate’s receipt etc. to satisfy
himself that the goods have actually been exported.
14.1 Under the normal export procedure, the merchant-exporters including those
manufacturer-exporters (Project-exporters who have to export bought out goods) have to
procure the excisable goods for export under bond manufactured in different parts of the
country. For this purpose, they have to have to furnish either several bonds with the
Deputy/Assistant Commissioner of Central Excise of the supplier's area and submit proof of
exports for discharge of such bonds or furnish a bond with the Maritime Commissioner who
are located only at seven ports, namely, Considering that there have been tremendous export
potentials from the inland areas located at considerable distance from a sea port and that
there have been considerable growth of exports from Inland Container Depots and the Air
Cargo Units located in such inland areas, the Board had appointed an officer in each
22
Commissionerate except those Commissionerates in which the Maritime Commissioner is
posted as Deputy/Assistant Commissioner of Central Excise (Export) for the purpose of
facilitating export under bond by Circular No. 500/66/99-CX dated 15th December, 1999,
under authority of rule 19 of the said Rules read with notification No.42/2001-Central Excise
(N.T) dated 26.6.2001.
Part-III
1. Introduction
1.1 Units, which are fully exempted from payment of duty by a notification granting
exemption based on value of clearances for home consumption, may be exempted from filing
ARE.1 and Bond till they remain within the full exemption limit. The following simplified export
procedure shall be followed in this regard by such units: -
2.1 Manufacturers exempted for payment of duty will not be required to take Central
Excise Registration. They shall however, file a declaration in terms of Para 2 of Notification
No. 36/2001-CE (NT) dated 26.6.2001, and obtain declarant code number [notwithstanding
they are exempted form declaration, but for this procedure].
3. Documentation
(i) Such manufacturers are permitted to use invoices or other similar documents
bearing printed Serial Numbers beginning from 1st day of a financial year for the
purpose of clearances for home consumption as well as for exports. (The printing
of Serial Numbers can be done by use of franking machine). The invoices meant
for use during a month shall be pre-authenticated by the owner or partner or
Director/Managing Director of a Company or other authorised person.
(ii) The declarant's Code Number should be mentioned on all clearance document.
(iii) Such clearance document should contain particulars of the description of goods,
name and address of the buyer, destination, value, [progressive total of total value
of excisable goods cleared for home consumption since beginning of the financial
year], vehicle number, date and time of the removal of the goods.
(iv The clearance document will be signed by the manufacturer or his authorised
) agent at the time of clearance.
(v) In case of export through merchant exporters, the manufacturer will also mention
on the top "EXPORT THROUGH MERCHANT EXPORTERS" and will mention the
Export-Import Code No. of such merchant exporters.
(vi In case of direct export by the manufacturer-exporters, he will mention on the top
23
) "FOR EXPORT" and his own Export - Import Code No., if any.
3.2.1 Such units shall maintain a simple record of quantity and value of production and
clearance. Entries in production record should either be allowed to be made at the close of
the day or before the commencement of the production on the following day. Entries need not
be made on days when there is no production or clearance of goods.
3.3.1 Such units shall file a prescribed quarterly statement to the Jurisdictional Range
Superintendent containing various particulars. (Annexure-20)
(i) Duly attested photocopy of shipping bill (Export Promotion Copy) bearing the
particulars and date of clearance document under which the goods are
cleared from the factory of production, having endorsement on its reverse by
the Customs of the particulars of mate's receipt no. (wherever applicable),
name of the ship/ flight no., of the aircraft, vehicle no. - by which the goods
were exported out, date of export, and EGM Number/ Airway Bill Number
(wherever applicable);
(ii) Duly Custom's attested copy of Bill of lading; and
(iii Foreign Exchange Remittance Certificates.
)
4.1.2 In the case of export through Merchant-exporter the document prescribed by Sales
Tax Department will be accepted as the proof of export. Sales made by manufacturer of the
goods' to the merchant exporter which ultimately are exported are exempt from Central Sales
Tax. The Sales Tax Department issues booklet to the merchant exporters containing serially
numbered H-Forms/ST-XXII form or equivalent Sales Tax form. After the goods have been
exported by the merchant exporters, the latter issues these forms to the manufacturers of the
goods. The merchant exporters in turn have to account all these serially numbered forms to
the sales Tax Department by furnishing a proof that the goods have been exported out. These
proofs are in the from of presentation of the Shipping Bill duly completed by the customs, bill
of landing, foreign exchange remittance certificates etc. The liability of the manufacturers to
the Central Sales Tax gets discharged only when they submit these forms to the Sales Tax
Department. It is, therefore, seen that indirectly exports get accounted for through the issue of
H-form or ST-XXII Form. Thus, photocopy of H-form or ST-XXII Form or any other equivalent
Sales Tax form duly attested and stamped by the manufacturer or his authorised agent will be
accepted for purpose of proof of export.
4.2.1 The proof of export should be submitted to the Range Officer within a period of 6
months from the date of clearance of goods from the factory of production.
24
4.2.2 If Range Superintendent finds that the clearances for home consumption, and the
clearances for export where proof of exports have not been furnished within 6 months, when
taken together, are likely to exceed the exemption limit (which is presently Rs. 100 lakhs for
home consumption), he should issue show cause notices for safeguarding revenue. These
show cause notices, however, should be kept pending for another three months by which time
proof of exports are expected to be received.
4.2.3 The Range Superintendent will maintain manufacturer wise record on the basis of
the quarterly return and the proof of exports submitted by the manufacturer from time to time
in order to ascertain that the clearances for exports and the proofs of exports are duly
accounted for and in case of failure on the part of exporter to submit proof of export,
necessary action can be initiated promptly on the lines already mentioned in the above para.
4.3 In case clearances of such manufacturers for home consumption plus clearance for
export where proof of export were not furnished within 6 months, exceed the exemption limit,
they should take Central Excise Registration and follow the regular A.R.E.1 procedure.
Part-IV
1. Introduction
1.1 The conditions and procedure for export to Nepal and the Board in Notification No.
45/2001-Central Excise (N.T.) dated 26.6.2001(hereinafter referred to as the ‘said
notification’) has specified Bhutan without payment of duty (under bond).
2.1 Under the said notification, export can be made from any of the following places: -
3.1 The export shall be required to file a general bond in the Form specified in the said
notification Annexure-16 with such security or surety as may be specified by the concerned
bond accepting authority. The bond shall be in a sum equal at least to the duty chargeable on
the goods for the due arrival of export goods at the place of export (Land Customs Station)
and their export therefrom under Customs supervision. The officer who will accept the bond,
will also be responsible for discharging that bond upon furnishing proof of export by the
exporter.
3.2 The bond shall not be discharged unless the goods are duly exported, to the
satisfaction of the Deputy/Assistant Commissioner of Central Excise or Maritime
Commissioner or such other officer as may be authorised by the Board on this behalf within
the time allowed for such export or are otherwise accounted for to the satisfaction of such
officer, or until the full duty due upon any deficiency of goods, not accounted so, and interest,
if any, has been paid
25
3.3 Invoice in the Form specified in the said notification (Annexure-21) shall be used for
export clearances. Six copies of invoice shall be prepared. This document shall bear running
serial number beginning from the first day of the financial year. During this year, for the sake
of continuity, the serial number, as started from 1.4.2001, may continue. The stationary for
invoice under erstwhile notification no. 50/94-Central Excise (N.T.) dated 22.9.1994 may be
used for the time being" during this financial year. On the invoice, certain declarations are
required to be given by the exporter. They should be signed by the exporter or his authorised
agent.
3.4 Certificate shall be required in the Form specified in the said notification (Annexure-
22) from the Reserve Bank of India or any other bank authorised to deal in foreign exchange
by the Reserve Bank of India, for the receipt of full payment in freely convertible currency.
Certificate may also be required where remittance is received in Indian Rupee.
4.1 Export under bond to Nepal or Bhutan where payment is in freely convertible
currency
4.1.1 Export under bond to Nepal or Bhutan where payment is in freely convertible
currency, shall be subject to following conditions, namely: -
(i) The importer in Nepal or Bhutan, as the case may be, shall open an irrevocable
letter of credit in favour of the exporter in India, before the export takes place.
However, this is not necessary int eh following cases of export:
(a All excisable goods other than consumer goods and
)
(b Motor vehicle,
)
if they are exported without payment of duty as –
(i) supplies to projects financed by any United Nations agency, the International
Bank for Reconstruction and Development, International Development
Association, the Asian Development Bank or any other multilateral agency of
like nature; and
(ii) to all diplomatic missions in Nepal or Bhutan provided the Indian Embassy or
the Ministry of External Affairs certifies that the import is for the personnel of
the diplomatic community;
(ii) The exporter shall furnish a bond in Form specified in Annexure-I of the above-
mentioned notification before the Deputy/Assistant Commissioner of Central
Excise having jurisdiction over the factory, warehouse, or the approved premises
or such other officer as authorised by the Board on this behalf, from where the
goods are removed for export to Nepal, as the case may be, or Bhutan;
(iii After the exports are effected the exporter shall furnish a certificate of remittances
) from the Reserve Bank of India or an authorised bank in India, showing that full
payment for the goods has been duly received in freely convertible currency, as
defined in the said notification. On receipt of such a certificate and on the
satisfaction that the goods have been exported in terms of the bond, the bond
accepting authority shall discharge the exporter of his liabilities under the bond.
4.2.1 As an exception to the above category of export, capital goods, as defined in the
said notification may be exported under bond directly from the factory of manufacture to
26
Nepal against any global tender invited by His Majesty's Government of Nepal without
payment of duty, for which payment is received in Indian currency. Such exports shall be
subject to the following further conditions, namely: -
(i) the exporter shall furnish a bond in specified Form before the Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central Excise or
such other officer as authorised by the Board on this behalf; and
(ii the exporter shall furnish a certificate of remittances in specified Form from a bank
) in India showing that full payment for the goods has been duly received in Indian
currency by the said bank;
4.2.2 On receipt of the certificate of remittances and on the satisfaction that the goods
have been exported in terms of bond, the bond accepting authority shall discharge the
exporter of his liabilities under the bond.
5.1.2 In case of export for supplies to Government of India Aided Projects in Nepal and
the Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for the bonafide
use of officers and staff of the Embassy in Nepal, the order from Project Implementation
Authority shall also be presented;
5.1.3 the Superintendent or Inspector of Central Excise having jurisdiction over the
factory, warehouse or any other approved premises shall verify the identity of goods with
reference to description mentioned in the invoice and the particulars of the duty payable but
for export, and if found in order, he shall seal the consignment, tank or container with Central
Excise seal or in such other the manner as may be specified by the Commissioner of Central
Excise and endorse each copy of the export invoice in token of having such verification and
examination done by him;
5.1.4 The said Superintendent or Inspector will allow export and distribute invoices in the
following manner:
27
5.1.5 The exporter or his agent shall then be free to remove the goods for export to Nepal
through the Land Customs Station indicated on the respective invoices;
5.1.6 Where the goods are exported by land, the export shall take place through any of
the following land customs stations, namely, Sukhiapokhri, Panitanki, Jogbani, Jayanagar,
Bairgania, Bhimnagar, Bitamore (Sursand), Raxaul, Sonauli, Barhni, Nepalganj Road,
Shohratgar (Khunwa), Jarwa, Katarniaghat, Gauriphanta, Banbasa, Jhulaghat, Dharchula,
Naxalbari, Galgalia, Kunauli, Sonabarsa, Tikonia, or such other check-post as may be
specified by the Board;
6.1 The exporter or his agent shall present the goods to the officer of customs in-charge
of the land customs station along with the original copy of the invoice and the sealed cover
containing duplicate, triplicate and quadruplicate copies and obtain acknowledgement;
6.2 Where the contents of all the copies of invoices tally and the packages, goods or
container are satisfactorily identified with their seals in tact, the officer of customs in-charge of
the land customs station shall make necessary entries in the register maintained at the land
customs station and allow the goods to cross into the territory of Nepal or Bhutan and certify
accordingly on each of the four copies of the invoice and indicate the running serial number in
red ink prominently visible and encircled. In case the seals are not found intact, the officer of
customs in charge of the land customs station may re-seal the containers with his own seal
after satisfying himself as to the identity of the containers and the goods from the particulars
shown on the invoice by opening and examining the goods, if necessary;
6.5 Further distribution of invoices: The officer of customs in-charge of the land
customs station shall forward the duplicate copy to the Central Excise Officer in charge of the
factory or warehouse from which the goods were removed for export without payment of duty.
For this purpose, the said officer in charge of the land customs station should keep a note of
28
the return of duplicate copies from the Customs Officer of Nepal or Bhutan and remind the
exporter for such copies as have not been received, failing which the exporter may be liable
to pay full duty on such consignments;
6.6 The officer of customs officers, at the land customs station shall also maintain a
separate record of all such in-bond exports of the goods without payment of duty and shall
assign running serial number on the invoice at the time of export as indicated earlier;
7.1 Essential ingredients for discharge of bond have already been mentioned under each
category of exports.
7.2 The general procedure would be - the exporter shall submit the quadruplicate copy
duly endorsed by the officer of customs in-charge of land customs station to the Central
Excise officer who has accepted the bond alongwith bank, certificate evidencing receipt of
payment in freely convertible currency (in Indian Rupee in particular category), within six
months from the date of removal of the goods. It may be noticed that earlier, the above
mentioned period has been extended from ‘three’ months to ‘six’ months, as compared to
erstwhile notification.
7.3 The Central Excise officer will tally the particulars with quintuplicate copy of the
invoice received from the Central Excise officer who has allowed clearance from the factory or
warehouse or any other approved premises and make suitable entries in Bond Account of the
exporter, giving provisional credit or discharging the bond provisionally.
7.4 On receipt of the duplicate copy of invoice, duly endorsed by customs officer of Nepal
or Bhutan from the customs officer in charge of land customs station, certifying export of the
goods and after tallying the particulars with those in quadruplicate copy of the invoice make
suitable entries in Bond Account and the obligation under the said bond will then be
discharged.
7.5 In case of failure to export within six months from the date of removal from the factory
or warehouse or any other approved premises, or shortages noticed, the exporter shall
discharge the duty liability on the goods not so exported or shortage noticed along with twenty
four per cent. interest thereon from the date of removal for export without payment of duty till
the date of payment of duty in terms of the bond.
Part-V
1.1 If the excisable goods cleared under A.R.E.1 are not exported for any reason and the
exporter intends to divert the goods for home consumption, he may request in writing the
authority who accepted the bond or letter of undertaking to allow cancellation of application,
and diversion of goods for consumption in India. He will be permitted to do so if he pays the
duty as specified in the application along with interest at the rate of twenty four percent per
annum on such duty from the date of removal for export from the factory or warehouse till the
date of payment of duty. The permission shall be granted within 3 working days. Since duty
assessment on A.R.E 1 has to be done in normal course, there will not be any need for re-
assessment by the Department or the assessee unless there are reasons to believe that the
assessment was not correct. After the duty is discharged, the exporter may take credit in his
running bond (where bond is furnished) on the basis of letter of permission, invoice and TR-6
Challans on which duty is paid. He shall record these facts in the Daily Stock Account
29
1.2 If the exporter, after clearing the goods for export without payment of duty, intends to
change the destination or buyer or port/place of export, he may do so provided he informs the
bond/LUT accepting authority in writing about the changes and makes necessary changes in
all the copies of A.R.E.1 and the invoices. If he intends to cancel the original export
documents and issue fresh ones, the same may be done under permission and authentication
by bond/LUT accepting authority who will ensure that the serial no. and date of the initial
documents are endorsed on the fresh documents. In such cases, if bond was furnished for
single consignment, fresh bond may not be asked.
2. Re-entry of the goods, cleared for export under bond but not actually exported,
in the factory of manufacture.
2.1 The excisable goods cleared for export under bond or undertaking but not actually
exported for any genuine reasons may be returned to the same factory provided –
(i) such goods are returned to the factory within six months along with original documents
(invoice and A.R.E.1);
(ii) the assessee shall give intimation of the re-entry of each consignment in Form D-3
within twenty-four hours of such re-entry;
(iii) such goods are to be stored for separately at least for 48 hours from the time intimation
is furnished to Range Office or shorter period if verification is done by the
Superintendent of Central Excise in the manner mentioned subsequently ; and
(iv the assessee shall record details of such goods in the daily stock account and taken in
) the stock in the factory;
2.2 The Superintendent of Central Excise will verify himself or though Inspector in charge
of the factory, about the identity of such goods with reference to invoice, A.R.E.1 and the daily
stock account in respect of 5% of intimations, within another 24 hours of receipt of intimation.
3. Re-import of exported goods for repairs etc. and subsequent re-export
3.1 It has been provided in the Notification 42/2001-Central Excise (N.T.), supra, that the
exported excisable goods which are re-imported for carrying out repairs, re-conditioning,
refining, re-making or subject to any similar process may be returned to the factory of
manufacture for carrying out the said processes and subsequent re-export. It may be noted
that ‘re-import and re-export’ shall be governed by the provisions of the Customs Act, 1962.
3.2 So far Central Excise is concerned, the manufacturer shall maintain separate account
for return of such goods in a daily stock account and make suitable entry on the said account
after goods are processed, repaired, re-conditioned, refined or re-made. When such goods
are exported, the usual export procedure shall be followed.
3.3 Any waste or refuse arising as a result of the said processes shall be removed from
the factory on payment of appropriate duty or destroyed after informing the proper officer in
writing at least 7 days in advance and after observing such conditions and procedure as may
be specified by the Commissioner of Central Excise and thereupon the duty payable on such
waste or refuse may be remitted by the said Commissioner of Central Excise.
4. Entry of goods in another factory of the same manufacturer for consolidation
and loading of consignment for export:
4.1 Goods removed without payment of duty for export on A.R.E.1 from one factory
(hereinafter referred to as ‘the first factory’) of a manufacturer are allowed to enter in another
factory of the said manufacturer (hereinafter referred to as the ‘subsequent factory’) ONLY for
30
the purpose of consolidation and loading of goods manufactured in subsequent factory and
export therefrom subject to following conditions: -
(i) The exporter shall be required to get his goods examined and sealed at each
factory [the places of despatch] by a Central Excise Officer.
(ii) The export goods shall be brought under cover on invoice and A.R.E.1 in the
subsequent factory in original packing and duly sealed by Central Excise Officers.
In case goods are stuffed in a container, Central Excise Officer shall duly seal the
container in the first factory and the sealing of each package shall not be insisted
upon. The Central Excise Officer having jurisdiction over the subsequent factory
shall supervise the opening of the seal of container, loading of goods (duly sealed
if these goods are to be loaded in open truck/vehicle) belonging to the subsequent
factory in vehicle or container and sealing of the container.
(iii The exporter or the manufacturer shall pay the supervision charges.
)
5.1 The Central Excise Officer examining the consignment would draw representative
samples wherever necessary in triplicate. He would hand over two sets of samples, duly
sealed, to the exporter or his authorized agent, for delivering to the Customs Officer at the
point of export. He would retain the third set for his records. The instructions and procedure
for drawl of samples specified by the Board should be followed.
Part-VI
1. Introduction
1.1 The Board has, by Notification No. 43/2001-Central Excise (N.T.) dated 26.6.2001
[hereinafter referred to as the ‘said notification’] notified the conditions, safeguards and
procedures for procurement of the excisable without payment of duty for the purpose of use in
the manufacture or processing of export goods and their exportation out of India, to any
country except Nepal and Bhutan.
1.2 It may be noted that in rule 19 of the said Rules and in said notification, expression
‘export goods’ has been used. This refers to excisable goods (dutiable or exempted) as well
as non-excisable goods. Thus, the benefit of input stage rebate can be claimed on export of
all finished goods whether excisable or not.
1.3 It may be also noted that materials, as defined in the said rule 19 may be used for
manufacture or processing. In other words, any processing not amounting to manufacture
(such as packing, blending etc.) will also be eligible for the benefit under said notification.
1.4 Removal without payment of duty of equipment and machinery in the nature of capital
goods used in relation to manufacture or process of finished goods shall not be allowed.
2.1 The conditions and procedure for manufacture of export goods in bond shall be, as
follows:
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(i) The manufacturer or the processor intending to avail benefit of this notification
shall register himself under rule 9 of the said Rules; and
(ii) The procedure specified in the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 shall be followed,
mutatis mutandis. It is clarified that there is no need for any separate exemption
notification for applying this rule.
(iii The manufacturer or processor shall file a declaration with the Deputy/Assistant
) Commissioner of Central Excise having jurisdiction over the factory of manufacture
under the Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001, and also declare ratio of input and
output and rate of duty payable on excisable goods to be procured without
payment of duty. Where there are more than one export product, separate
statement of the input-output ratios may be furnished for each export product. The
consumption should be net of recycled materials. Where recoverable wastage are
generated but not recycled but sold on account of its unsuitability, the same should
be clearly reflected in the declaration. The declarant should also enclose, in case
of a new product or in case where the manufacturer is not regularly manufacturing
the export goods and clearing for home consumption or export, a write up of
manufacturing process.
2.2.1 The Deputy/Assistant Commissioner of Central Excise shall verify the correctness
of the ratio of input and output mentioned in the declaration filed before commencement of
export of such goods, if necessary, by calling for samples of finished goods or by inspecting
such goods in the factory of manufacture or process. If, after such verification, the
Deputy/Assistant Commissioner of Central Excise is also satisfied that there is no likelihood of
evasion of duty, he may grant permission to the applicant for manufacture or processing and
export of finished goods and countersign the application in the manner specified in the
Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable
Goods) Rules, 2001;
2.2.2 It is clarified that for the sake of convenience and transparency, input output norms
notified under the Export Import Policy may be accepted by the Department unless there are
specific reasons for variation. However, in case, the input output norms notified under the
Export Import Policy does not include all the materials used in export goods, the claim under
this scheme should not be denied merely on that ground.
2.3 If for any reason the Deputy/Assistant Commissioner of Central Excise is not satisfied
with reference to the correctness of the consumption norms claimed by the applicant,
especially where the product is being manufactured for the first time in his jurisdiction, he may
permit the manufacturing operations and the verification of the consumption norms should be
completed while the process of manufacture is on. The verification should be completed
before allowing the export of the goods as the manufacturer working under this Scheme is
expected to declare the raw materials costumed in ARE-2.
2.4 The permission granted by the Deputy/Assistant Commissioner of Central Excise can
be withdrawn at any time if any glaring misuse resulting into loss of revenue comes to his
notice.
2.5 Any change in the consumption ratio [input-output ratio] should be promptly intimated
by the manufacturer to the deputy/Assistant Commissioner of Central Excise and the
jurisdictional Range Superintendent giving reference of the permission granted. If necessary,
the Deputy/Assistant Commissioner of Central Excise may order fresh verification.
32
3.1 The procedure of procurement of material required for the manufacture shall be
governed by the provisions of the Central Excise (Removal of Goods at Concessional Rate of
Duty for Manufacture of Excisable Goods) Rules, 2001.
(a for the purposes of test, repairs, refining, reconditioning or carrying out any other operation
) necessary for the manufacture of the finished goods and return the same to his factory without
payment of duty for further use in the manufacture of finished goods or remove the same without
payment of duty in bond for export, provided that the waste, if any, arising in the course of such
operation is also returned to the said factory of the manufacture or process; or
(b for the purpose of manufacture of intermediate products necessary for the manufacture or
) processing of finished goods and return the said intermediate products to his factory for further
use in the manufacture or process of finished goods without payment of duty or remove the same,
without payment of duty for export, provided that the waste, if any, arising in the course of such
operation is also returned to the factory of manufacturer or processor;
(c) Any waste arising from the processing of materials may be removed on payment of duty as if such
waste is manufactured or processed in the factory of the manufacturer or processor;
5.1 The goods shall be exported on the application in Form A.R.E. 2 specified in the
Annexure-23 and the procedures specified in the Notification No. 42/2001-Central Excise
dated 26th June, 2001 shall be followed. It is mentioned that in such cases, fresh A.R.E.1 is
not required because export will be effected on A.R.E.2 itself. But the procedure specified in
the aforementioned notifications relating to removals, distribution of documents at the place of
despatch and place of export, acceptance of proof of export etc. shall be followed mutatis
mutandis.
5.2 The Deputy/Assistant Commissioner of Central Excise should point out deficiency, if
any within 15 days of filing of A.R.E.1 duly certified by Customs indicating actual export.
Queries/ deficiencies shall be pointed out at one go and piecemeal queries should be
avoided.
5.3 Only a manufacture or processor of finished goods who exports the goods can claim
benefit of input stage rebate. This facility shall not be extended where export are through
merchant exporters.
5.4 The benefit of input stage rebate cannot be claimed in any of the following situations:
(i) where the finished goods are exported under Claim for Duty Drawback
(ii) where the finished goods are exported in discharge of export obligations under a
Value Advance Licence or a Quantity Based Advance Licence issued before
31.03.95.
(iii where facility of input stage credit is availed under CENVAT Credit Rules, 2001
)
33
6.1 The manufacturer shall maintain register of duty free materials brought to the factory
for manufacture of finished goods for export and the account for finished goods manufactured
and exported. Any officer duly empowered by the Deputy/Assistant Commissioner of Central
Excise in this behalf shall have access at all reasonable times to any premises indicated in
the application. The applicant shall also permit the officer of Central Excise access to any
records relating to the production, storage and export of goods.
Original White
Duplicate Buff
Triplicate Pink
Quadruplicate Green
Quintuplicate Blue
7.1 Samples will be invariably drawn by the Customs Officers for testing at the place of
export in case the export goods are of sensitive nature considering that they are made from
materials bearing high Central Excise Duty.
7.2 Customs officer responsible for making endorsement in A.R.E.2 shall carefully check
that exports are not covered under any of the following:
8. The Deputy/Assistant Commissioner sanctioning rebate shall ensure that the relevant
transport copies (duplicate copies) of Duty paying document have been suitably defaced
before payment is made.
9.1 In case of export by parcel post after the goods intended for export have been sealed,
the exporter shall affix to the duplicate application sufficient postage stamps to cover postal
charges and shall present the documents, together with the package or packages to which it
refers, to the postmaster at the Office of booking.
10. Filing of rebate claims by electronic declaration and sanction thereof through
Electronic Data Inter-change (EDI)
10.1 The new concept of filing of rebate claim and its sanction through EDI established
by the Customs formations at different ports/airports/ICDs/CFSs has been incorporated in the
new procedure. However, its implementation is dependent upon development of software and
formats of electronic forms, administrative set-up at the places of exports for auditing such
claims and putting in place the necessary hardware. The new process will also require to be
tested. This may take some time. Accordingly, the provision has been made that this facility
will be available at such places and from such time as may be specified by the Board.
10.2 For this purpose, the expression ‘electronic declaration" has been defined as the
declaration of the particulars relating to the export goods, lodged in the Customs Computer
34
System, through the data-entry facility provided at the Service Centre or the date
communication networking facility provided by the National Informatic Centre, from the
authorised person’s computer.
35
Part-II
1. Introduction
1.1 For export to Nepal, a different procedure has to be followed considering that the
rebate is granted to the His Majesty’s Government of Nepal based on Indo-Nepal Treaty.
Currently, the procedure is specified only for exports through specified Land Customs
Stations. There is no rebate procedure for Bhutan.
2.1 The conditions of export are similar to export to other countries. For clarity, these are
explained below: -
(i) It is essential that the excisable goods shall be exported after payment of duty,
directly from a factory or warehouse. The condition of "payment of duty" is
satisfied once the exporter records the details of removals in the Daily Stock
Account maintained under rule 10 of the Central Excise (No.2) Rules, 2001
(hereinafter referred to as the said Rules), whereas the duty may be discharged
in the manner specified under rule 8 of the said Rules, i.e. on fortnightly or
monthly basis, as the case may be.
(ii) In certain cases, the CBEC may issue instructions/procedures for exporting the
duty paid goods from a place other than the factory or the warehouse.
(iii) The excisable goods shall be exported within six months from the date on which
they were cleared for export from the factory of manufacture or warehouse. This
date will be indicated on the Nepal Invoice issued for the purpose. However, the
Commissioner of Central Excise has powers to extend this period, for reasons to
be recorded in writing in any particular case. The exporter will be required to
submit written request to the Commissioner specifying the reasons why they
could not export within the stipulated six months’ period. The Commissioner
should give his decision within seven working days of the receipt of the request. It
should also be noted that such permissions should not given in a routine manner.
(iv) The market price of the excisable goods at the time of exportation should not be
less than the amount of rebate of duty claimed.
(v) The rebate claim will be admissible only if the amount of rebate of duty
admissible is five hundred rupees or more.
(vi) The rebate of duty paid on those excisable goods export of which is prohibited
under any law for the time being in force, shall not be made.
(vii) The whole or that part of duty as is granted as rebate to the exporter is not
allowed as rebate to His Majesty's Government of Nepal.
(viii The goods can only be exported by land through any of the following land
) customs stations, namely, Sukhiapokhri, Panitanki, Jogbani, Jayanagar,
Bairgania, Bhimnagar, Bitamore (Sursand), Raxaul, Sonauli, Barhni, Nepalganj
Road, Shohratgar (Khunwa), Jarwa, Katarniaghat, Gauriphanta, Banbasa,
Jhulaghat, Dharchula, Naxalbari, Galgalia, Kunauli, Sonabarsa, Tikonia, or such
other check-post as may be specified by the CBEC.
36
3.1 The Format of ‘Nepal Invoice’ has been specified in the notification no. 40/2001-
Central Excise (N.T.) dated 26.6.2001 (Annexure-21It is similar to the erstwhile form except
minor modifications such as incorporating "duty paid or payable" in place of "duty paid" so as
to attune it with the Fortnightly Payment System.
4.1 The exporter is required to prepare five copies of Nepal Invoice. The goods shall be
assessed to duty in the same manner as the goods for home consumption. The classification
and rate of duty should be in terms of Central Excise Tariff Act, 1985 read with any exemption
notification and/or the said Rules. The value shall be the "transaction value" and should
conform to section 4 or section 4A, as the case may be, of the Central Excise Act, 1944. It is
clarified that this value may be less than, equal to or more than the F.O.B. value indicated by
the exporter on the Bill of Export.
4.2 The duty payable shall be determined on the Nepal Invoice and recorded in the Daily
Stock Account it should be paid in the manner specified in rule 8 of the said) Rules.
4.3 The exporter may request the Superintendent or Inspector of Central Excise having
jurisdiction over the factory of production or manufacture, warehouse or approved premises
for examination and sealing at the place of despatch 24 hours in advance, or such shorter
period as may be mutually agreed upon, about the intended time of removal so that
arrangements can be made for necessary examination and sealing.
4.4 In case of exports under Duty Exemption Entitlement Certificate Scheme (DEEC),
Duty Exemption Pass Book Scheme (DEPB) and claim for Drawback, the Superintendent of
Central Excise shall also examine and seal the consignment and sign the documents in token
of having done so. In exceptional cases, where the exporter has unblemished track record of
compliance (Central Excise) and where there is non-availability of Superintendent of Central
Excise due to leave, vacant post or other reasonable causes, the jurisdictional
Assistant/Deputy Commissioner of Central Excise may permit examination and sealing by
Inspector. Other types of export may be examined and sealed by the Inspector of Central
Excise.
4.5 The Superintendent or Inspector of Central Excise, as the case may be, will verify the
identity of goods mentioned in the application and the particulars of the duty paid or payable.
If he finds that the declaration in Nepal Invoice are correct from the point of view of identity of
goods and its assessment to duty, and that the exporter has recorded the duty payable in
Daily Stock Account, he shall seal each package or the container ensuring that the goods
cannot be tampered with after the examination. Normally, individual packages should be
sealed by using wire and lead seals and an all-sides-closed container by using numbered
One time Lock/Bottle seals or in such other manner as may be specified by the Commissioner
of Central Excise by a special or general written order. Thereafter, the said officer shall
endorse and sign each copy of the application in token of having such examination done;
Original Hand over to the Exporter or his agent along with the goods,
(First copy) packages or container after sealing it.
Duplicate To be put in a sealed cover and given to the exporter or his agent
(Second Copy) by the Central Excise Officer for being handed over to the officer of
Customs In-Charge of the concerned land customs station
Triplicate To be put in a sealed cover and given to the exporter or his agent
(Third Copy) by the Central Excise Officer for being handed over to the officer of
Customs In-Charge of the concerned land customs station
37
Quadruplicate To be retained by the Central Excise Officer;
(Fourth Copy)
4.7 The exporter or his agent shall then be free to remove the goods for export to Nepal,
through the specified land customs stations.
5.1 The exporter or his agent shall present the goods to the officer of Customs in-charge
of the land customs station along with the original copy of invoice and the sealed cover
containing duplicate and triplicate copies;
5.2 The said officer shall examine the goods with reference to the declarations in the
Nepal Invoice. Where the contents of all the copies of invoices tally and the packages, goods
or container are satisfactorily identified with their seals in tact, the said customs officer shall
make necessary entries in the register maintained at the land customs station and allow the
goods to cross into the territory of Nepal. He may, to satisfy himself as to the identity of the
packages, goods or containers from the particulars shown on the invoice, open container or
packages and examine the goods, especially where the seals are broken;
5.3 He will also certify on each of the three copies of the invoice to this effect and
simultaneously indicate the running serial number in red ink prominently visible and encircled
against Item 3 on all the three copies of the invoice.
5.4 the customs officer, then deliver the original copy of the invoice duly endorsed to the
exporter or his agent alongwith the goods for presentation to the Nepalese Customs Officer.
5.5 He shall also send, directly the duplicate and triplicate copies of the invoice to the
Nepalese Customs Officer in-charge of the check post through which the goods are to be
imported into Nepal;
5.6 the goods will then be produced before the Nepalese Customs Officer at the
corresponding border check post along with the original copy of the invoice. The Nepalese
Customs Officer, shall deal with the original copy as directed by His Majesty's Government of
Nepal and return the duplicate copy, after endorsing his certificate of receipt of goods in
Nepal directly to the officer of customs in-charge of the land customs station;
5.7 the officer in-charge of the land customs station shall forward the duplicate copy to
the Deputy Director of Inspection, Customs and Central Excise, Nepal Refund Wing, New
Delhi. For this purpose, the said officer in-charge of the land customs station should keep a
note of the return of duplicate copies from the Nepalese Customs Officer and remind the
exporter for such copies as have not been received.
6.1 The Directorate General of Inspection, Customs and Central Excise (Nepal Refund
Wing), New Delhi [hereinafter referred to as "the Directorate"] shall maintain separate
registers for each Indian Border Customs Check Post.
6.2 The duplicate invoice will be entered in the respective registers showing the running
serial number in the recapitulation statement register prescribed for the purpose.
6.3 At the end of every month he shall calculate the amount of rebate due in respect of all
certificates of exports received during that month and shall prepare a consolidated statement
to arrive at the amount of rebate due to His Majesty's Government of Nepal.
38
6.4 One copy of the recapitulation statement shall be forwarded to the Commissioner of
Central Excise concerned for verifying the payment of rebate to Nepal Government and for
issue of a post audit certificate in respect of the amount allowed as rebate against each
invoice passed in that bill. In order to detect errors in the duty amount and quantity indicated.
Internal Audit Department of the Commissionerate concerned should check this factor by
comparison with the recapitulation statement forwarded by the Directorate and the monthly
return of the factories concerned.
6.5 Where any over payment is noticed the fact should be brought to the notice of the
Directorate for making necessary adjustment.
6.6 One copy of the recapitulation statement shall be forwarded to His Majesty's
Government of Nepal.
6.7 One copy of the recapitulation statement shall remain as office copy with the
Directorate.
6.8 After receiving the recapitulation statement, the Commissioner will get a verification
conducted that the concerned factories have actually paid the duty of excise against which
the rebate is to be given and the Commissioner/PAO of that Commissionerate shall furnish a
certificate to the Directorate to the effect that all the concerned factories have paid the
amounts of duty as indicated in the Annexure to the recapitulation statement.
6.9 In case the Directorate does not receive the duplicate copy of the invoice from the
Officer in-charge of the Indian Land Customs Station and the triplicate copy is not received by
the Nepal Government, necessary check should be made with the officer in-charge of the
Indian Land Customs Station concerned as to the whereabouts of the particular invoice.
MISCELLANEOUS
1.1 The rebate sanctioning authority should point out deficiency, if any, in the claim within
15 days of lodging the same and ask the exporter to rectify the same within 15 days. Queries/
deficiencies shall be pointed out at one of and piecemeal queries should be avoided. The
claim of rebate of duty on export of goods should be disposed of within a period of two
months.
2.1 The Supplementary Rebate Claim, if any, should be filed within the stipulated time
provided under section 11B of the Central Excises Act, 1944.
3. Entry of goods in another factory of the same manufacturer for consolidation
and loading of consignment for export:
3.1 Goods removed on A.R.E.1 from one factory of a manufacturer may be allowed to
enter in another factory of the said manufacturer ONLY for the purpose of consolidation and
loading of goods in second or subsequent factory(ies) and export therefrom. For this facility
the exporter shall be required to get his goods examined and sealed at each factory [the
places of despatch] by a Central Excise Officer. The packages loaded in the vehicle shall be
in sealed condition in their original packing. Where goods are stuffed in a container, the
container shall be sealed. The Central Excise Officer having jurisdiction over the second or
subsequent factory(ies) shall supervise the opening of the seal of container, loading of goods
(duly sealed if these goods are to be loaded in open truck/vehicle) belonging to the
subsequent factory in vehicle or container and sealing of the container.
39
4. Cancellation of documents
4.1 After the goods are cleared for export on payment of appropriate duties of excise
under claim of rebate but are not exported for any reason, the Assistant Commissioner of
Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the
factory or the warehouse, shall, on being requested by the exporter in writing, cancel the
export documents and make necessary endorsements. Thereafter, the goods shall be treated
as if these were cleared for home-consumption. The goods need not be brought back to the
factory or warehouse.
Part-V
1. Introduction
1.1 The Government has, by Notification No. 41/2001-Central Excise (N.T.) dated
26.6.2001 [hereinafter referred to as the ‘said notification’] allowed rebate of whole of the duty
paid on excisable goods, which are in fact materials or inputs for manufacture or processing
of other goods, on their exportation out of India, to any country except Nepal and Bhutan, to
be paid subject to the conditions and the procedure specified in the above-mentioned
notification.
1.2 It may be noted that in rule 18 and in said notification, expression ‘export goods’ has
been used. It refers excisable goods (dutiable or exempted) as well as non-excisable goods.
Thus the benefit of input stage rebate can be claimed on export of all finished goods whether
excisable or not.
1.3 It may be also noted that materials may be used for manufacture or processing. In
other words, any processing not amounting to manufacture (such as packing, blending etc.)
will also be eligible for the benefit under said notification.
1.4. The expression ‘material’ shall mean all raw materials, consumables, components,
semi-finished goods, assemblies, sub-assemblies, intermediate goods, accessories, parts
and packing materials required for manufacture or processing of export goods. Rebate of
Central Excise duty paid on equipment and machinery in the nature of capital goods used in
relation to manufacture or process of finished goods being shall not be allowed.
1.5 The benefit of input stage rebate cannot be claimed in any of the following situations:
(i) where the finished goods are exported under Claim for Duty Drawback.
(ii) where the finished goods are exported in discharge of export obligations under a
Value Advance Licence or a Quantity Based Advance Licence issued before
31.03.95.
(iii) where facility of input stage credit is availed under CENVAT Credit Rules, 2001.
(iv The market price of the goods is less than the rebate amount.
)
(v) The amount of rebate admissible is less then Rs. 500/-
40
1.6 The claim for rebate should be filed within the time stipulated under Section 11B of
the Central Excise Act, 1944.
3.1 The Deputy/Assistant Commissioner of Central Excise shall verify the correctness of
the ratio of input and output mentioned in the declaration filed before commencement of
export of such goods, if necessary, by calling for samples of finished goods or by inspecting
such goods in the factory of manufacture or process. If, after such verification, the
Deputy/Assistant Commissioner of Central Excise is also satisfied that there is no likelihood of
evasion of duty, he may grant permission to the applicant for manufacture or processing and
export of finished goods.
3.3 It is clarified that for the sake of convenience and transparency, input output norms
notified under the Export Import Policy may be accepted by the Department unless there are
specific reasons for variation. However, in case, the input output norms notified under the
Export Import Policy does not include all the materials used in export goods, the claim under
this scheme should not be denied merely on that ground.
3.4 If for any reason the Deputy/Assistant Commissioner of Central Excise is not satisfied
with reference to the correctness of the consumption norms claimed by the applicant,
especially where the product is being manufactured for the first time in his jurisdiction, he may
permit the manufacturing operations and the verification of the consumption norms should be
completed while the process of manufacture is on. The verification should be completed
before allowing the export of the goods as the manufacturer working under this Scheme is
expected to declare the raw materials costumed is the ARE-2 for claiming rebate.
3.5 The permission granted by the Deputy/Assistant Commissioner of Central Excise can
be withdrawn at any time if any glaring misuse resulting into loss of revenue comes to his
notice.
3.6 Any change in the consumption ratio [input-output ratio] should be promptly intimated
by the manufacturer to the Deputy/Assistant Commissioner of Central Excise and the
jurisdictional Range Superintendent giving reference of the permission granted. If necessary,
the Deputy/Assistant Commissioner of Central Excise may order fresh verification.
41
4.1 The manufacturer or processor shall obtain the materials to be utilised in the
manufacture of the finished goods intended for export directly from the registered factory in
which such goods are produced, accompanied by an invoice under rule 11 of the said Rules.
4.2 The manufacturer or processor may also procure materials from dealers registered
for the purposes of the CENVAT Credit Rules, 2001 under invoices issued by such dealers.
(i) for the purposes of test, repairs, refining, reconditioning or carrying out any other operation
necessary for the manufacture of the finished goods and return the same to his factory
without payment of duty for further use in the manufacture of finished goods or remove the
same without payment of duty in bond for export, provided that the waste, if any, arising in
the course of such operation is also returned to the said factory of the manufacture or
process; or
(ii for the purpose of manufacture of intermediate products necessary for the manufacture or
) processing of finished goods and return the said intermediate products to his factory for
further use in the manufacture or process of finished goods without payment of duty or
remove the same, without payment of duty for export, provided that the waste, if any, arising
in the course of such operation is also returned to the factory of manufacturer or processor;
Any waste arising from the processing of materials may be removed on payment of duty as if
such waste is manufactured or processed in the factory of the manufacturer or processor;
6.1 The goods shall be exported on the application in Form A.R.E. 2 specified (Annexure-
23) and the procedures specified in Notification No.40/2001-Central Excise (N.T.) dated 26 th
June, 2001 shall be followed. In other words, the exporter has option to pay duty on finished
export goods (if these are excisable) and claim rebate of such duty. He may also export the
excisable goods without payment of duty. In both cases, fresh A.R.E.1 is not required
because export will be effected on A.R.E.2 itself. But the procedure specified in the
aforementioned notifications relating to removals, distribution of documents at the place of
despatch and place of export, acceptance of proof of export/filing of claim etc. shall be
followed mutatis mutandis.
Original White
Duplicate Buff
Triplicate Pink
Quadruplicate Green
Quintuplicate Blue
7.1 The claim for rebate of duty paid on materials used in the manufacture or processing
of goods shall be lodged only with the Deputy/Assistant Commissioner of Central Excise
having jurisdiction of the place approved for manufacture or processing of such export goods.
The following documents shall be presented with the claim: -
42
(i) Original copy of the ARE2 duly endorsed by the Customs Officer;
(ii) Duty self-attested copy of Shipping Bill (Export Promotion Copy)
(iii) Duly self-attested copy of Bill of lading/ Air way bill
(iv Duplicate copy of the Central Excise Invoice under which Central Excise duty was
) paid/accounted as payable on goods cleared for export. [where rebate of finished goods are
also being claimed]
(v) Duplicate copy of the ARE.2 received from the customs officer in a sealed cover (if
obtained).
8.1 The Assistant Commissioner of Central Excise should point out deficiency, if any
within 15 days of lodging of the claim and ask the exporter to rectify the same within 15 days.
Queries/ deficiencies shall be pointed out at one go and piecemeal queries should be
avoided. The claim of rebate should be disposed of within a maximum period of two months.
8.2 Only a manufacture or processor of finished goods who exports the goods can claim
benefit of input stage rebate. Benefit of the input stage rebate shall not be extended where
export are through merchant exporters.
9.1 The manufacturer shall maintain register of duty paid materials brought to the factory
for manufacture of finished goods for export under claim for input stage rebate and the
account for finished goods manufactured and exported. Any officer duly empowered by the
Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise in
this behalf shall have access at all reasonable times to any premises indicated in the
application. The applicant shall also permit the officer of Central Excise access to any records
relating to the production, storage and export of goods.
10.1 Samples will be invariably drawn by the Customs Officers for testing at the place of
export in case the export goods are of sensitive nature considering that they are made from
materials bearing high Central Excise Duty.
10.2 Customs officer responsible for making endorsement in A.R.E.2 shall carefully
check that exports are not covered under any of the following:
43
Notification No.45/2001-Central Excise (N.T.) 26th June, 2001
In exercise of the powers conferred by sub-rule (3) of rule 19 of the Central Excise (No.2)
Rules, 2001, the Board hereby specifies the conditions, safeguards and procedures for export
of all excisable goods without payment of excise duty from the factory of production or
manufacture, warehouse or any other premises as may be approved by the Commissioner of
Central Excise, namely:
1. Conditions and safeguards: -
1. Export under bond to Nepal or Bhutan where payment is in freely convertible
currency. – Export under bond to Nepal or Bhutan where payment is in freely
convertible currency, shall be subject to following conditions, namely: -
i. the importer in Nepal or Bhutan, as the case may be, shall open an
irrevocable letter of credit in favour of the exporter in India, before the export
takes place;
ii. condition (i) shall not apply if the excisable goods other than consumer
goods, but excluding motor vehicles, are exported without payment of duty
as:-
a. supplies to projects financed by any United Nations agency,
the International Bank for Reconstruction and Development,
International Development Association, the Asian
Development Bank or any other multilateral agency of like
nature;
b. to all diplomatic missions in Nepal or Bhutan provided the
Indian Embassy or the Ministry of External Affairs certifies
that the import is for the personnel of the diplomatic
community;
iii. the exporter shall furnish a bond in Form specified in Annexure-I before the
Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise having jurisdiction over the factory, warehouse, or the
approved premises or such other officer as authorised by the Board on this
behalf, from where the goods are removed for export to Nepal, as the case
may be, or Bhutan;
iv. the exporter shall furnish a certificate in Form as specified in Annexure-II
from the Reserve Bank of India or any other bank authorised to deal in
foreign exchange by the Reserve Bank of India, showing that full payment for
the goods has been duly received in freely convertible currency. On receipt of
such a certificate and on the satisfaction that the goods have been exported
in terms of the bond referred to in sub-condition (iii), the Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central
Excise or the such other officer as authorised by the Board on this behalf
shall discharge the exporter of his liabilities under the bond;
Explanation. - "Freely convertible currency" means Australian Dollars, Austrian Schillings,
Baharin Dinars, Belgian Francs, Canadian Dollars, Danish Kroners, Deutsche Marks, French
Francs, Hongkong Dollars, Italian Lire, Japanese Yen, Kuwaiti Dinars, Malaysian Dollars,
Netherlands Guilders, Norwegian Kroners, Pounds Sterling, Singapore Dollars, Swedish
Kroners, Swiss Francs and U.S.A. Dollars (and includes Indian Rupees bought by the Asian
Development Bank by payment to the Reserve Bank of India in foreign exchange).
1. Export to Nepal in bond against payment in Indian rupee. – Notwithstanding
anything contained in condition (1) above, export of capital goods under a bond
directly from the factory of manufacture to Nepal against any global tender invited by
His Majesty's Government of Nepal without payment of duty, for which payment is
received in Indian currency, shall be subject to the following further conditions,
namely: -
i. the exporter shall furnish a bond in Form as specified in Annexure-I before
the Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise or such other officer as authorised by the Board on this behalf;
and
44
ii. the exporter shall furnish a certificate in the Form specified in Annexure-II
duly signed by the concerned bank in India showing that full payment for the
goods has been duly received in Indian currency by the said bank;
(2) On receipt of the certificate referred to in sub-condition (ii) and on the satisfaction
that the goods have been exported in terms of bond referred to in sub-condition (i),
the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central
Excise or such other officer as authorised by the Board on this behalf shall discharge
the exporter of his liabilities under the bond.
Explanation. - The "capital goods" means the goods, that is to say, all items of
machinery including prime movers, instruments, apparatus and appliances, control
gear and transmission equipment as well as auxiliary equipment (including those
required for research and development purpose, testing and quality control), required
by an investor for production of goods or for rendering services, including those for
replacement or expansion.
2. Export in bond of petroleum oil and lubricant products to Nepal. –
Notwithstanding anything contained in condition (1) above, the export in bond without
payment of duty of excise of petroleum oil and lubricant products to Nepal, through
the agency of Nepal Oil Corporation from calibrated stocks of M/s Indian Oil
Corporation registered as a warehouse in accordance with the provisions rule 20 the
Central Excise (No.2) Rules, 2001, and situated at places notified for the purpose,
from time to time, or purchased without payment of duty from tanks of other Oil
Companies or Undertakings is permitted provided that the Indian Oil Corporation shall
execute a bond in the form specified in Annexure-I, to cover removals of petroleum oil
and lubricant products to be exported for such amount and in such manner as may be
determined by the Assistant Commissioner of Central Excise or the Deputy
Commissioner of Central Excise having jurisdiction over the installation from which
the petroleum oil and lubricant products are to be exported.
3. Export in bond for supplies to Government of India Aided Projects in Nepal and
the Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for
the bonafide use of officers and staff of the Embassy in Nepal. – Export in bond
for supplies to Government of India Aided Projects in Nepal and the Embassy
Cooperative Store and Embassy Petrol Pump located in Nepal for the bonafide use of
officers and staff of the Embassy in Nepal shall be subject to the following conditions,
namely: -
i. the exporter shall furnish a bond in Form as specified in Annexure-I before
the Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise or such other officer as authorised by the Board on this behalf;
and
ii. the First Secretary (Economic), Embassy of India, Nepal, certifies the
signature and stamp or seal of the person authorised to place the order for
supply of excisable goods to the specified Government of India Aided
Projects in Nepal;
4. Export of all excisable goods without payment of duty to Kurichu Hydro
Electric Project and Tala Hydro Electric Project in Bhutan. –. Export of all
excisable goods without payment of duty to Kurichu Hydro Electric Project and Tala
Hydro Electric Project in Bhutan shall be subject to the following conditions, namely: -
i. the exporter shall furnish a bond in Form as specified in Annexure-I before
the Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise or such other officer as authorised by the Board on this behalf;
ii. the goods are supplied against one or more specified contract which have
been registered with the Directorate General of Inspection, Customs and
Central Excise in the manner specified in Annexure III;
iii. the goods are covered by a release order issued by an officer authorised by
the General Manager of the concerned project authority;
iv. the exporter furnishes a bond in the Form specified in Annexure-I to the
Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise having jurisdiction over the factory or warehouse or the
approved premises or from where the goods are removed for export to the
45
specified project or such other officer as authorised by the Board on this
behalf.
2. Procedure: -
(1) Procedure at the place of despatch. - (i) Six copies of invoice in the Form specified
under Annexure-IV shall be presented to the Superintendent or Inspector of Central Excise
having jurisdiction over the factory, warehouse or any other approved premises along with the
export goods;
(ii) in case of export for supplies to Government of India Aided Projects in Nepal and the
Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for the bonafide use
of officers and staff of the Embassy in Nepal, the order from Project Implementation Authority
shall also be presented;
(iii) the Superintendent or Inspector of Central Excise having jurisdiction over the factory,
warehouse or any other approved premises shall verify the identity of goods with reference to
description mentioned in the invoice and the particulars of the duty payable but for export, and
if found in order, he shall seal the consignment, tank or container with Central Excise seal or
in such other the manner as may be specified by the Commissioner of Central Excise and
endorse each copy of the export invoice in token of having such verification and examination
done by him;
(iv) the goods shall be delivered to the exporter or his agent, together with the original copy of
the invoice, duly completed and registered. The said officer will also give duplicate, triplicate
and quadruplicate copies of invoice in a sealed cover, to the exporter or his agent for delivery
to the Customs officer in-charge of the Land Customs Station through which the goods are
intended to be exported and will obtain acknowledgement to this effect .
(iii) the exporter or his agent shall then be free to remove the goods for export to Nepal
through the Land Customs Station indicated on the respective invoices;
(iv) where the goods are exported by land, the export shall take place through any of the
following land customs stations, namely, Sukhiapokhri, Panitanki, Jogbani, Jayanagar,
Bairgania, Bhimnagar, Bitamore (Sursand), Raxaul, Sonauli, Barhni, Nepalganj Road,
Shohratgar (Khunwa), Jarwa, Katarniaghat, Gauriphanta, Banbasa, Jhulaghat, Dharchula,
Naxalbari, Galgalia, Kunauli, Sonabarsa, Tikonia, or such other check-post as may be
specified by the Board;
(v) the quintuplicate copy shall be forwarded to the Assistant Commissioner of Central Excise
or the Deputy Commissioner of Central Excise who has accepted the bond; and
(vi) the said Superintendent or Inspector of Central Excise shall retain the sixtuplicate copy of
the invoice.
(2) Procedure at the Land Customs Station. – (i) the exporter or his agent shall present the
goods to the officer of customs in-charge of the land customs station along with the original
copy of the invoice and the sealed cover containing duplicate, triplicate and quadruplicate
copies and obtain acknowledgement;
(ii) Where the contents of all the copies of invoices tally and the packages, goods or container
are satisfactorily identified with their seals in tact, the officer of customs in-charge of the land
customs station shall make necessary entries in the register maintained at the land customs
station and allow the goods to cross into the territory of Nepal or Bhutan and certify
accordingly on each of the four copies of the invoice and indicate the running serial number in
red ink prominently visible and encircled. In case the seals are not found intact, the officer of
customs in charge of the land customs station may re-seal the containers with his own seal
after satisfying himself as to the identity of the containers and the goods from the particulars
shown on the invoice by opening and examining the goods, if necessary;
(iii) the officer of customs, then deliver the original copy of the invoice duly endorsed to the
exporter or his agent alongwith the goods for presentation to the Customs Officer of Nepal or
Bhutan. He shall also send, directly the duplicate and triplicate copies of the invoice to the
Nepalese or Bhutanese Customs Officer in-charge of the check post through which the goods
are to be imported into Nepal or Bhutan, as the case may be;
(iv) the goods are then to be produced before the Nepalese or Bhutanese Customs Officer, as
the case may be, at the corresponding border check-post alongwith the original copies of the
invoice. The Nepalese or Bhutanese Customs Officer shall deal with the original and triplicate
copies of the invoice as directed by His Majesty's Government of Nepal or His Majesty’s
Government of Bhutan and return the duplicate copy, after endorsing his certificate of receipt
46
of goods in Nepal or Bhutan, as the case may be, directly to the officer of customs-in-charge
of the land customs station in India;
(v) The officer of customs in-charge of the land customs station shall forward the duplicate
copy to the Central Excise Officer in charge of the factory or warehouse from which the goods
were removed for export without payment of duty. For this purpose, the said officer in charge
of the land customs station should keep a note of the return of duplicate copies from the
Customs Officer of Nepal or Bhutan and remind the exporter for such copies as have not
been received, failing which the exporter may be liable to pay full duty on such consignments;
(vii) the officer of customs officers, at the land customs station shall also maintain a separate
record of all such in-bond exports of the goods without payment of duty and shall assign
running serial number on the invoice at the time of export as indicated earlier;
(3). Procedure for discharge of bond or the duty liability. - (i) the exporter shall submit the
quadruplicate copy duly endorsed by the officer of customs in-charge of land customs station
to the Central Excise officer who has accepted the bond alongwith bank,
certificate evidencing receipt of payment in freely convertible currency, within six months from
the date of removal of the goods. The Central Excise officer will tally the particulars with
quintuplicate copy of the invoice received from the Central Excise officer who has allowed
clearance from the factory or warehouse or any other approved premises and make suitable
entries in Bond Account of the exporter, giving provisional credit or discharging the bond
provisionally. On receipt of the duplicate copy of invoice, duly endorsed by customs officer of
Nepal or Bhutan from the customs officer in charge of land customs station, certifying export
of the goods and after tallying the particulars with those in quadruplicate copy of the invoice
make suitable entries in Bond Account and the obligation under the said bond will then be
discharged.
(ii) in case of failure to export within six months from the date of removal from the factory or
warehouse or any other approved premises, or shortages noticed, the exporter shall
discharge the duty liability on the goods not so exported or shortage noticed along with twenty
four per cent. interest thereon from the date of removal for export without payment of duty till
the date of payment of duty in terms of the bond.
Annexure-II
Bank Certificate
This is to certify that the following Bills covering exports of ………………..to Nepal/Bhutan
drawn by M/s.........……………………………have been negotiated and proceeds as given
below received by us in the approved manner. We also certify that the payments thereof have
been received in freely convertible currency.
Signature of Manager/Authorised officer
of the Bank with Official Stamp.
Notes:
1. This certificate should be on the Bank's letterhead and should bear the Official Stamp of
the Bank.
2. This certificate will be issued only after the full proceeds of the Bill have been realised.
Annexure-IV
47
INVOICE
ORIGINAL
DUPLICATE
TRIPLICATE
QUADRUPLICATE
Invoice of goods liable to Central Excise Duty in India
Transmitted under Central Excise Seal to Nepal or Bhutan
Invoice No. ______________ Date_____________
Range_____________ Division___________ Commissionerate _______________ from
_______________ (factory/warehouse) by ___________________________through the
Border Post of._______________
(Merchant's Name) ______________________
Marks Marks Numbers Description Net Value Rate Amount Number Gross Number
and and and of good with weight, (words of of duty and date weight of and
numbers numbers descriptio tariff value and duty paid or of package date of
of of n of classificatio or figures payabl documen s railway
package package packages n quantit ) e t under receipt,
s s y
(In which if any
Words
and
Central
Excise
figures) Duty was
paid or is
payable
1 2 3 4 5 6 7 8 9 10 11
(1) I/We hereby declare that the above-mentioned particulars are true and correctly stated
and that the consignment of goods is intended for export to Nepal/ ______(place) and shall
not be diverted en route to any other country.
Signature of exporter or his authorised agent.
Place:
Date:
(To be printed overleaf)
(2) Certified that the above-mentioned packages have been identified by me and sealed with
the Central Excise seal under my supervision.
Signature and designation of the Officer of Central Excise.
Running Serial No.
Date:
(to be given in red ink and encircled by the Border Examiner)
(3) Certified that the above-mentioned consignment has been duly identified by me and has
passed the Border Customs Post.
(Running Serial number of the Border Check Post
to be written in red ink prominently encircled)
Signature and designation of the Indian
Officer-in-charge of the Border Customs Pos tat__________.
(4) Certified that the above-mentioned consignment/packages have been duly identified by
me and have
48
been received and accounted for in Nepal.
Signature and designation
(with official seal) of Nepalese/Bhutanese Customs Officer.
Check Post ____________
2. This notification shall come into force on 1st July, 2001.
F.No.209/18/2001-CX.6
(P.K. Sinha)
Under Secretary to the Government of India
Annexure-III
REGISTRATION OF CONTRACTS
1. Every Project Authority specified in the notification desirous of obtaining supplies under
benefits of this notification shall apply in writing to the Director General, Directorate General of
Inspection (Customs and Central Excise) [hereinafter referred to as DGICCE], 5th Floor, Drum
Shape Building, I.P. Estate, New Delhi for registration of the contract through Ministry of
External Affairs as soon as the contract has been concluded with the suppliers;
2. The application shall be accompanied by the original deed of contract and list of items duly
approved by the Ministry of External Affairs;
3. The Project Authority shall also furnish such other documents or other particulars as may
be required by the DGICCE in connection with the project.
4. DGICCE, on being satisfied, shall register the contract by entering the particulars in a
Register maintained separately for each project and shall assign a number in token of
registration and communicate the same to the Project Authority and shall also return to the
project authority all original documents which are no longer required. This number shall be
indicated on all the invoices and other related documents.
5. A copy of the contract so registered along with the approved list of items shall be forwarded
to the Commissioner of Central Excise having jurisdiction over the factory/warehouse to which
the contract pertains for extending benefits under this notification and consequent benefits
under the Central Excise CENVAT Credit Rules, 2001 to the supplier.
AMENDMENT OF CONTRACT
1. If any contract referred to hereinabove is amended, whether before or after registration, the
Project Authority shall make an application for registration of amendments to the said contract
to the DGICCE.
2. The application shall be accompanied by the original deed of contract relating to the
amendment and a list of items pertaining to amendment, if any, duly approved by the Ministry
of External Affairs.
3. On being satisfied that the application is in order the DGICCE shall make note of the
amendments in the relevant entries.
4. The DGICCE shall forward copy of the amended contract and the amended list of items, if
any, to the concerned Commissioner of Central Excise.
FINALISATION OF CONTRACT
1. Each Project Authority shall submit a statement of supplies received on quarterly basis
along with relevant invoices and other documents to the DGICCE within one month from the
last date of the quarter.
49
2. The Commissioner of Central Excise to whom a registered contract has been forwarded
shall forward a statement, after all the items covered under the contract have been exported,
to the DGICCE.
3. The DGICCE shall, on receipt of the statement, reconcile both and, if satisfied, finalise the
contract and close the entry in the register.
Annexure-I
FORM B-1
GENERAL BOND (SURETY/SECURITY)
General Bond with surety/security for removal for export of excisable goods without payment
of duty for export
[I/We ...................................of............................ hereinafter called "the obligor(s)" and
For ……………................. of………................hereinafter called "the surety(ies)"/ am/are held
surety and firmly bound to the President of India (hereinafter called the "President") in the sum
bond of...........................rupees to be paid to the President for which payment will and truly to
be made/ I/We jointly and severally bind myself/ourselves and my/our respective heirs,
executors/ administrators, legal representatives/successors and assigns by these
presents] :
I/We.................of....................hereinafter called "obligor(s)"I/am/are held and firmly bound
For to the President of India (hereinafter called "the President") in the sum
security of......................rupees to be paid to the President of India for which payment will and
bond truly to be made, I/We jointly and severally bind myself/ourselves and my/our respective
heirs/ executors/ administrators/ legal representatives/successors and assigns by these
presents];
Dated this...................day of....................
WHEREAS the above bounden obligor has been permitted to remove from time to time
the excisable goods from his registered warehouse/registered factory at ...........for export
to foreign countries without payment of duty;
For AND WHEREAS the Commissioner has required the obligor to deposit as security for the
security amount of this bond/ the sum of ............................................ rupees in cash (the
bond securities as hereinafter mentioned of a total value of ............................................. rupees
only endorsed in favour of the President and accepted on his behalf by the Assistant
Commissioner of Central Excise or Deputy Commissioner of Central Excise,
namely, ............................. and whereas the obligor has furnished such guarantee by
depositing with the Commissioner the cash/securities as aforementioned;
The condition of this bond is that if the obligor and his representative shall observe all the
provisions of the Central Excise (No.2) Rules, 2001 and all such amendments thereto as
may be issued from time to time to be observed in respect of export of excisable goods to
a foreign country or manufacture of goods and export thereof under rule 19;
And whereas the obligor(s) has /have furnished such guarantee by depositing with the
Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise
the cash/securities/bank guarantee as aforementioned.
And shall observe all the provisions of the Central Excise (No.2) Rules, 2001 or the
provisions of other rules made under the Central Excise Act, 1944 (1 of 1944) and all
such amendments thereto, as may be issued from time to time so far as they relate to the
export of excisable goods without payment of the whole or part of the duty;
And if the relevant and specific goods are duly exported to destination within such time as
specified in the Central Excise (No.2) Rules, 2001 or notifications issued thereunder
and/or if all dues whether excise duty or other lawful charges, which shall be demandable
50
on the goods removed by the obligor(s) without payment of the whole or part of the duty
and transported from the place of procurement for export as shown by the Central Excise
records, be duly paid into the treasury to the account of the Commissioner of Central
Excise along with such interest as may be specified in the said rules,/notification within
ten days of the date of demand thereof being made in writing by the said Officer of
Central Excise, this obligation shall be void.
For
surety OTHERWISE and on breach or failure in the performance of any part of this condition,
bond the same shall be in full force and virtue:
only
Provided always that the liability of the surety hereunder shall not be impaired or
For discharged by reason of any time being granted or any forbearance, act or omission of
security the Government (whether with or without the knowledge or the consent of the surety) in
bond respect of or in relation to the obligation and condition to be performed or discharged by
only the obligor(s) nor shall it be necessary to sue the obligor(s) before suing the surety for
amounts hereunder;
AND the President shall, at his option, be competent to make good all the loss and
damages from the amount of the security deposit or by endorsing his rights under the
above-written bond or the both;
I/We further declare that this bond is given under the orders of the Central Government
for the performance of enact in which the public are interested.
In these presents the words imposing singular only shall also include the plural and vice
versa where the context so requires;
IN THE WITNESS THEREOF these presents have been signed the day hereinbefore
written by the obligor(s) and the surety(ies).
Signature(s) of obligor(s).
Date:
Place:
Witnesses
1. Name and Address Occupation
2. Name and Address Occupation
Date
Place
Signature(s) of surety (ies).
Date:
Place:
Witnesses
1. Name and Address Occupation
26th June, 2001
51
Notification No. 44/2001-Central Excise (N.T.)
In exercise of the powers conferred by of sub-rule (3) read with sub-rule (2) of rule 19 of the
Central Excise (No.2) Rules, 2001, the Central Board of Excise and Customs hereby notifies
the conditions, safeguards and procedures for removal of excisable goods (hereinafter
referred to as the" intermediate goods") from the place of manufacture without payment of
duty for the purpose of use in the manufacture or processing of all articles (hereinafter
referred to as the "resultant articles") by a manufacturer who is an holder of a Duty Exemption
Entitlement Certificate and an Advance Licence under the Duty Exemption Scheme
(hereinafter referred to as ‘the ultimate exporter") and their exportation out of India, to any
country except Nepal and Bhutan, namely: -
i. the manufacturer of the intermediate goods holds an Advance Intermediate Licence
or has applied for such licence to the Licensing Authority and has obtained an
acknowledgement for the same, or as the case may be, has been permitted by the
licensing authority or the Committee to manufacture for supply of such goods to the
ultimate exporter;
ii. the provisions of the Central Excise (Removal of Goods at Concessional Rate of Duty
for Manufacture of Excisable Goods) Rules, 2001 shall be followed, mutatis mutandis;
iii. the quantity of intermediate goods removed without payment of duty shall not exceed
the duty exemption entitlement indicated in the said Certificate;
iv. the intermediate goods shall be utilised by the ultimate exporter for manufacture of
resultant articles to be exported or for use as replenishment of duty paid excisable
goods of identical specifications and technical characteristics which have been used
in the manufacture of resultant articles already exported in discharge of export
obligations under a Duty Exemption Entitlement Certificate :
Provided that the intermediate goods obtained for replenishment of duty paid
excisable goods may be utilised for further production in the factory of the ultimate
exporter or may be disposed of in such manner as may be specified by the
Commissioner of Central Excise having jurisdiction over the factory of the ultimate
exporter in terms of the provisions of Export and Import Policy notified under the
Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);
v. the ultimate exporter makes necessary arrangements for facilitating drawl of samples
and subjecting them to such tests as may be directed by the Commissioner of Central
Excise having jurisdiction over the factory;
vi. any waste or by-product arising from the process of manufacture undertaken by the
ultimate exporter on the intermediate goods obtained under this notification shall be
removed on payment of appropriate duty as if such waste is manufactured in the
factory of the manufacturer.
vii. that the export of resultant products made out of intermediate products, namely, nylon
fibre, nylon yarn, nylon fabrics, polyester fibre, polyester yarn, polyester fabrics,
stainless steel sheets, stainless steel strips, magnetic tapes, precious metals, metals
clad with precious metals and articles thereof, be made only through -
a. any of the sea ports at Kandla, Mumbai, Nhava Sheva, Cochin, Chennai,
Visakhapatnam and Kolkata; or
b. any of the airports at Mumbai, Kolkata, Delhi, Chennai and Bangalore; or
c. any of the internal container depots at Delhi and Bangalore;
viii. the goods shall be exported following the procedures specified in the Ministry of
Finance (Department of Revenue) notification no. 42//2001-Central Excise (N.T.)
dated 26th June, 2001.
ix. the ultimate exporter submits within thirty days of the expiry of the period specified in
the Duty Exemption Entitlement Certificate or Advance Licence or within such
extended period as may be permitted by the Licensing Authority or the Committee a
detailed summary of the accounts maintained in the proforma specified under the
52
Duty Exemption Entitlement Scheme, along with attested copies of the shipping bills,
bills of lading and the Duty Exemption Entitlement Certificate with appropriate entries
made by the officers of Customs.
Explanation. - For the purpose of this notification "Advance Licence", "Advance Intermediate
Licence", "Duty Exemption Scheme" and "Committee" shall have the same meanings as
assigned to them in an Export and Import Policy notified under the Foreign Trade
(Development and Regulation) Act, 1992 (22 of 1992);
53
26th June, 2001
Notification No.43/2001-Central Excise (N.T.)
In exercise of the powers conferred by of sub-rule (3) read with sub-rule (2) of rule 19 of the
Central Excise (No.2) Rules, 2001, the Central Board of Excise and Customs hereby notifies
the conditions, safeguards and procedures for procurement of the excisable without payment
of duty for the purpose of use in the manufacture or processing of export goods and their
exportation out of India, to any country except Nepal and Bhutan, namely: -
i. the manufacturer or the processor intending to avail benefit of this notification
shall register himself under rule 9 of the Central Excise No.2) Rules, 2001;
ii. provisions of the Central Excise (Removal of Goods at Concessional Rate of
Duty for Manufacture of Excisable Goods) Rules, 2001 shall be followed,
mutatis mutandis;
iii. the manufacturer or processor shall, while filing declaration under the Central
Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of
Excisable Goods) Rules, 2001, also declare ratio of input and output and rate
of duty payable on excisable goods to be procured without payment of duty;
iv. the Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise shall also verify the correctness of the ratio of input and output
and other particulars mentioned in the declaration filed before
commencement of export of such goods. He may, if necessary, call for
samples of finished goods or inspect such goods in the factory of
manufacture for verifying the declarations. He shall, after being satisfied
about the correctness of declarations, countersign the application in the
manner specified in the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules, 2001;
v. The manufacturer or processor may remove the excisable goods so received
as such or after these have been partially processed during the course of
manufacture or processing of finished goods to a place outside the factory -
a. for the purposes of test, repairs, refining, reconditioning or carrying
out any other operation necessary for the manufacture or processing
of the finished goods and return the same to his factory without
payment of duty for further use in the manufacture or processing of
finished goods or remove the same without payment of duty in bond
for export, provided that the waste, if any, arising in the course of
such operation is also returned to the said factory of the manufacture
or processing; or
b. for the purpose of manufacture of intermediate products necessary
for the manufacture or processing of finished goods and return the
said intermediate products to his factory for further use in the
manufacture or processing of finished goods without payment of duty
or remove the same, without payment of duty in bond for export,
provided that the waste, if any, arising in the course of such operation
is also returned to the factory of manufacturer or processor; and
c. any waste arising from the processing of the excisable goods may be
removed on payment of appropriate duty as if such waste is
manufactured in the factory of the manufacturer or processor;
vi. the goods shall be exported on the application in Form A.R.E. 2 specified in
the Annexure and the procedures specified in Ministry of Finance
(Department of Revenue) notification No.40/2001-Central Excise (N.T.) dated
26th June, 2001or in notification No.42/2001-Central Excise dated 26th June,
2001 shall be followed.
54
Explanation I: "Duty" for the purpose of this notification means duties of excise collected
under the following enactments, namely: -
a. the Central Excise Act, 1944 (1 of 1944);
b. the Additional Duties of Excise (Goods of Special Importance) Act,1957 (58
of 1957);
c. the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of
1978);
d. any special excise duty collected under a Finance Act.
55
26th June 2001
Notification No.42/2001-Central Excise (N.T.)
In exercise of the powers conferred by sub-rule (3) of rule 19 of the Central Excise (No.2)
Rules, 2001, the Central Board of Excise and Customs hereby notifies the conditions and
procedures for export of all excisable goods, except to Nepal and Bhutan without payment of
duty from the factory of the production or the manufacture or warehouse or any other
premises as may be approved by the Commissioner of Central Excise, namely: -
1. Conditions: -
i. that the exporter shall furnish a general bond in the Form specified in Annexure-I to
the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central
Excise having jurisdiction over the factory, warehouse or such approved premises, as
the case may be, or the Maritime Commissioner or such other officer as authorised
by the Board on this behalf in a sum equal at least to the duty chargeable on the
goods, with such surety or sufficient security, as such officers may approve for the
due arrival thereof at the place of export and their export therefrom under Customs or
as the case may be postal supervision. The manufacturer-exporter may furnish a
letter of undertaking in the Form specified in Annexure-II in lieu of a bond.
ii. that goods shall be exported within six months from the date on which these were
cleared for export from the factory of the production or the manufacture or warehouse
or other approved premises within such extended period as the Assistant
Commissioner of Central Excise or Deputy Commissioner of Central Excise or
Maritime Commissioner may in any particular case allow;
iii. that when the export is from a place other than registered factory or warehouse, the
excisable goods are in original packed condition and identifiable as to their origin;
iv. that exports of mineral oil products falling under Chapter 27 of the First Schedule to
the Central Excise Tariff Act, 1985 (5 of 1986) as stores for consumption on board of
an aircraft on foreign run shall be subject to conditions and limitations, to be applied
mutatis mutandis, as notified in the Ministry of Finance (Department of Revenue),
Notification No.40/2001-Central .Excise (N.T.) dated 26th June, 2001 issued under
rule 18 of Central Excise (No.2) Rules, 2001.
2. Procedure: -
(i) Procedure for removal without payment of duty under this notification: – (a) After
furnishing bond, a merchant-exporter shall obtain certificates in Form CT-1 specified in
Annexure-III issued by the Superintendent of Central Excise having jurisdiction over the
factory or warehouse or approved premises or Maritime Commissioner or such other officer
as may be authorised by the Board on this behalf and on the basis of such certificate he may
procure excisable goods without payment of duty for export by indicating the quantity, value
and duty involved therein;
(b) the exporter who has furnished bond shall ensure that the debit in bond account does not
exceed the credit available therein at any point of time;
(c) the manufacturer-exporter may remove the goods without payment of duty after furnishing
the letter of undertaking as specified under condition (i).
(d) such General bond or letter of undertaking shall not be discharged unless the goods are
duly exported, to the satisfaction of the Assistant Commissioner of Central Excise or the
Deputy Commissioner of Central Excise or Maritime Commissioner or such other officer as
may be authorised by the Board on this behalf within the time allowed for such export or are
otherwise accounted for to the satisfaction of such officer, or until the full duty due upon any
deficiency of goods, not accounted so, and interest, if any, has been paid.
56
(ii) Sealing of goods and examination at place of despatch. - (a) For the sealing of goods
intended for export at the place of despatch, the exporter shall present the goods along with
four copies of application in the Form A.R.E.-1 specified in Annexure-IV to the Superintendent
or Inspector of Central Excise who will verify the identity of goods mentioned in the application
and the particulars of the duty paid or payable, and if found in order, he shall seal each
package or the container in the manner as may be specified by the Commissioner of Central
Excise and endorse each copy of the application in token of having such examination done;
(b) the said Superintendent or Inspector of Central Excise shall return the original and
duplicate copies of application to the exporter and retain the quadruplicate copy;
(c) the triplicate copy of application shall be sent to the officer to whom bond or letter of
undertaking has been furnished, either by post or by handing over to the exporter in a tamper
proof sealed cover after posting the particulars in official records;
(d) the exporter may prepare quintuplicate copy of application for claiming any other export
incentive. This copy shall be dealt in the same manner as the original copy of application;
(e) in case of export by parcel post after the goods intended for export has been sealed, the
exporter shall affix to the duplicate application sufficient postage stamps to cover postal
charges and shall present the documents, together with the package to which it refers, to the
postmaster at the office of booking.
(iii) Despatch of goods by self-sealing and self-certification. – (a) Where the exporter
desires self-sealing and self-certification for removal of goods from the factory, warehouse or
any approved premises, the owner, the working partner, the Managing Director or the
Company Secretary, of the manufacturing unit of the goods or the owner of warehouse or a
person duly authorised by such owner, working partner or the Board of Directors of such
Company, as the case may be, shall certify on all the copies of the application that the goods
have been sealed in his presence, and shall send the original and duplicate copies of the
application along with the goods at the place of export, and shall send the triplicate and
quadruplicate copies of the application to the Superintendent or Inspector of Central Excise
having jurisdiction over the factory, warehouse, any such approved premises within twenty
four hours of removal of the goods;
(b) the Superintendent or Inspector of Central Excise shall, after verifying the particulars of
the bond or letter of undertaking and endorsing the correctness or otherwise, of the
particulars on the application, send to the officer to whom the bond or letter of undertaking
has been furnished either by post or by handing over to the exporter in a tamper proof sealed
cover after recording the particulars in the official records;
(c) The exporter may prepare quintuplicate copy of application for claiming any other export
incentive. This copy shall be dealt in the same manner as the original copy of application;
(d) In case of export by parcel post after the goods intended for export has been sealed, the
exporter shall affix to the duplicate application sufficient postage stamps to cover postal
charges and shall present the documents, together with the package to which it refers, to the
postmaster at the office of booking.
(iv) Examination of goods at the place of export. – (a) On arrival at the place of export, the
goods shall be presented together with original, duplicate and quintuplicate (optional) copies
of the application to the Commissioner of Customs or other duly appointed officer;
(b) The Commissioner of Customs or other duly appointed officer shall examine the goods
with the particulars as specified in the application and if he finds that the same are correct and
exportable in accordance with the laws for the time being in force, shall allow export thereof
and certify on the copies of the application that the goods have been duly exported citing the
shipping bill number and date and other particulars of export:
57
Provided that if the Superintendent or Inspector of Central Excise sealed packages or
container at the place of despatch, the officer of customs shall inspect the packages or
container with reference to declarations in the application to satisfy himself about the
exportability thereof and if the seals are found intact, he shall allow export.
(c) The Commissioner of Customs or the other duly appointed officer shall return the original
and quadruplicate (optional copy for exporter) copies of application to the exporter and
forward the duplicate copy of application either by post or by handing over to the exporter in a
tamper proof sealed cover to the officer specified in the application, with whom the exporter
has furnished bond or a letter of undertaking.
(d) The exporter shall use the quintuplicate copy for the purposes of claiming any other export
incentive.
(v) Cancellation of applications: (a) If the excisable goods are not exported, the Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central Excise or Maritime
Commissioner or such other officer as authorised by the Board on this behalf, as the case
may be, to whom the bond or letter of undertaking has been furnished, may, on written
request for cancellation of application, cancel said application and allow diversion of goods for
consumption in India subject to the sub-Para (b);
(b) The exporter shall pay the duty as specified in the application along with interest at the
rate of twenty four percent per annum on such duty from the date of removal for export from
the factory or warehouse or any other approved premises till the date of payment of duty.
(vi) Procedure in respect of exported goods subsequently re-imported and returned to
the factory: (a) Exported excisable goods which are re-imported for carrying out repairs, re-
conditioning, refining, re-making or subject to any similar process may be returned to the
factory of manufacture for carrying out the said processes and subsequent re-export.
(b) Any waste or refuse arising as a result of the said processes shall be removed from the
factory on payment of appropriate duty or destroyed after informing the proper officer in
writing at least 7 days in advance and after observing such conditions and procedure as may
be specified by the Commissioner of Central Excise and thereupon the duty payable on such
waste or refuse may be remitted by the said Commissioner of Central Excise.
Explanation I. – For the purpose of this notification, "merchant-exporter" mean any exporter
who procures and exports excisable goods manufactured by any other person.
Explanation II. – For the purpose of this notification, "Maritime Commissioner" means the
Commissioner of Central Excise under whose jurisdiction one or more of the port, airport or
post office of exportation is located in Mumbai, Kolkata, Chennai, Paradeep, Visakhapatnam,
Cochin, Kandla and Tuticorin.
FORM UT-1
Letter of Undertaking
For removal for export of excisable goods without payment of duty
To
The President of India (hereinafter called the "President"), acting through the Assistant
Commissioner of Central Excise or Deputy Commissioner of Central Excise or the Maritime
Commissioner or such Central Excise Officer duly authorised by the Central Board of Excise
and Customs, constituted under the Central Board of Revenue Act, 1963 (54 of 1963)
(hereinafter called "the Board")_____________________[Address of the office].
I/We .................of............. (Address of the factory) having Central Excise Registration
No…………………hereinafter called "the undertaker(s) including my/our respective heirs,
58
executors/ administrators, legal representatives/successors and assigns by these presents,
hereby jointly and severally undertake on this...................day of.................... to the President.
a. to export the excisable goods removed from my/our factory/warehouse/approved
place of storage without payment of duty under rule 19 of the Central Excise (No.2)
Rules, 2001 within six months from the date of such removal or such extended period
as may be permitted by the jurisdictional Assistant Commissioner of Central Excise or
the Deputy Commissioner of Central Excise or the Maritime Commissioner or the
Central excise Officer duly authorised by the Board;
b. to observes all the provisions of the Central Excise (No.2) Rules, 2001and all such
amendments thereto as may be issued from time to time to be observed, in respect of
export of excisable goods to a foreign country;
c. to export the goods to the satisfaction of the Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise having jurisdiction over the
factory of production or manufacture
d. pay the excise duty payable on such excisable goods in the event of failure to export
them, along with an amount equal to twenty four percent interest per annum on the
amount of duty not paid, from the date of removal for export till the date of payment.
I/We declare that this undertaking is given under the orders of the Board for the performance
of enacts in which the public are interested.
Signature(s) of undertaker(s).
Date : Place : Witnesses
1. Name and Address Occupation 2.Name and Address
Occupation
Date Place
Accepted by me on this.........................day of .............(month).................…….(year)
…………………..of Central Excise, (Designation) for and on behalf of the President of India.
59
Annexure-III
Serial Number______/___-___ (Financial Year).
Range Division Commissionerate
FORM CT-1
Certificate for procurement of excisable goods for export without
payment of duty
This is to certify that,
1. The exporter has furnished a Bond in Form [Specific/General]* for
Rs___________________, which has been accepted by the Assistant Commissioner
of Central Excise/the Deputy Commissioner of Central Excise in F.No.
_______________________ on the _________day of the ___________(month)
___________ (Year).
OR
Mr./Messers. ______________________________(Name and address) is/are
registered under rule 9 of Central Excise (No.2) Rules, 2001 in this Range, having
registration number__________________________________has furnished an
undertaking in the form specified under Notification No. /2001-Central Excise (N.T.)
dated to the Assistant Commissioner of Central Excise/the Deputy Commissioner of
Central Excise, _____________________(Name of the Division or the Office) who
has accepted the undertaking in F.No. _______________________ on the
_________day of the ___________(month) ___________ (Year).
2. The above-said exporter/manufacturer-exporter is permitted to obtain excisable
goods for export under rule 19 of the Central Excise (No.2) Rules, 2001 as per details
specified overleaf. This certificate is valid upto one year from the date of issue
specified below.
Name and Signature of the
Superintendent of Central Excise
["Seal"]
Dated:
(Address of the Range Office)
(To be printed overleaf)
To be filled by the exporter
For Procuring Goods under the procedure specified under
Notification No. 42/2001-Central Excise (N.T.) dated 26th June, 2001 issued rule 19 of the
Central Excise (No.2) Rules, 2001
Name and address of the factory/ ___________________________________
warehouse/place of storage of the supplier ___________________________________
Registration Number of the factory/warehouse _________________________________
Details of the goods to be procured
Sl. No. Description Quantity Value Duty involved
I hereby declare that I have made a provisional debit of Rupees .............................................
(in both words and figures) in the Bond Account at serial No….................................. dated
…………… and on this day and after the abovementioned debit, the balance in the Bond
Account is Rs. …………………………... . OR
Please find attested copy of the specific bond/Undertaking details of which is specified by the
Superintendent of Central Excise,_____________________________ (address) overleaf.
( Dated signature of the Exporter(s) or his/ their authorised agents and their seal.
Annexure-IV
60
Range...........
Division..............Address.....................
Commissionerate....................
Original (White)
Duplicate (Buff)
Triplicate (Pink)
Quadruplicate (Green)
FORM A.R.E. 1
Application for removal of excisable goods for export by (Air/Sea/Post/Land)*
To
Superintendent of Central Excise
........................(Full Postal Address)
1. Particulars of [Assistant/Deputy Commissioner of Central Excise]/Maritime
Commissioner of Central Excise from whom rebate shall be claimed/with whom
bond/undertaking is executed and his complete postal address.
2. I/We ........ of ..............propose to export the under-mentioned consignment to ...........
(Country of destination) by Air/Sea/Land/Parcel Post under claim for
rebate/bond/undertaking*.
Particulars of Manufactu- No. and Gross Marks and Quantity Description
rer of goods-and his Description weight/ Nos. of goods of
Central Excise Registration of Net weight on Goods
No. packages packages
Value Duty No. and date of Invoice under Amount of Remarks
which duty was paid/No. and Rebate
date of bond/undertaking claimed
Rate Amt. (Rs.) executed under Rule 19
61
1. Certified that duty has been paid by debit entry in the Personal Ledger Account
No. .........and/or CENVAT Account Entry No..……or recorded as payable in Daily
Stock Account, on the goods described overleaf.
OR
Certified that the owner has entered into Bond No. ............ under Rule 19 of Central
Excise (No.2) Rules, 2001 with the...........................……….
[F.No.___________________], duly accepted by the Assistant Commissioner/Deputy
Commissioner of Central Excise________ on _________(Date).
2. Certified that I have opened and examined the packages No.....
……………………………………………......... and found that the particulars stated and
the description of goods given overleaf and the packing list (if any) are correct and
that all the packages have been stuffed in the container No. ............... with
Marks .................. and the same has been sealed with Central Excise Seal/One Time
Seal (OTS) No. .............
3. I have verified with the records, the exporter is only availing the export incentives, as
specified in box No.6. and found it to be true.
4. Certified that I have drawn three representative samples from the consignment
(wherever necessary) and have handed over, two sets thereof duly sealed to the
exporter/his authorised representative.
Place.....................
Date ........................
Signature Signature
(Name in Block Letters) (Name in Block Letters)
Superintendent of Central Excise Inspector of Central Excise
PART B
CERTIFICATION BY THE CUSTOMS OFFICER
Certified that the consignment was shipped under my supervision under Shipping Bill
No_______ dated _______by S.S./Flight No. ______which left on the_______ day
of________ (Month)__________(year)
OR
Certified that the above-mentioned consignment was stuffed in Container
No._____________________ belonging to Shipping Line_________________ based on the
"Let Export Order" given on ____________day of.________(Month)__________year) on the
Shipping Bill No______ dated________ and sealed by seal/one time lock
No._______________ in my supervision and the container was handed over to the Custodian
M/s______________ for being shipped via ___________________(Name of the Port).
OR
Certified that the above-mentioned consignment has been duly identified and has
passed the land frontier today at_______in its original condition under Bill of Exports
No______________ Place_____________ Date_____________.
Signature
(Name and designation of the Customs
Officer in Block Letters)/(Seal)
PART C
EXPORT BY POST
62
Certified that the consignment described overleaf has been despatched by foreign post to
……………………… on ……………….. day of 200……….
Place ………..
Date ……….
Signature of Post Master
(Seal)
PART D
REBATE SANCTION ORDER
(On Original, Duplicate and Triplicate)
Refund Order No……………….. dated ………………….. Rebate of Rs…………….. (Rupees
………………………………………..) sanctioned vide Cheque No. ………………dated
…………………
Place ………..
Date ……….
Assistant/Deputy Commissioner/ Maritime
Commissioner of Central Excise
*Strike out inapplicable portions.
2. This notification shall come into force on 1st July, 2001.
F.No.209/19/2001-CX.6
(P.K. Sinha)
Under Secretary to the Government of India
63
26th June, 2001
Notification No.41/2001-Central Excise (N.T.)
In exercise of the powers conferred by of rule 18 of the Central Excise (No.2) Rules, 2001, the
Central Government hereby directs that rebate of whole of the duty paid on excisable goods
(hereinafter referred to as ‘materials’) used in the manufacture or processing of export goods
shall, on their exportation out of India, to any country except Nepal and Bhutan, be paid
subject to the conditions and the procedure specified hereinafter: -
(1) Filing of declaration. - The manufacturer or processor shall file a declaration with the
Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise
having jurisdiction over the factory of manufacture describing the finished goods proposed to
be manufactured or processed along with their rate of duty leviable and
manufacturing/processing formula with particular reference to quantity or proportion in which
the materials are actually used as well as the quality. The declaration shall also contain the
tariff classification, rate of duty paid or payable on the materials so used, both in words and
figures, in relation to the finished goods to be exported;
(2) Verification of Input–output ratio. – The Assistant Commissioner of Central Excise or
the Deputy Commissioner of Central Excise shall verify the correctness of the ratio of input
and output mentioned in the declaration filed before commencement of export of such goods,
if necessary, by calling for samples of finished goods or by inspecting such goods in the
factory of manufacture or process. If, after such verification, the Assistant Commissioner of
Central Excise or the Deputy Commissioner of Central Excise is also satisfied that there is no
likelihood of evasion of duty, he may grant permission to the applicant for manufacture or
processing and export of finished goods.
(3) Procurement of material. – The manufacturer or processor shall obtain the materials to
be utilised in the manufacture of the finished goods intended for export directly from the
registered factory in which such goods are produced, accompanied by an invoice under rule
11 of the Central Excise (No.2) Rules, 2001 :
Provided that the manufacturer or processor may procure materials from dealers registered
for the purposes of the CENVAT Credit Rules, 2001 under invoices issued by such dealers.
(4) Removal of materials or partially processed material for processing. – The Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central Excise may permit a
manufacturer to remove the materials as such or after the said materials have been partially
processed during the course of manufacture or processing of finished goods to a place
outside the factory -
a. for the purposes of test, repairs, refining, reconditioning or carrying out any
other operation necessary for the manufacture of the finished goods and
return the same to his factory without payment of duty for further use in the
manufacture of finished goods or remove the same without payment of duty
in bond for export, provided that the waste, if any, arising in the course of
such operation is also returned to the said factory of the manufacture or
process; or
b. for the purpose of manufacture of intermediate products necessary for the
manufacture or processing of finished goods and return the said intermediate
products to his factory for further use in the manufacture or process of
finished goods without payment of duty or remove the same, without payment
of duty for export, provided that the waste, if any, arising in the course of
such operation is also returned to the factory of manufacturer or processor;
64
c. Any waste arising from the processing of materials may be removed on
payment of duty as if such waste is manufactured or processed in the factory
of the manufacturer or processor;
(5) Procedure for export. - the goods shall be exported on the application in Form A.R.E. 2
specified in the Annexure and the procedures specified in Ministry of Finance (Department of
Revenue) notification No.40/2001-Central Excise (N.T.) dated 26th June, 2001or in notification
No. 42/2001-Central Excise dated 26th June, 2001 shall be followed.
(6) Presentation of claim of rebate. – The claim for rebate of duty paid on materials used in
the manufacture or processing of goods shall be lodged only with the Assistant Commissioner
of Central Excise or Deputy Commissioner of Central Excise having jurisdiction of the place
approved for manufacture or processing of such export goods.
65
Notification No. 40/2001-Central Excise (N.T.) 26th June, 2001
In exercise of the powers conferred by rule 18 of the Central Excise (No.2) Rules, 2001, the
Central Government hereby directs that there shall be granted subject to conditions and
limitations specified in paragraph 2 and procedures specified in paragraphs 3 and 4, -
a. rebate of whole of the duty paid on all excisable goods falling under the First
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), except mineral oil
products falling under Chapter 27 of the First Schedule to the Central Excise Tariff
Act, 1985 (5 of 1986) exported as stores for consumption on board an aircraft on
foreign run, on their exportation to any country except Nepal and Bhutan;
b. rebate of whole of the duty paid on the excisable goods to the His Majesty’s
Government on their exportation to Nepal except that the rebate shall not, in each
case, exceed the aggregate of the duty of Customs and additional duty of Customs
levied by His Majesty's Government of Nepal on such goods when they are imported
into Nepal from any country other than India; and
c. rebate of whole of the duty paid on mineral oil products falling under Chapter 27 of
the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) exported as stores for
consumption on board an aircraft on foreign run except that in respect of the
excisable goods mentioned in column (2) of the Table below, the rebate shall be
reduced by the amount indicated in the corresponding entry in column (3) of the said
Table.
TABLE
Sl. No. Description of excisable Amount
goods
Refined Diesel Oil, other Rs. 60.00 per kilolitre at fifteen degrees
than High Speed Diesel of Centigrade thermometer.
Oil
High Speed Diesel Oil Rs. 24.94 per kilolitre at fifteen degrees
of Centigrade thermometer.
Diesel Oil not otherwise Rs. 53.39 per kilolitre at fifteen degrees
specified of Centigrade thermometer.
66
2. Conditions and limitations –
i. that the excisable goods shall be exported after payment of duty, directly from a
factory or warehouse except as otherwise permitted by the Central Board of Excise
and Customs by a general or special order;
ii. the excisable goods shall be exported within six months from the date on which they
were cleared for export from the factory of manufacture or warehouse or within such
extended period as the Commissioner of Central Excise may in any particular case
allow;
iii. that the excisable goods supplied as ship’s stores for consumption on board a vessel
bound for any foreign port are in such quantities as the Commissioner of Customs at
the port of shipment may consider reasonable;
iv. that export to any country except Nepal, shall be made in accordance with the
procedure set out in paragraph 3 of this notification;
v. the rebate claim by filing electronic declaration shall be allowed from such place of
export and such date, as may be specified by the Board in this behalf;
vi. that in respect of the export to Nepal, -
a. procedure specified in the paragraph 4 shall be followed;
b. where the goods are exported by land, the export shall take place through
any of the following land customs stations, namely, Sukhiapokhri, Panitanki,
Jogbani, Jayanagar, Bairgania, Bhimnagar, Bitamore (Sursand), Raxaul,
Sonauli, Barhni, Nepalganj Road, Shohratgar (Khunwa), Jarwa, Katarniaghat,
Gauriphanta, Banbasa, Jhulaghat, Dharchula, Naxalbari, Galgalia, Kunauli,
Sonabarsa, Tikonia, or such other check-post as may be specified by the
Central Board of Excise and Customs; and
c. the whole or that part of duty as is granted as rebate to the exporter is not
allowed as rebate to His Majesty's Government of Nepal.
vii. that the market price of the excisable goods at the time of exportation is not less than
the amount of rebate of duty claimed;
viii. that the amount of rebate of duty admissible is not less than five hundred rupees;
ix. that the rebate of duty paid on those excisable goods, export of which is prohibited
under any law for the time being in force, shall not be made.
3. Procedure for export to all countries except Nepal or Bhutan Sealing of goods and
examination at place of despatch. - (a) For the sealing of goods intended for export at the
place of despatch, the exporter shall present the goods along with four copies of application in
the Form ARE-I specified in Annexure-I to the Superintendent or Inspector of Central Excise
having jurisdiction over the factory of production or manufacture or warehouse, who will verify
the identity of goods mentioned in the application and the particulars of the duty paid or
payable, and if found in order, he shall seal each package or the container in the manner as
may be specified by the Commissioner of Central Excise and endorse each copy of the
application in token of having such examination done;
(b) The said Superintendent or Inspector of Central Excise shall return the original and
duplicate copies of application to the exporter.
(c) The triplicate copy of application shall be, -
i. sent to the officer with whom rebate claim is to be filed, either by post or by handing
over to the exporter in a tamper proof sealed cover after posting the particulars in
official records, or
ii. Sent to the Excise Rebate Audit Section at the place of export in case rebate is to be
claimed by electronic declaration on Electronic Data Inter-change system of Customs.
(d) The exporter may prepare quintuplicate copy of application for claiming any other export
incentive. This copy shall be dealt in the same manner as the original copy of application.
(e) where goods are not exported directly from the factory of manufacture or warehouse, the
triplicate copy of application shall be sent by the Superintendent having jurisdiction over the
factory of manufacture or warehouse who shall, after verification forward the triplicate copy in
the manner specified in sub-paragraph (c);
(f) In case of export by parcel post after the goods intended for export has been sealed, the
exporter shall affix to the duplicate application sufficient postage stamps to cover postal
67
charges and shall present the documents, together with the package or packages to which it
refers, to the postmaster at the Office of booking.
(2) Despatch of goods by self-sealing and self-certification. – (a) Where the exporter
desires self-sealing and self-certification for removal of goods from the factory or warehouse,
the owner, the working partner, the Managing Director or the Company Secretary, of the
manufacturing unit of the goods or the owner of warehouse or a person duly authorised by
such owner, working partner or the Board of Directors of such Company, as the case may be,
shall certify on all the copies of the application that the goods have been sealed in his
presence, and shall send the original and duplicate copies of the application along with the
goods at the place of export, and shall send the triplicate and quadruplicate copies of the
application to the Superintendent or Inspector of Central Excise having jurisdiction over the
factory or warehouse within twenty four hours of removal of the goods;
(b) The said Superintendent or Inspector of Central Excise shall, after verifying the particulars
of the duty paid or duty payable and endorsing the correctness or otherwise, of these
particulars,
i. send to the officer with whom rebate claim is to be filed, either by post or by handing
over to the exporter in a tamper proof sealed cover after posting the particulars in
official records, or
ii. send to the Excise Rebate Audit Section at the place of export in case rebate is to be
claimed by electronic declaration on Electronic Data Inter-change system of Customs.
(c) The exporter may prepare quintuplicate copy of application for claiming any other export
incentive. This copy shall be dealt in the same manner as the original copy of application.
(d) In case of export by parcel post after the goods intended for export has been sealed, the
exporter shall affix to the duplicate application sufficient postage stamps to cover postal
charges and shall present the documents, together with the package or packages to which it
refers, to the postmaster at the Office of booking.
(3) Examination of goods at the place of export. – (a) On arrival at the place of export, the
goods shall be presented together with original, duplicate and quintuplicate (optional) copies
of the application to the Commissioner of Customs or other duly appointed officer.
(b) The Commissioner of Customs or other duly appointed officer shall examine the
consignments with the particulars as cited in the application and if he finds that the same are
correct and exportable in accordance with the laws for the time being in force, shall allow
export thereof and certify on the copies of the application that the goods have been duly
exported citing the shipping bill number and date and other particulars of export:
Provided that if the Superintendent or Inspector of Central Excise sealed packages or
container at the place of despatch, the officer of customs shall inspect the packages or
container with reference to declarations in the application to satisfy himself about the
exportability thereof and if the seals are found intact, he shall allow export.
(c) The officer of customs shall return the original and quintuplicate (optional copy for
exporter) copies of application to the exporter and forward the duplicate copy of application
either by post or by handing over to the exporter in a tamper proof sealed cover to the officer
specified in the application, from whom exporter wants to claim rebate:
Provided that where exporter claims rebate by electronic declaration on Electronic Data Inter-
change system of Customs, the duplicate shall be sent to the Excise Rebate Audit Section at
the place of export.
(d)The exporter shall use the quintuplicate copy for the purposes of claiming any other export
incentive.
(4) Presentation of claim for rebate to Central Excise.- (a) Claim of the rebate of duty shall
be lodged along with original copy of the application to the Assistant Commissioner of Central
68
Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of
manufacture or warehouse or, as the case may be, the Maritime Commissioner.
(b) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central
Excise of Central Excise having jurisdiction over the factory of manufacture or warehouse or,
as the case may be, Maritime Commissioner of Central Excise shall compare the duplicate
copy of application received from the Officer of Customs with the original copy received from
the exporter and with the triplicate copy received from the Central Excise Officer and if
satisfied that the claim is in order, he shall sanction the rebate either in whole or in part.
(5) Claim of rebate by electronic declaration. – An exporter may enter the requisite
information in the Shipping Bill filed at such place of export, as may be specified by the Board,
for claiming rebate by electronic declaration on Electronic Data Inter-change system of
Customs. The details of the corresponding application shall be entered in the Electronic Data
Inter-change system of Customs upon arrival of the goods in the Customs area. After goods
are exported or order under section 51 of the Customs Act, 1962 (52 of 1962) has been
issued, the rebate of excise duty shall, if the claim is found in order, be sanctioned and
disbursed by the Assistant Commissioner of Customs or the Deputy Commissioner of
Customs.
(6) Special procedure for store for consumption on board an aircraft on foreign run:
Notwithstanding anything contained in this paragraph, in case of mineral oil products falling
under Chapter 27 of the First Schedule to the Central Excise Act, 1985 (5 of 1986) exported
as stores for consumption on board an aircraft on foreign run, the products as remain on
board an aircraft after completion of an internal flight but prior to its reversion to foreign run,
the rebate for which shall be granted without production of documents evidencing the
payment of duty thereon. The proper officer of Customs shall certify in the manner specified
by the Commissioner of Central Excise the quantity of products left on board for determining
the quantum of rebate therefor.
(7) Cancellation of documents: If the excisable goods are not exported, the Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central Excise shall cancel
the export documents.
4. Procedure for export to Nepal:
(1) Procedure relating to removal of goods. - When goods liable to duties of excise in India
are despatched to Nepal through land, the exporter or his agent shall observe the following
procedure at the registered factory or warehouse or premises as approved by the
Commissioner of Central Excise, from where the excisable goods are removed for export to
Nepal: -
a. Application in the form specified under Annexure-II, in quadruplicate, shall be
presented to the jurisdictional Superintendent or Inspector of Central Excise
along with the export goods.
b. The said officer shall verify the packages and the goods with reference to the
declaration in the Application. If found in order, he shall deliver the goods,
packages or container after sealing it, to the exporter or his agent together
with the original copy of the invoice, duly completed and registered. The
exporter or his agent shall then be free to remove the goods for export to
Nepal, through the specified land customs stations.
c. the duplicate and triplicate copies of the invoices shall be put in a cover and
sealed and handed over to the exporter or his agent by the Central Excise
Officer for being handed over to the officer of customs in-charge of the said
land customs station
d. The quadruplicate copy of the invoice shall be retained by the Central Excise
Officer;
(2) Procedure at the land customs station. – At the land customs station, the following
procedure shall be followed, namely: -
a. the exporter or his agent shall present the goods to the officer of
Customs in-charge of the land customs station along with the original
69
copy of invoice and the sealed cover containing duplicate and
triplicate copies;
b. where the contents of all the copies of invoices tally and the
packages, goods or container are satisfactorily identified with their
seals in tact, the customs officer in-charge of the land customs
station shall make necessary entries in the register maintained at the
land customs station and allow the goods to cross into the territory of
Nepal and certify accordingly on each of the three copies of the
invoice and simultaneously indicate the running serial number in red
ink prominently visible and encircled against Item 3 on all the three
copies of the invoice. He may, to satisfy himself as to the identity of
the packages, goods or containers from the particulars shown on the
invoice, open container or packages and examine the goods,
especially where the seals are broken;
c. the customs officer, then deliver the original copy of the invoice duly
endorsed to the exporter or his agent alongwith the goods for
presentation to the Nepalese Customs Officer. He shall also send,
directly the duplicate and triplicate copies of the invoice to the
Nepalese Customs Officer in-charge of the check post through which
the goods are to be imported into Nepal;
d. the goods will then be produced before the Nepalese Customs
Officer at the corresponding border check post along with the original
copy of the invoice. The Nepalese Customs Officer, shall deal with
the original copy as directed by His Majesty's Government of Nepal
and return the duplicate copy, after endorsing his certificate of receipt
of goods in Nepal directly to the officer of customs in-charge of the
land customs station;
e. the officer in-charge of the land customs station shall forward the
duplicate copy to the Deputy Director of Inspection, Customs and
Central Excise, Nepal Refund Wing. For this purpose, the said officer
in-charge of the land customs station should keep a note of the return
of duplicate copies from the Nepalese Customs Officer and remind
the exporter for such copies as have not been received.
(3) Procedure to be followed by the Directorate General of Inspection, Customs and
Central Excise (Nepal Refund Wing), New Delhi. –
a. The Directorate General of Inspection, Customs and Central Excise (Nepal
Refund Wing), New Delhi [hereinafter referred to as "the Directorate"] shall
maintain separate registers for each Indian Border Customs Check Post.
b. The duplicate invoice will be entered in the respective registers showing the
running serial number in the recapitulation statement register prescribed for
the purpose.
c. At the end of every month he shall calculate the amount of rebate due in
respect of all certificates of exports received during that month and shall
prepare a consolidated statement to arrive at the amount of rebate due to His
Majesty's Government of Nepal.
d. One copy of the recapitulation statement shall be forwarded to the
Commissioner of Central Excise concerned for verifying the payment of
rebate to Nepal Government and for issue of a post audit certificate in
respect of the amount allowed as rebate against each invoice passed in that
bill. In order to detect errors in the duty amount and quantity indicated.
Internal Audit Department of the Commissionerate concerned should check
this factor by comparison with the recapitulation statement forwarded by the
Directorate and the monthly return of the factories concerned.
e. Where any over payment is noticed the fact should be brought to the notice
of the Directorate for making necessary adjustment.
f. One copy of the recapitulation statement shall be forwarded to His Majesty's
Government of Nepal.
g. One copy of the recapitulation statement shall remain as office copy with the
Directorate.
70
h. After receiving the recapitulation statement, the Commissioner will get a
verification conducted that the concerned factories have actually paid the
duty of excise against which the rebate is to be given and the
Commissioner/PAO of that Commissionerate shall furnish a certificate to the
Directorate to the effect that all the concerned factories have paid the
amounts of duty as indicated in the Annexure to the recapitulation statement.
i. In case the Directorate does not receive the duplicate copy of the invoice
from the Officer in-charge of the Indian Land Customs Station and the
triplicate copy is not received by the Nepal Government, necessary check
should be made with the officer in-charge of the Indian Land Customs Station
concerned as to the whereabouts of the particular invoice.
4. Review of the working of the procedure. – The representatives of the two Governments
shall meet to make a half-yearly review of the working of simplified procedure.
Explanation I - "Duty" means for the purposes of this notification, duties of excise collected
under the following enactment, namely:
a. the Central Excise Act, 1944;
b. the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58
of 1957);
c. the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of
1978);
d. Special excise duty collected under a Finance Act.
Explanation II – The expression ‘electronic declaration" means the declaration of the
particulars relating to the export goods, lodged in the Customs Computer System, through the
data-entry facility provided at the Service Centre or the date communication networking
facility provided by the National Informatic Centre, from the authorised person’s computer.
Explanation III. – For the purpose of this notification, "Maritime Commissioner" means the
Commissioner of Central Excise under whose jurisdiction one or more of the port, airport or
post office of exportation is located in Mumbai, Kolkata, Chennai, Paradeep, Visakhapatnam,
Cochin, Kandla and Tuticorin.
71
26th June, 2001
Notification No.35/2001-Central Excise(N. T.)
In exercise of powers conferred by rule 9 of the Central Excise (No.2) Rules, 2001,
(hereinafter referred to as the said rules) the Central Board of Excise and Customs hereby
specifies the conditions, safeguards and procedures for registration of a person under the
said rules and exemptions from registration in specified cases: -
(1) Application for registration: Every person specified under sub-rule (1) of rule 9, unless
exempted from doing so by the Board under sub-rule (2) of rule 9, shall get himself registered
with the jurisdictional Superintendent of Central Excise by applying in the form specified in
Annexure-I;
(2) Registration of different premises of the same registered person: If the person has
more than one premises requiring registration, separate registration certificate shall be
obtained for each of such premises.
(3) Registration Certificate and Number: Registration Certificate in the Form specified in
Annexure-II containing registration number shall be granted within seven days of the receipt
of the duly complete application.
(4) Transfer of Business: Where a registered person transfers his business to another
person, the transferee shall get himself registered afresh.
(5) Change in the Constitution: Where a registered person is a firm or a company or
association of persons, any change in the constitution of firm, company or association, shall
be intimated to the jurisdictional Central Excise Officer within thirty days of such change.
(6) De-registration: Every registered person, who ceases to carry on the operation for which
he is registered, shall de-register himself by making a declaration in the form specified in
Annexure-III and depositing his registration certificate with the Superintendent of Central
Excise.
(7) Revocation or suspension of registration: A registration certificate granted under this
rule may be revoked or suspended by the Assistant Commissioner of Central Excise or the
Deputy Commissioner of Central Excise, if the holder of such certificate or any person in his
employment, is found to have committed breach of any of the provisions of the Act or the
rules made thereunder or has been convicted of an offence under section 161, read with
section 109 or with section 116 of the Indian Penal Code (45 of 1860).
72
Annexure-I
FORM A-1
Application for Registration to cure/produce/manufacture/conduct wholesale trade/act as a
broker
or commission agent/obtain excisable goods, for industrial purpose etc.
[ Rule 9 ]
(Delete the letters and words not applicable)
To
The Superintendent of Central Excise,
Sir,
I/We_____________________________Son/Daughter(s) of___________________ residing
at ____________________hereby request that I/We _______________________ may be
issued a registration certificate under Rule 9 for the purposes indicated in the schedule. Other
details required are also furnished in the schedule.
2. I/We___________________ agree to abide by all the terms and conditions of the
registration which may be imposed from time to time.
3. I/We_________________________ agree to abide by all the provisions of Central Excise
(No.2) Rules, 2001 and any orders issued thereunder.
4. I/We_________________ declare to the best of my/our knowledge and belief the
information furnished herein is true and complete.
Place:
Date:
Signature of the applicant
(Signatures)
…………………………………………………..tear
here………………………………………………
ACKNOWLEDGEMENT
Received an application for Registration from Ms./Mr./Smt. __________________
Son/Daughter of __________________ for registration under Rule 9
Date:
Rubber stamp of the officer
receiving the application.
SCHEDULE
1. Name and address of the person applying for the registration :
2. Details of the premises where the activity proposed is to be carried on : (attach details of
plan of Building/Plant/Machinery etc.)
3. Details of the proprietors/all partners/Directors of the company including :
(a) Name(s)
(b) Address(es)
(i) Official
(ii) Residential
(c) Income Tax No./Nos.
4.
Sl. Description Tariff The purpose for which Remarks
No. of Excisable Classification the registration is sought
goods for
5. In case the application is for obtaining excisable goods to be used for special industrial
purposes,additional details as below may be furnished.
(i) Estimated quantity of each case of goods and value of such goods likely to be used during
the year
(ii) Commodities to be manufactured and issue of each commodity during the year
(iii) Manner of manufacture
73
(iv) Purpose to which manufactured product is supplied
(v) Source from which excisable goods will be obtained
(vi) Remarks
6. In case the application is for obtaining permission for warehousing, additional details in the
format
furnished below may be given:
1. Village/town
2. District
__________________________________________________________________________
___
Distinguishing letter or number or Detailed description of each Purpose of each
letter and number of each
__________________________________________________________________________
___
3. Description of each main division or sub-division of the warehouse or store-room
4. Area and total storage capacity
5. Varieties of excisable product to be stored
6. Estimated quantity of each variety of such products to be stored during each financial year:
21st June, 2001
74
Notification No.34 /2001-Central Excise (N. T.)
In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1
of 1944), the Central Government hereby makes the following rules, namely:-
1. Short title, extent and commencement.- (1) These rules may be called the Central
Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of
Excisable Goods) Rules, 2001.
(2) They extend to the whole of india.
(3) They shall come into force on and from the 1st day of July, 2001.
2. Application.- These rules shall apply to a manufacturer who intends to avail of the
benefit of a notification issued under sub-section (1) of section 5A of the Central
Excise Act, 1944 ( 1 of 1944 ) ( hereinafter referred to as the Act) granting exemption
of duty to excisable goods ( hereinafter referred to as subject goods) when used for
the purpose specified in that notification.
3. Application by the manufacturer to obtain the benefit.- (1) A manufacturer who
intends to receive subject goods for specified use at concessional rate of duty, shall
make an application in quadriplicate in the Form at Annexure I to the jurisdictional
Assistant Commissioner of Central Excise or the Deputy Commissioner of Central
Excise, as the case may be ( hereinafter referred to as the said Assistant
Commissioner or Deputy Commissioner ).
(2) The manufacturer shall make separate application in respect of each supplier of subject
goods.
(3)The manufacturer shall execute a general bond with surety or security.
(4) The bond shall be for such amount as considered appropriate by the said Assistant
Commissioner or Deputy Commissioner, to cover the recovery of duty liability estimated to be
involved at any given point of time.
(5) The application shall be countersigned by the said Assistant Commissioner or Deputy
Commissioner who shall certify therein that the said person has executed a bond to his
satisfaction in respect of end use of the subject goods and indicate the particulars of such
bond.
(6) Of the four copies of the application referred to in sub-rule (5), one copy shall be
forwarded to the jurisdictional range Superintendent of the manufacturer of the subject goods,
two copies shall be handed over to the manufacturer and one copy shall be retained, by the
said Assistant Commissioner or Deputy Commissioner.
(7) One copy of the application referred to in sub-rule (6) received by the manufacturer, shall
be forwarded by the said manufacturer to the manufacturer of subject goods.
4. Procedure to be followed by the manufacturer of subject goods. – (1) On the basis of
the application referred to in sub-rule (7) of rule 3, the manufacturer of subject goods
shall avail the benefit of the exemption notification.
(2) The manufacturer of the subject goods shall record on the application the removal details,
such as No. and date of invoice, description, quantity and value of subject goods and amount
of excise duty paid at concessional rate.
5. Manufacturer to give information regarding receipt of the subject goods and maintain
records.- The manufacturer, receiving subject goods, shall maintain a simple account
indicating the quantity and value of subject goods, the quantity of subject goods
consumed for the intended purpose, and the quantity remaining in stock, invoice wise
and shall submit a monthly return in Return at Annexure II to the said Assistant
Commissioner or Deputy Commissioner by the tenth day of the following month.
6. Recovery of duty in certain cases.- Where the subject goods are not used by the
manufacturer for the intended purpose, the manufacturer shall be liable to pay the
amount equal to the difference between the duty leviable on such goods but for the
exemption and that already paid, if any, at the time of removal from the factory of the
manufacturer of the subject goods, alongwith interest and the provisions of section
11A and section 11AB of the Central Excise Act, 1944 (1 of 1944) shall apply mutatis
mutandis for effecting such recoveries.
Explanation.- For the removal of doubts, it is hereby clarified that subject goods shall be
deemed not to have been used for the intended purpose even if any of the quantity of the
subject goods is lost or destroyed by natural causes or by unavoidable accidents during
75
transport from the place of procurement to the manufacturer’s premises or during handling or
storage in the manufacturer’s premises.
Annexure I
Application under Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001
( Original with 3 copies to be submitted through the Range Superintendent)
To,
The Assistant Commissioner or Deputy Commissioner of Central Excise,
Division ……….
Vide S. No………of Notification No…….Central Excise, dated the ……….issued
under Section 5A (1) of the Central Excise Act, 1944 read with the relevant provisions of the
Central Excise Act, 1944 ( 1 of 1944) and the Central Excise Tariff Act, 1985 ( 5 of 1986) and
other laws for the time being in force the goods, namely,……… used for the specified purpose
of ……attract the following excise duty (ies) (specify rates): Basic excise duty /Special excise
duty /Additional duty(ies) /Other Duty(ies).
We undertake to follow the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 as required by the above
notification. The quantity and value of subject goods, we wish to obtain during the financial
year……. for the aforesaid specified purpose is…..(specify quantity and value) and we intend
to procure the subject goods for use in our premises at………..
The estimated duty leviable on the subject goods but for the exemption under the
above notification is rupees……..only (attach calculation sheet) and the estimated total duty
on the subject goods payable at the time of removal under the above notification is rupees
…..only (attach calculation sheet).
We also hereby undertake:
(a to use the subject goods ……… for the purpose of ……. and to
) follow any other condition that the said notification imposes on us;
and
(b to pay on demand, in the event of failure to comply with (a) above,
) an amount equal to the difference between the duty leviable on such
quantity of the subject goods but for the exemption under the
aforesaid notification and that paid at the time of removal.
We have also executed the necessary bond dated…… (enclose the bond executed) for your
acceptance.
Signature and stamp of authorised signatory, with name and address of the premise
Date:
Place:
(Endorsement and counter-signature of the said Assistant Commissioner or Deputy
Commissioner on the application)
It is hereby certified that M/s ….having their premise at…. Have executed the bond as
required by the said rules, for rupees….only, which has been accepted on behalf of the
President of India by the undersigned and entered at S. No. dated ……of Bond Register.
F. No.
Signature of the said Assistant Commissioner or
Deputy Commissioner with date, name, stamp and seal
76
Date: Place:
Annexure II
Monthly Return ( See rule 5)
Name of subject goods
S.No. Descriptio Details Closing Goods
n of balance manufactured
subject
goods Openin Receive Total of Quantity Nature Quantit
g d column consume y
balance s (3) & d for the
(4) intended
purpose
77
Valuation
1.1 Value of the excisable goods has to be necessarily determined when the rate of duty
is on ad-valorem basis. Accordingly, under the Central Excise Act, 1944 the following values
are relevant for assessment of duty. Transaction value is the most commonly adopted
method.
2.1 Section 4 of the Central Excise Act, as substituted by section 94 of the Finance Act,
2000(No.10 of 2000),has come into force from the 1st day of July 2000. This section contains
the provision for determining the Transaction value of the goods for purpose of assessment of
duty.
2.2 For applicability of transaction value in a given case, for assessment purposes,
certain essential requirements should be satisfied. If any one of the said requirement is not
satisfied, then the transaction value shall not be the assessable value and value in such case
has to be arrived at under the valuation rules notified for the purpose. The essential
ingredients of a Transaction value are:
(i) The goods are sold by an assessee for delivery at the time of place of removal.
The term "place of removal" has been defined basically to mean a factory or a
warehouse;
(ii) The assessee and the buyer of the goods are not related; and
(iii The price is the sole consideration for the sale.
)
2.3 The definition of "transaction value" needs to be carefully taken note of as there is
fundamental departure from the erstwhile system of valuation that was essentially based on
the concept of ‘Normal Wholesale Price’, even though sales were effected at varying prices to
different buyers or class of buyers from factory gate or Depots etc. had to be determined.
2.4 The new section 4 essentially seeks to accept different transaction values which may
be charged by the assessee to different customers, for assessment purposes so long as
these are based upon purely commercial consideration where buyer and the seller have no
relationship and price is the sole consideration for sale. Thus, it enables valuation of goods for
excise purposes on value charged as per commercial practices rather than looking for a
notionally determined value.
2.5 Transaction value would include any amount which is paid or payable by the buyer to
or on behalf of the assessee, on account of the factum of sale of goods. In other words, if, for
example, an assessee recovers advertising charges or publicity charges from his buyers,
either at the time of sale of goods or even subsequently, the assessee cannot claim that such
charges are not to be included in the transaction value. The law recognizes such payment to
78
be part of the transaction value that is assessable value for those particular transactions.
Certain other elements which are included in the Transaction value are, as follows:
79
special packing, as per customer’s requirements. Whereas in the context of
erstwhile section 4 certain disputes often arose whether certain packing in relation
to particular goods is secondary or primary and whether its value is to be added
for assessment purposes, under the new section 4, such issues are no longer
relevant. Any charges recovered for packing are obviously charges recovered in
relation to the sale of the goods under assessment and will form part of the
transaction value of the goods. In short, it is immaterial whether packing is
ordinary or special. Whatever amount is charged from the buyer for packing and if
not already included by the assessee in the price payable for the goods will be
included while determining the transaction value of the goods.
2.6 Where the assessee includes all their costs incurred in relation to manufacture and
marketing while fixing price payable for the goods and bills and collects an all inclusive price –
as happens in most cases where sales are to independent customers on commercial
consideration - the transaction price will generally be the assessable value. Nevertheless,
there could be situations where the amount charged by an assessee does not reflect the true
intrinsic value of goods marketed and total value split up into various elements like special
packing charges, warranty charges, service charges etc. These cases would require to be
scrutinised carefully to ensure that duty is paid on correct value. The definition of "transaction
value" makes it clear that all the elements of cost which the assessee incurred till the
sale/marketing as aforesaid, continue to be included in the assessable value even under new
section 4.
2.7 The term "place of removal" has been defined in the same manner as was defined in
the erstwhile section 4 prior to its amendment in 1996. If, therefore, the transaction value is
with reference to delivery at the time and place of removal, such transaction value will be the
assessable value.
3.1 In those cases where any of the three requirements mentioned in para 2 above is
missing, the assessable value shall be determined on the basis of the Central Excise
Valuation (Determination of Price of Excisable Goods) Rules, 2001 notified under Section 4(1)
(b) by notification No. 45/2000-CE (NT), dated 30.6.2000.
3.2 Salient features of the new valuation rules are mentioned below:
(i) If the assessee and the buyer are not related persons and the price is also the
sole consideration for sale but only the delivery of goods is made by the assessee
at a place other than the factory/warehouse, then the assessable value shall be
the "transaction value" without the addition of the cost of transportation from the
factory/warehouse upto the place of delivery. However, exclusion of cost of
transportation is allowed only if the assessee has shown them separately in the
invoice and the exclusion is permissible only for the actual cost so charged from
his buyers. If the assessee has a system of pricing and sale at uniform prices
inclusive of equated freight for delivery at factory gate or elsewhere, no deductions
for freight element will be permissible.
(ii) If the goods are not sold at the factory gate or at the warehouse but they are
transferred by the assessee to his depots or consignment agents or any other
place for sale, the assessable value in such case for the goods cleared from
factory/warehouse shall be the normal transaction value of such goods at the
depot, etc. at or about the same time on which the goods as being valued are
removed from the factory or warehouse. It may be pertinent to take note of the
definition of "normal transaction value" as given in the valuation rules. What it
basically means is the transaction value at which the greatest aggregate quantity
of goods from the depots etc. are sold at or about the time of removal of the goods
being from the factory/warehouse. If, however, the identical goods are not sold by
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the assessee from depot/consignment agent’s place on the date of removal from
the factory/warehouse, the nearest date on which such goods were sold or would
be sold shall be taken into account. In either case if there are series of sales at or
about the same time, the normal transaction value for sale to independent buyers
will have to be determined and taken as basis for valuation of goods at the time of
removal from factory/warehouse. It follows from the Valuation Rules that in such
categories of cases also if the price charges is with reference to delivery at a place
other than the depot, etc. then the actual cost of transportation will not be taken to
be a part of the transaction value and exclusion of such cost allowed on similar
lines as discussed earlier, when sales are effected from factory gate/warehouse.
(iii) As a measure of simplification, it has been decided to value goods which are
captively consumed on cost construction method only as there have been disputes
in adopting values of comparable goods. The assessable value of captively
consumed goods will be taken at 115% of the cost of manufacture of goods even if
identical or comparable goods are manufactured and sold by the same assessee.
The concept of deemed profit for notional purposes has thus been done away with
and a margin of 15% by way of profit etc. is prescribed in the rule itself for ease of
assessment of goods used for captive consumption.
(iv In the case where price is not the sole consideration for the sale, but the other
) requirements of clause (a) of sub-section (1) of section 4 of the Central Excise Act
are satisfied, the value shall be determined in accordance with the provisions of
rule 6 of the valuation rules. This provides for adding, to the transaction value the
money value of any additional consideration flowing directly or indirectly from the
buyer to the assessee. Such additional consideration would include the money
value of goods and services provided free or at reduced cost by or on behalf of the
buyer to the assessee. An Explanation has been added in the new rule only to
remove any doubts with respect to its scope.
(v) Where goods are sold through related persons, the transaction value is not
applicable. The definition of related persons includes "inter-connected
undertakings" as defined in the Monopolies and Restrictive Trade Practices Act,
1969. The definition of inter-connected undertaking in the said Act is
comprehensive and includes two or more under-takings which are inter-connected
with each other in any of a number of ways such as if one owns or controls the
other, or where the undertakings are owned by firm, or if such firms have one or
more common partners, etc. A provision has been made in the Valuation Rules
that even if the assessee and the buyer are ‘inter-connected undertakings’, the
transaction value will be "rejected" only when they are "related" in the following
manner:
(a They are relatives.
)
(b The buyer is a relative and a distributor of the assessee, or sub-distributor of
) such distributor.
(c) They have a direct or indirect interest in the business of each other.
In other cases, they will not be considered related. "Transaction value" could then
form the basis of valuation provided other two conditions, namely, price is for
delivery at the time and place of removal and the price is the sole consideration for
sale are satisfied. If any of the two aforesaid conditions are not satisfied then, quite
obviously, value in such cases will be determined under the relevant rule.
4.1 The practice being followed is to assess the price administered petroleum products
like motor spirit, HSD, SKO (domestic) and LPG to duty on the ex-storage sale prices that are
fixed by the Oil Coordination Committee (OCC) from time to time. The assessable value is the
81
same irrespective of whether the administered petroleum products are sold at the refineries or
through the marketing companies.
5.1 For certain items the Government may fix a tariff value as per provisions of Section
3(3) of the Central Excise Act, 1944. In such cases the assessment of duty shall be on the
basis of the tariff value.
6.1 The value is based on maximum retail sale price in terms of Section 4A of the Central
Excise Act, 1944. This is applicable to notified commodities. The notification issued in this
regard indicates the extent of abatement to be allowed for arriving at the assessable value for
determination of amount of duty.
CHAPTER 18
Miscellaneous Provisions
Part I
Remission of duty and Destruction of goods
1.1 Rule 21 of the Central Excise (No.2) Rules, 2001provides for remission of duty in
certain situations.
1.2 Where it is shown to the satisfaction of the Central Excise Officers specified in Table
below that goods have been lost or destroyed by natural causes or by unavoidable accident
or are claimed by the manufacturer as unfit for consumption or for marketing, at any time
before removal, he may remit the duty payable on such goods as specified in the
corresponding entry in the said Table, subject to such conditions as may be imposed by him
by order in writing. The competence to supervise destruction of excisable goods claimed by
the manufacturer as unfit for consumption or for marketing, at any time before removal has
also been specified in column 4 of the said Table. Destruction shall be carried on only after
the competent officers have passed the order for remission.
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not exceeding
Rs. 20,000
1.3 The proper officer may not demand duty (remit duty) due on any excisable goods,
including ‘tea’, claimed by the manufacturer as unfit for consumption or marketing provided
the goods are destroyed irrecoverably under the supervision of the proper officer, and subject
to the procedure, specified hereinafter.
1.4 The procedure to be followed for destruction of goods and remission of duty thereon
shall be, as follows:
(i) A manufacturer desiring to destroy and seek remission of duty in respect of the excisable
goods manufactured in his factory, in terms of proviso to sub-rule (1) of rule 49 on the
grounds that the said goods have been rendered unfit for consumption or for marketing,
will make an application in duplicate to the Range Officer indicating complete details of the
goods and reasons for destruction, along with the proof that the goods have become unfit
for consumption or for marketing such as report of chemical test or any other test,
conducted by a Government recognised laboratory.
(ii) The application will be quickly processed by the Range Office. In case the Range Officer is
competent to allow destruction and remission (in terms of para 2.2 above) he will proceed
to take necessary action at his level. In case the matter falls within the competency of
superior officer, he will forward the application along with his recommendation to the
Deputy/Assistant Commissioner within 15 days of receipt.
(iii) The Deputy/Assistant Commissioner will scrutinise the application and based upon the
information given by the assessee, if found in order, allow destruction of goods and
remission of duty, if the case relates to his competency. Otherwise, he will forward the
application with his remarks to the superior authority competent to give permission for
destruction and remission (Additional/Joint Commissioner or Commissioner, as the case
may be) within 3 days.
(iv) Where only physical verification is required, the same may be conducted by the remission
granting authority (proper officer), as specified above and upon his satisfaction, destruction
of goods and remission of duty may be allowed.
(v) In case of any doubts, the competent authority may, for reasons to be recorded in writing,
order for drawing of samples and its testing by the Central Revenue Control Laboratory or
the Customs House Laboratories or any other Government recognised laboratories where
the aforementioned laboratories cannot test the samples. The testing of samples will be
done in the manner specified in the Basic Excise Manual as modified by the instructions
issued, if any, by the Board in this regard.
(vi) Ordinarily the views of the assessees that the goods are rendered unfit for consumption or
marketing, should be accepted and necessary permission should be granted within a
period of 21 days or earlier, if possible. Where samples are drawn, such permission should
be granted within 45 days.
(vii) Actual destruction of goods should be supervised by the officers according to the monetary
limits specified in column (4) of the Table in para 2.2 above. The date and time for
destruction should be fixed by mutual convenience of the proper officer and the assessee
and it should be ensure that the same date and time are not fixed for more than one
assessee. It should also be ensured that there is no inordinate delay once permission for
destruction and remission is granted.
(viii In case of frequent requests for destruction of goods by an assessee, necessary enquiries
) into the cause thereof should be conducted before according permission for destruction of
goods.
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(ix) The proper officer personally supervising the destruction will check the quantity by physical
verification i.e. by weight or by counting or using appropriate method in case of liquid, as
the case may be, and the identity of goods by reference to relevant records and the
application for destruction. The clearance of goods, within or outside the factory premises,
shall be done on an invoice, indicating ‘nil’ duty. The order of the proper officer permitting
destruction and remission, should be quoted on the invoice.
(x) As far as possible, destruction should be made inside the factory.
2.1 The goods intended and presented before the proper officer for destruction must be
destroyed in such a manner that they become irretrievable as excisable commodity. The
actual method of destruction will depend upon the nature of the goods to be destroyed. For
example, matches, cotton, rayon and woollen fabrics, paper, cigar and cheroots may be
destroyed by fire. Electric bulb and batteries may be destroyed by crushing into bits and
scraps. Vegetable oils and vegetables products may be destroyed by mixing earth or
kerosene and dumping into pits. Whatever method of destruction is adopted, the officer
supervising the destruction will satisfy himself that the destroyed goods cannot be marketed.
If there is any doubt with regard to the suitability of any particular method for destruction of
any goods, the officer destroying the goods will refer the matter to his superior officer for
orders.
2.2 The officer supervising the destruction must endorse under his signature the relevant
records/ documents such as AR-1, invoices, RG-1, EB-4, RG23A, RG23C or other relevant
factory records indicating the description and quantity of the goods destroyed in his presence
at which time and on which day.
2.3 Immediately after destruction of the goods is completed, the officer supervising
destruction must also send a certificate to his immediate superior, countersigned by the
factory manager and the factory officer in the prescribed form.
2.4 Where excisable goods are manufactured out of inputs goods on which CENVAT
credit was availed, proportionate credit should be reversed before destruction of such goods.
2.5 There will be no limit on the executive powers of the Commissioners to order
remission of duty in such cases. However, it has been decided that as a measure of
administrative control and information, where the duty amount exceeds Rs.5 lakhs in a case,
the Commissioners will send a report to the Board giving sufficient details of such cases.
2.6 No remission of duty in case of theft should be allowed, since the goods are available
for consumption somewhere.
PART II
1.1 Wherever an assessee or exporter is required services of Central Excise Officers for
supervision in accordance of any procedure specified in this regard by rules or instructions
beyond office hours or on Sundays, Saturday or public holidays and where there is no specific
posting of Officers in shifts by any Office order, he shall be required to pay Merchant
Overtime at the rates specified under the Customs Act, 1961 under Customs (Fees for
Rendering Services by Customs Officers) Regulation, 1998.
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1.2 If a manufacturer or exporter requisitions services of Central Excise Officers for
supervision and examination of export cargo and stuffing in containers at his premises, such
Officers also discharge functions of a "Customs Officers".
In one of their report, C & AG observed that the scope of certain terms like working
hours, rendering services, Customs Officer is not defined in the overtime regulations which
causes divergence in proactive in recovery of merchant overtime in various field formations.
2. The matter was discussed in meeting of SCOPE SHIPPING and was observed that there
is need to review the existing regulations for levy of overtime rates to be recovered for
providing services of Customs Officers after or before normal working hours.
3. Consequent upon the implementation of recommendations of the 5th Central Pay
Commission, the rates for recovery of overtime are required to revised accordingly.
4. In view of above the regulations were reviewed and the new Customs (Fees for
Rendering Services by Customs Officers) Regulation 1998 were issued, the same shall come
into force on 15.10.1998. The new regulations supercede the earlier Customs (Fees for
Rendering Services by Customs Officers) Regulation, 1968 and all the other instructions
issued on the subject from time to time.
5. The new regulations define the scope of various terms as follows :-
(a) "Customs Officer" includes such officers as are appointed under section 4 of the
Customs Act, 1962 (52 of 1962);
(b) "Customs Work" means functions to be performed by Customs officers under the
Customs Act, 1962 (52 of 1962) or any other law for the time being in force;
(i) performances of Customs Work by the Customs officers beyond the working hours but
within the Customs area; and
(ii) performance of Customs Work by the Customs officer beyond the Customs area at any
time, and includes :-
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(B) loading and unloading of the goods whether generally of specifically,
(C) escorting goods from one Customs area to the other, and
(d) "Working hours" means the duty house prescribed by the Commissioner of Customs in
his jurisdiction for normal customs work and where different working hours have been
prescribed by the said Commissioner for different items Customs work or for different places
within his jurisdiction, such working hours.
7. Any importer / exporter or their agent or any other person authorised to deal with the
import / export of any consignment may request for services of Customs officer on over time
basis. He is required to make a request in writing to the proper officer of Customs in advance.
8. The fees are to be paid by the person requesting for rendering of services or on whose
account such services has been requested.
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9. The levy of fees as aforesaid should be for a minimum of 3 hours in each case, except in
cases of overtime postings immediately preceding or immediately following the working hours
of the concerned cadre of officers.
10. The period between midnight and 6 A.M. is to treated as block whether the services are
required for the entire block or for a portion thereof.
11. In relation to jobs to be performed by any customs officer during the working hours,
there would be two blocks; one before lunch and the other after lunch respectively and fees
should be charged for the entire block whether the request for the services of such officer
relates to the entire block or a portion thereof.
12. The new rate shall come into force from 15th October, 1998. The new rates may kindly
be brought to the notice of trade an departmental offices by way of issuing public notice and
standing orders immediately.
1.1 Rule 16 of the said Rules provides for return of any goods, on which duty has been
paid at the time of removal, to the factory for being re-made, refined, re-conditioned or for any
other reason. In such cases, the assessee shall state the particulars of such return in his
records and shall be entitled to have CENVAT credit of the duty paid as if such goods are
received as inputs under the CENVAT Credit Rules, 2001 and utilise this credit according to
the said rules. As per this rule the goods should return to the same factory in which they were
produced.
1.2 If the goods so returned are subjected to certain process which do not amount to
manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken.
1.3 In any other case [where the returned goods are subjected to process(es) amounting
to manufacture] the manufacturer shall pay duty at the rate applicable on the date of removal
and on the value determined under Section 4 or Section 4A of the Act, as the case may be.
1.4 In the event the assessee has any difficulty, the Commissioner is empowered to
resolve the same and permit the entry of the goods into the factory and the availment of
CENVAT credit thereon. For this the Commissioner, either on case to case basis by special
order or to be applied to "particular type of case" by general order, impose such conditions as
may be necessary for safeguarding interest of revenue.
PART IV
1.1 Rule 16 of the said Rules provides for return of any goods, on which duty has been
paid at the time of removal, to the factory for being re-made, refined, re-conditioned or for any
other reason. In such cases, the assessee shall state the particulars of such return in his
records and shall be entitled to have CENVAT credit of the duty paid as if such goods are
received as inputs under the CENVAT Credit Rules, 2001 and utilise this credit according to
the said rules. As per this rule the goods should return to the same factory in which they were
produced.
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1.2 If the goods so returned are subjected to certain process which do not amount to
manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken.
1.3 In any other case [where the returned goods are subjected to process(es) amounting
to manufacture] the manufacturer shall pay duty at the rate applicable on the date of removal
and on the value determined under Section 4 or Section 4A of the Act, as the case may be.
1.4 In the event the assessee has any difficulty, the Commissioner is empowered to
resolve the same and permit the entry of the goods into the factory and the availment of
CENVAT credit thereon. For this the Commissioner, either on case to case basis by special
order or to be applied to "particular type of case" by general order, impose such conditions as
may be necessary for safeguarding interest of revenue.
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GENERAL EXEMPTIONS - CENTRAL EXCISE TARIFF
I Value Based Exemption Notifications for Small Scale Sector.
1. Exemption to first clearances of specified goods upto a value of
Rs. 1 Crore, if CENVAT facility not availed and exemption to goods
captively consumed- Notification No. 8/03-CE dated 1.3.2003.
Ref: For exemption to goods specified under Notification Nos.
8/03-CE dated 1.3.2003 when manufactured on job work basis -
please see G.E. No.23.
89
international trade fair or exhibition or sent abroad for
demonstration or carrying out tests or trials -Notification No.
263/79-CE dated 22.12.1979.
11 Omitted.
III Exemption Notifications relating to Goods manufactured in
specified areas
A North-Eastern States:
12 Exemption to specified goods manufactured by Units located in
specified areas of North Eastern States equal to duty of excise and
additional duty of excise paid in cash -Notification No. 32/99 dated
8.7.1999.
13 Exemption to specified goods manufactured and cleared by Units
located in North Eastern States equal to duty of excise and
additional duty of excise paid in cash -Notification No. 33/99-CE
dated 8.7.1999.
Ref : For effective rates of National Calamity Contingent duty on
Pan masala produced in North Eastern States - please see Notfn.
No. 27/01-CE dt. 11.5.2001 below Chapter 21.
14 Exemption to goods falling under sub headings 2401.90, 2402.00,
2404.41, 2404.49, 2404.50 and 2404.99 from all the duties of
excise cleared by the Units in North Eastern States, if the duty
saved is utilised for investments in North Eastern States -
Notification No. 8/04-Ce dated 21.1.2004.
15 Effective rates of all types of excise duties on goods cleared by
four specified Refineries of Assam - Notification No. 29/02-CE
dated 13.5.2002.
B Jammu & Kashmir:
16 Exemption to all goods (except cigarettes, cigars, manufactured
tobacco and substitutes thereof, soft drinks and their concentrate)
cleared from a unit located in the State of Jammu & Kashmir equal
to duty of excise and additional duty of excise paid in cash -
Notification No. 57/02 dated 14.11.2002.
17 Exemption to specified goods manufactured by Units located in
specified areas of Jammu & Kashmir equal to duty of excise and
additional duty of excise paid in cash - Notification No. 56/02-CE
dated 14.11.2002
C State of Sikkim:
18 Exemption to all goods (except as in Annexure I) manufactured
and cleared from units located in specified areas in the State of
Sikkim equal to duty of excise and additional duty of excise paid in
cash - Notification No. 71/03-CE dated 9.9.2003.
19 Exemption to all goods (except as per Annexure) cleared from
units located in State of Sikkim equal to duty of excise and
additional duty of excise paid in cash - Notification No. 56/03-CE
dated 25.6.2003.
D State of Uttranchal & Himachal Pradesh:
20 Exemption to the all goods (except as per Annexure I)
90
manufactured by units located in specified areas in State of
Uttranchal & Himachal Pradesh - Notification No. 50/03-CE dated
10.6.2003.
21 Exemption to certain specified goods cleared from units located in
the State of Uttranchal or State of Himachal Pradesh from the
whole of the duty of Excise and Additional duty of Excise -Notfn.
No. 49/03-CE dated 10.6.2003
E Kutch (Gujrat):
22 Exemption to all the goods (except as per Annexure I)
manufactured by units located in Kutch district of Gujrat equal to
duty of excise and additional duty of excise paid in cash -
Notification 39/01-CE dated 31.7.2001.
IV Job work Notifications:
23 Exemption to all the goods (except LDO, HSD and Petrol) used in
the manufacture of final products (other than matches) on job
work basis -Notification No. 214/86-CE dated 25.3.1986.
24 Exemption to goods specified under Notification Nos. 8/03-CE and
9/03-CE both dated 1.3.2003 and specified exempted goods of
Chapter 84 when manufactured on job work basis - Notification
No. 83/94-CE dated 11.4.1994.
25 Exemption to goods specified under Notification Nos. 8/03-CE and
9/03-CE both dated 1.3.2003 and specified exempted goods of
Chapter 84 when cleared by a manufacturer outside the factory
for getting the job work done -Notification No. 84/94-CE dated
11.4.1994
V Exemption to goods Captively consumed
26 Exemption to goods manufactured in a factory on job work basis
for use in specified undertakings who supply final goods to the
Ministry of Defence - Notification No. 70/92-CE dated 17.6.1992.)
27 Exemption to goods manufactured in a factory and captively
consumed for the manufacture of final products, subject to
conditions of specified notifications - Notification No. 83/92-CE
dated 16.9.1992.
28 Exemption to capital goods and all goods (other than LDO, HSD
and petrol) captively consumed for manufacture of final products
(other than matches) - Notification No. 67/95-CE dated
16.3.1995.
29 Exemption to all the excisable goods captively consumed for the
manufacture of specified excisable goods - Notification No. 10/96-
CE dated 23.7.1996.
30 Exemption to goods manufactured in a workshop and used within
the factory for repairs and maintenance of machinery installed
therein - Notification No. 65/95-CE dated 16.3.1995.
Ref: For exemption to goods of sub-heading No. 2106.00 and
Chapter 24 and captively consumed for the manufacture of final
goods of Chapter 24 please see Notfn. No. 52/02-CE., dt.
17.10.2002 under Chapter 24.
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30A Exemption from additional duty of excise leviable under
Section 85 of the Finance Act, 2005 in respect of goods,
captively consumed - Notifn. No.12/05 CE., dt. 13.5.2005.
VI Exemption to goods manufactured in Govt. Factories and
supplied to Defence.
31 Exemption to goods supplied for Defence and other specified
purposes -Notification No. 64/95-CE dated 16.3.1995.
32 Exemption to goods manufactured in prison, specified units of
Defence Ministry, shipyard, specified tool rooms/institutions and
Bharat Dynamics Ltd. and supplied for specified purposes -
Notification No. 63/95-CE dated 16.3.1995.
33 Exemption to goods manufactured in Ordnance Factories, Mints
and factories belonging to Central Govt. and supplied for specified
purposes - Notification No. 62/95-CE dated 16.3.1995.
34 Exemption to all the goods and materials manufactured by M/s.
Nuclear Fuel Complex, Hyderabad - Notification No. 130/94-CE
dated 21.9.1994.
35 Exemption to specified goods manufactured in factories belonging
to State Govt. and intended for use in any of its department -
Notification No. 74/93-CE dated 28.2.1993.
VII Exemption to Technical, Educational and Research
Institutes.
36 Exemption to goods produced in a Technical, Educational or
Research Institute during the course of training, experiment or
research - Notification No. 167/71-CE dated 11.9.1971.
37 Exemption to specified goods supplied to a Public Funded
Research Institution, University, IIT, IISC, REC or a non-
commercial Institution other than hospital - Notification No.
10/97-CE dated 1.3.1997.
38 Exemption for 3 years to patented goods manufactured by an
Indian owned company, National Lab, Public Funded Research
Institution or University - Notification No. 13/99-CE dated
28.2.1999.
VIII Exemption to goods produced without aid of power and for
units in rural areas.
39 Omitted.
40 Exemption of specified goods produced in a Village Industry and
marketed by KVIC - Notification No. 198/87-CE dated 28.8.1987.
41 Exemption to specified goods manufactured in a rural area by
specified manufacturers - Notification No. 88/88-CE dated
1.3.1988.
IX Exemption to certain goods and industries.
42 Exemption to handicrafts, scented chunnam, katha, vibhuti,
contraceptives,enamelware, laminated jute bags, pyrites, fly ash,
coke oven and blast furnace gas, sludge, leather board, animal
drawn vehicles, erasers and spent fuller’s earth - Notification No.
92
76/86-CE dated 10.2.1986.
43 Omitted.
44 Exemption to all items of machinery and their components/parts
and pipes required for setting up of water supply plants -
Notification No. 3/04-CE dated 8.1.2004.
44A. Exemption to all items of machinery and their components/parts
required for setting up of a project for the generation of power
using non-conventional materials - Notifn. No.33/05-CE., dt.
8.10.2005.
45 Exemption to improved chulhas (including smokeless chulhas)
made of metal or pottery - Notification No. 62/91-CE dated
25.7.1991.
46 Omitted.
47 Exemption to strips of plastics, parts and components of one day
alarm time pieces, flavouring essences, plaster of paris moulds
and refractory containers used as inputs in the manufacture of
specified final products -Notification No. 221/86-CE dated
2.4.1986.
48 Exemption to all the goods supplied to UN or an International
Organisation for their official use or for supply to G.O.I. approved
projects financed by them - Notification No. 108/95-CE dated
28.8.1995.
49 Exemption to capital goods, components and raw materials
cleared for repair of goods falling under heading Nos. 89.01,
89.02, 89.04, 89.05 (ex-cluding floating or submersible drilling or
production platforms) and 89.06 - Notification No. 82/84-CE dated
31.3.1984.
50 Exemption to waste and parings arising during manufacture of
exempted goods-Notification No. 89/95-CE dated 18.5.1995.
51 Omitted.
52 Exemption to all the goods falling within the Schedule to the
Additional Duties of Excise (Textile and Textile Articles) Act -
Notfn. No. 31/04-CE dt. 9.7.2004.
X Notifications prescribing effective rates of duty on the
goods of various chapters.
53 Effective rates of additional duty (in lieu of Sales Tax) on specified
goods of Chapter 24 and specified textiles - Notification No. 9/96-
CE dated 23.7.1996.
54 Effective rates of duties on specified goods of various Chapters -
Notification No. 10/06-CE dated 1.3.2006.
55 Omitted.
56 Omitted.
57 Effective rates of duty on textile articles falling under Chapters 50
to 63 -Notification No. 30/04-CE dated 9.7.2004.
58 Omitted.
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59 Effective rates of duty on textile articles falling under Chapter 50
to 63 Notfn. No. 29/04-CE dt. 9.7.2004.
60 Omitted.
61 Exemption and effective rate of duty on specified goods -
Notification No.3/05 - CE dated 24.2.2005.
62 Omitted.
63 Exemption and effective rate of duty on specified goods -
Notification No.20/05-CE., dt.13.5.2005.
64 Exemption to specified goods falling under various chapters -
Notification No. 21/05-CE., dt.13.5.2005.
65 Exemption to specified goods falling under various chapters -
Notification No.3/06-C.E., dt.1.3.2006.
66 Exemption to specified goods falling under various chapters -
Notification No.4/06-C.E., dt.1.3.2006.
67 Exemption to specified goods falling under various chapters -
Notification No.5/06-C.E., dt.1.3.2006.
68 Exemption to specified goods falling under various chapters -
Notification No.6/06-C.E., dt.1.3.2006.
XI Exemption to certain goods for rehabilitation work.
69 Exemption to certain goods for rehabilitation work in tsunami
affected districts - Notification No.32/05-CE., dt.17.8.2005.
(i) Year-wise Index to Notification in force as on 1.3.2006
(ii) List of notifications rescinded/superseded/validity expired during
the period from 10.7.2004 to 1.3.2006
94
CENTRAL BOARD OF EXCISE AND
CUSTOMS
The Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture
of Excisable Goods) Rules, 2001
1. Short title, extent and commencement.- (1) These rules may be called the Central
Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of
Excisable Goods) Rules, 2001.
(2) They extend to the whole of india.
(3) They shall come into force on and from the 1st day of July, 2001.
2. Application.- These rules shall apply to a manufacturer who intends to avail of the
benefit of a notification issued under sub-section (1) of section 5A of the Central
Excise Act, 1944 ( 1 of 1944 ) ( hereinafter referred to as the Act) granting exemption
of duty to excisable goods ( hereinafter referred to as subject goods) when used for
the purpose specified in that notification.
3. Application by the manufacturer to obtain the benefit.- (1) A manufacturer who
intends to receive subject goods for specified use at concessional rate of duty, shall
make an application in quadriplicate in the Form at Annexure I to the jurisdictional
Assistant Commissioner of Central Excise or the Deputy Commissioner of Central
Excise, as the case may be ( hereinafter referred to as the said Assistant
Commissioner or Deputy Commissioner ).
(2) The manufacturer shall make separate application in respect of each supplier of subject
goods.
(3)The manufacturer shall execute a general bond with surety or security.
(4) The bond shall be for such amount as considered appropriate by the said Assistant
Commissioner or Deputy Commissioner, to cover the recovery of duty liability estimated to be
involved at any given point of time.
(5) The application shall be countersigned by the said Assistant Commissioner or Deputy
Commissioner who shall certify therein that the said person has executed a bond to his
satisfaction in respect of end use of the subject goods and indicate the particulars of such
bond.
(6) Of the four copies of the application referred to in sub-rule (5), one copy shall be
forwarded to the jurisdictional range Superintendent of the manufacturer of the subject goods,
two copies shall be handed over to the manufacturer and one copy shall be retained, by the
said Assistant Commissioner or Deputy Commissioner.
(7) One copy of the application referred to in sub-rule (6) received by the manufacturer, shall
be forwarded by the said manufacturer to the manufacturer of subject goods.
4. Procedure to be followed by the manufacturer of subject goods. – (1) On the
basis of the application referred to in sub-rule (7) of rule 3, the manufacturer of
subject goods shall avail the benefit of the exemption notification.
(2) The manufacturer of the subject goods shall record on the application the removal details,
such as No. and date of invoice, description, quantity and value of subject goods and amount
of excise duty paid at concessional rate.
5. Manufacturer to give information regarding receipt of the subject goods and
maintain records.- The manufacturer, receiving subject goods, shall maintain a
simple account indicating the quantity and value of subject goods, the quantity of
subject goods consumed for the intended purpose, and the quantity remaining in
stock, invoice wise and shall submit a monthly return in Return at Annexure II to the
said Assistant Commissioner or Deputy Commissioner by the tenth day of the
following month.
6. Recovery of duty in certain cases.- Where the subject goods are not used by the
manufacturer for the intended purpose, the manufacturer shall be liable to pay the
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amount equal to the difference between the duty leviable on such goods but for the
exemption and that already paid, if any, at the time of removal from the factory of the
manufacturer of the subject goods, alongwith interest and the provisions of section
11A and section 11AB of the Central Excise Act, 1944 (1 of 1944) shall apply mutatis
mutandis for effecting such recoveries.
Explanation.- For the removal of doubts, it is hereby clarified that subject goods shall be
deemed not to have been used for the intended purpose even if any of the quantity of the
subject goods is lost or destroyed by natural causes or by unavoidable accidents during
transport from the place of procurement to the manufacturer’s premises or during handling or
storage in the manufacturer’s premises.
Annexure I
Application under Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001
( Original with 3 copies to be submitted through the Range Superintendent)
To,
The Assistant Commissioner or Deputy Commissioner of Central Excise,
Division ……….
Vide S. No………of Notification No…….Central Excise, dated the ……….issued
under Section 5A (1) of the Central Excise Act, 1944 read with the relevant provisions of the
Central Excise Act, 1944 ( 1 of 1944) and the Central Excise Tariff Act, 1985 ( 5 of 1986) and
other laws for the time being in force the goods, namely,……… used for the specified purpose
of ……attract the following excise duty (ies) (specify rates): Basic excise duty /Special excise
duty /Additional duty(ies) /Other Duty(ies).
We undertake to follow the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 as required by the above
notification. The quantity and value of subject goods, we wish to obtain during the financial
year……. for the aforesaid specified purpose is…..(specify quantity and value) and we intend
to procure the subject goods for use in our premises at………..
The estimated duty leviable on the subject goods but for the exemption under the
above notification is rupees……..only (attach calculation sheet) and the estimated total duty
on the subject goods payable at the time of removal under the above notification is rupees
…..only (attach calculation sheet).
We also hereby undertake:
(a to use the subject goods ……… for the purpose of ……. and to
) follow any other condition that the said notification imposes on us;
and
(b to pay on demand, in the event of failure to comply with (a) above,
) an amount equal to the difference between the duty leviable on such
quantity of the subject goods but for the exemption under the
aforesaid notification and that paid at the time of removal.
We have also executed the necessary bond dated…… (enclose the bond executed) for your
acceptance.
Signature and stamp of authorised signatory, with name and address of the premise
Date:
Place:
(Endorsement and counter-signature of the said Assistant Commissioner or Deputy
Commissioner on the application)
96
It is hereby certified that M/s ….having their premise at…. Have executed the bond as
required by the said rules, for rupees….only, which has been accepted on behalf of the
President of India by the undersigned and entered at S. No. dated ……of Bond Register.
F. No.
Signature of the said Assistant Commissioner or
Deputy Commissioner with date, name, stamp and seal
Date:
Place:
Annexure II
Monthly Return ( See rule 5)
Name of subject goods
S.No. Descriptio Details Closing Goods
n of balance manufactured
subject
goods Openin Receive Total of Quantity Nature Quantit
g d column consume y
balance s (3) & d for the
(4) intended
purpose
I/We declare that I/we have compared the above particulars with the records (and)
/books of my/our factory and that they are, insofar as I/we can ascertain complete.
Verified
97
CE NV AT Cre di t Rul es , 20 04
Notification No. 23/2004 - Central Excise (N.T.), dated 10/09/2004 - In exercise of the powers
conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the
Finance Act, 1994 (32 of 1994) and in supersession of the CENVAT Credit Rules, 2002 and
the Service Tax Credit Rules, 2002, except as respects things done or omitted to be done
before such supersession, the Central Government hereby makes the following rules,
namely:-
1. (1) These rules may be called the CENVAT Credit (Fifth Amendment) Rules, 2006.
(2) They shall come into force on the 1st day of May, 2006.
(Above rule 1 has been amended vide Notification No. 10/2006 - Central Excise (N.T.), dated
25/04/2006)
(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.02
and sub-heading No. 6801.10 of the First Schedule to the Excise Tariff Act;
(iii) components, spares and accessories of the goods specified at (i) and (ii);
used-
(1) in the factory of the manufacturer of the final products, but does not include any equipment
or appliance used in an office; or
(B) motor vehicle registered in the name of provider of output service for providing taxable
service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of
section 65 of the Finance Act;
(b) "Customs Tariff Act" means the Customs Tariff Act, 1975 (51 of 1975);
(c) "Excise Act" means the Central Excise Act, 1944 (1 of 1944);
(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of
excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty;
(e) "exempted services" means taxable services which are exempt from the whole of the
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service tax leviable thereon, and includes services on which no service tax is leviable under
section 66 of the Finance Act;
(f) "Excise Tariff Act" means the Central Excise Tariff Act, 1985 (5 of 1986);
(g) "Finance Act" means the Finance Act, 1994 (32 of 1994);
(h) "final products" means excisable goods manufactured or produced from input, or using
input service;
(ij) "first stage dealer" means a dealer, who purchases the goods directly from,-
(i) the manufacturer under the cover of an invoice issued in terms of the provisions of Central
Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the
consignment agent of the said manufacturer or from any other premises from where the
goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or
(ii) an importer or from the depot of an importer or from the premises of the consignment
agent of the importer, under cover of an invoice;
(i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as
petrol, used in or in relation to the manufacture of final products whether directly or indirectly
and whether contained in the final product or not and includes lubricating oils, greases, cutting
oils, coolants, accessories of the final products cleared along with the final product, goods
used as paint, or as packing material, or as fuel, or for generation of electricity or steam used
in or in relation to manufacture of final products or for any other purpose, within the factory of
production;
(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as
petrol and motor vehicles, used for providing any output service;
Explanation 1.- The light diesel oil, high speed diesel oil or motor spirit, commonly known as
petrol, shall not be treated as an input for any purpose whatsoever.
Explanation 2.- Input include goods used in the manufacture of capital goods which are
further used in the factory of the manufacturer;
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture
of final products and clearance of final products from the place of removal,
and includes services used in relation to setting up, modernization, renovation or repairs of a
factory, premises of provider of output service or an office relating to such factory or
premises, advertisement or sales promotion, market research, storage upto the place of
removal, procurement of inputs, activities relating to business, such as accounting, auditing,
financing, recruitment and quality control, coaching and training, computer networking, credit
rating, share registry, and security, inward transportation of inputs or capital goods and
outward transportation upto the place of removal;
(m) "input service distributor" means an office of the manufacturer or producer of final
products or provider of output service, which receives invoices issued under rule 4A of the
Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as
the case may be, challan for the purposes of distributing the credit of service tax paid on the
said services to such manufacturer or producer or provider, as the case may be;
99
(n) "job work" means processing or working upon of raw material or semi-finished goods
supplied to the job worker, so as to complete a part or whole of the process resulting in the
manufacture or finishing of an article or any operation which is essential for aforesaid process
and the _expression "job worker" shall be construed accordingly;
(na) “manufacturer” or “producer” in relation to articles of jewellery falling under heading 7113
of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of
excise leviable on such goods under sub-rule (1) of rule 12AA of the Central Excise Rules,
2002;
(Clause (na) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated
01/03/2005)
(p) "output service" means any taxable service provided by the provider of taxable service, to
a customer, client, subscriber, policy holder or any other person, as the case may be, and the
expressions ‘provider’ and ‘provided’ shall be construed accordingly;
[ OMITTED-
Explanation.- For the removal of doubts it is hereby clarified that if a person liable for paying
service tax does not provide any taxable service or does not manufacture final products, the
service for which he is liable to pay service tax shall be deemed to be the output service. ]
(Above explanation has been omitted vide Notification No. 08/2006 - Central Excise (N.T.),
dated 19/04/2006)
(q) "person liable for paying service tax" has the meaning as assigned to it in clause (d) of
sub-rule (1) of rule 2 of the Service Tax Rules, 1994;
(r) "provider of taxable service" include a person liable for paying service tax;
(s) "second stage dealer" means a dealer who purchases the goods from a first stage dealer;
(t) words and expressions used in these rules and not defined but defined in the Excise Act or
the Finance Act shall have the meanings respectively assigned to them in those Acts.
3. CENVAT credit. -
(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the
Excise Act;
(ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under
the Excise Act;
(iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise
(Textile and Textile Articles) Act,1978 ( 40 of 1978);
(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise
(Goods of Special Importance) Act, 1957 ( 58 of 1957);
(v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001
(14 of 2001);
(vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of
the Finance (No.2) Act, 2004 (23 of 2004);
100
(vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the
duty of excise specified under clauses (i), (ii), (iii), (iv), (v) and (vi);
(viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act,
[OMITTED- as substituted by clause 72 of the Finance Bill, 2005, the clause which has, by
virtue of the declaration made in the said Finance Bill under the Provisional Collection of
Taxes Act, 1931 (16 of 1931), the force of law ]:
(In clause (viia), portion beginning with the words and figures "as substituted by clause 72"
and ending with the words "the force of law" has been omitted vide Notification No. 22/2005 -
Central Excise (N.T.), dated 13/05/2005)
Provided that a provider of taxable service shall not be eligible to take credit of such additional
duty;
(Clause (viia) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated
01/03/2005)
(viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of
2003);
(ix) the service tax leviable under section 66 of the Finance Act; and
(x) the Education Cess on taxable services leviable under section 91 read with section 95 of
the Finance (No.2) Act, 2004 (23 of 2004),
(xi) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 )
(In clause (xi), the words and figures "section 85 of Finance Act, 2005 (18 of 2005 )" has been
substituted vide Notification No. 22/2005 -Central Excise (N.T.), dated 13/05/2005)
(Clause (xi) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated
01/03/2005)
paid on-
(i) any input or capital goods received in the factory of manufacture of final product or
premises of the provider of output service on or after the 10th day of September, 2004; and
(ii) any input service received by the manufacturer of final product or by the provider of output
services on or after the 10th day of September, 2004,
including the said duties, or tax, or cess paid on any input or input service, as the case may
be, used in the manufacture of intermediate products, by a job-worker availing the benefit of
exemption specified in the notification of the Government of India in the Ministry of Finance
(Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published
in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received
by the manufacturer for use in, or in relation to, the manufacture of final product, on or after
the 10th day of September, 2004.
Explanation.- For the removal of doubts it is clarified that the manufacturer of the final
products and the provider of output service shall be allowed CENVAT credit of additional duty
leviable under section 3 of the Customs Tariff Act on goods falling under heading 9801 of the
First Schedule to the Customs Tariff Act.
(2) Notwithstanding anything contained in sub-rule (1), the manufacturer or producer of final
products shall be allowed to take CENVAT credit of the duty paid on inputs lying in stock or in
process or inputs contained in the final products lying in stock on the date on which any
goods manufactured by the said manufacturer or producer cease to be exempted goods or
any goods become excisable.
101
(3) Notwithstanding anything contained in sub-rule (1), in relation to a service which ceases to
be an exempted service, the provider of the output service shall be allowed to take CENVAT
credit of the duty paid on the inputs received on and after the 10th day of September, 2004
and lying in stock on the date on which any service ceases to be an exempted service and
used for providing such service.
(b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or
after being partially processed; or
(c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are
removed as such; or
(d) an amount under sub rule (2) of rule 16 of Central Excise Rules, 2002; or
Provided that while paying duty of excise or service tax, as the case may be, the CENVAT
credit shall be utilized only to the extent such credit is available on the last day of the month
or quarter, as the case may be, for payment of duty or tax relating to that month or the
quarter, as the case may be:
Provided further that the CENVAT credit of the duty, or service tax, paid on the inputs, or
input services, used in the manufacture of final products cleared after availing of the
exemption under the following notifications of Government of India in the Ministry of Finance
(Department of Revenue),-
Provided also that no credit of the additional duty leviable under sub-section (5) of section 3 of
the Customs Tariff Act, [OMITTED-as amended by clause 72 of the Finance Bill, 2005, the
clause which has, by virtue of the declaration made in the said Finance Bill under the
Provisional Collection of Taxes Act, 1931, the force of law], shall be utilised for payment of
service tax on any output service:
(Portion beginning with the words and figures "as substituted by clause 72" and ending with
the words "the force of law," has been omitted vide Notification No. 22/2005 -Central Excise
(N.T.), dated 13/05/2005)
Provided also that the CENVAT credit of any duty mentioned in sub-rule (1), other than credit
of additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ), shall
not be utilised for payment of said additional duty of excise on final products:
(The words, figures and brackets "section 85 of Finance Act, 2005 (18 of 2005 )" has been
substituted vide Notification No. 22/2005 -Central Excise (N.T.), dated 13/05/2005)
(Above 3rd & 4th provisos has been inserted vide Notification No. 13/2005 - Central Excise
(N.T.), dated 01/03/2005)
(i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated 8th July, 1999];
(ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated 8th July, 1999];
(iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565 (E), dated the 31st
July, 2001];
(iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the
14th November, 2002];
102
(v) No. 57/2002-Central Excise, dated 14th November, 2002 [G.S.R.. 765(E), dated the 14th
November, 2002];
(vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th
June, 2003]; and
(vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717 (E), dated the
9th September, 2003],
shall, respectively, be utilized only for payment of duty on final products, in respect of which
exemption under the said respective notifications is availed of.
(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as
such from the factory, or premises of the provider of output service, the manufacturer of the
final products or provider of output service, as the case may be, shall pay an amount equal to
the credit availed in respect of such inputs or capital goods and such removal shall be made
under the cover of an invoice referred to in rule 9:
Provided that such payment shall not be required to be made where any inputs are removed
outside the premises of the provider of output service for providing the output service:
Provided further that such payment shall not be required to be made when any capital goods
are removed outside the premises of the provider of output service for providing the output
service and the capital goods are brought back to the premises within 180 days, or such
extended period not exceeding 180 days as may be permitted by the jurisdictional Deputy
Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case
may be, of their removal.
(5A) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an
amount equal to the duty leviable on transaction value.
(Above sub-rule (5A) has been inserted vide Notification No.27/2005 - C.E.(N.T.), dated
16/05/2005)
(6) The amount paid under sub-rule (5) and sub-rule (5A) shall be eligible as CENVAT credit
as if it was a duty paid by the person who removed such goods under sub-rule (5) and sub-
rule (5A).
(In sub-rule (6), words, brackets and figure, "sub-rule (5) and sub-rule (5A)" has been
substituted vide Notification No. 27/2005-CE(N.T.), dated 16/05/2005)
Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and
CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of
customs leviable on the inputs or the capital goods respectively and X denotes the
assessable value.
Provided that the CENVAT credit in respect of inputs and capital goods cleared on or after 1st
103
March, 2006 from an export oriented undertaking or by a unit in Electronic Hardware
Technology Park or in a Software Technology Park, as the case may be, on which such unit
pays excise duty under section 3 of the Excise Act read with serial number 2 of the
notification no. 23/2003-Central Excise dated 31st March, 2003 [G.S.R. 266(E), dated the
31st March, 2003] shall be equal to X multiplied by {(1+BCD/400) multiplied by (CVD/100)}.
(Above proviso has been inserted vide Notification No. 06/2006-CE(N.T.), dated 20/03/2006)
(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise
(Textiles and Textile Articles) Act, 1978 (40 of 1978);
(ii) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001
(14 of 2001);
(iii) the education cess on excisable goods leviable under section 91 read with section 93 of
the Finance (No.2) Act, 2004 (23 of 2004);
(iv) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the
duty of excise specified under items (i), (ii) and (iii) above;
(v) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of
2003);
(vi) the education cess on taxable services leviable under section 91 read with section 95 of
the Finance (No.2) Act, 2004 (23 of 2004); and
(vii) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ),
shall be utilized only towards payment of duty of excise or as the case may be, of service tax
leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or
the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14
of 2001), or the education cess on excisable goods leviable under section 91 read with
section 93 of the Finance (No.2) Act, 2004, additional duty of excise leviable under section
157 of the Finance Act, 2003, or the education cess on taxable services leviable under
section 91 read with section 95 of the said Finance (No.2) Act, 2004, or the additional duty of
excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ), respectively, on any final
products manufactured by the manufacturer or for payment of such duty on inputs
themselves, if such inputs are removed as such or after being partially processed or on any
output service:
(In clause (b) the words, figures and bracke "section 85 of Finance Act, 2005 (18 of 2005 )"
has been substituted vide Notification No. 22/2005-CE(N.T.), dated 13/05/2005)
Provided that the credit of the education cess on excisable goods and education cess on
taxable services can be utilised, either for payment of the education cess on excisable goods
or for the payment of the education cess on taxable services.
Explanation.- For the removal of doubts, it is hereby declared that the credit of the additional
duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special
Importance) Act, 1957 (58 of 1957) paid on or after the 1st day of April, 2000, may be utilised
towards payment of duty of excise leviable under the First Schedule or the Second Schedule
to the Excise Tariff Act;
(Above Clause (b) has been substituted vide Notification No. 13/2005-CE(N.T.), dated
01/03/2005)
(c) the CENVAT credit, in respect of additional duty leviable under section 3 of the Customs
Tariff Act, paid on marble slabs or tiles falling under sub-heading No. 2504.21 or 2504.31
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respectively of the First Schedule to the Excise Tariff Act shall be allowed to the extent of
thirty rupees per square meter;
Explanation.- Where the provisions of any other rule or notification provide for grant of whole
or part exemption on condition of non-availability of credit of duty paid on any input or capital
goods, or of service tax paid on input service, the provisions of such other rule or notification
shall prevail over the provisions of these rules.
(1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs
in the factory of the manufacturer or in the premises of the provider of output service:
Provided that in respect of final products, namely, articles of jewellery falling under heading
7113 of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs
may be taken immediately on receipt of such inputs in the registered premises of the person
who get such final products manufactured on his behalf, on job work basis, subject to the
condition that the inputs are used in the manufacture of such final product by the job worker.
(Above proviso has been inserted vide Notification No. 13/2005-CE(N.T.), dated 01/03/2005)
(2) (a) The CENVAT credit in respect of capital goods received in a factory or in the premises
of the provider of output service at any point of time in a given financial year shall be taken
only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the
same financial year:
Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole
amount of the duty paid on such capital goods in the same financial year if such capital goods
are cleared as such in the same financial year.
Provided further that the CENVAT credit of the additional duty leviable under sub-section (5)
of section 3 of the Customs Tariff Act, [OMITTED- as amended by clause 72 of the Finance
Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill
under the Provisional Collection of Taxes Act, 1931, the force of law ], in respect of capital
goods shall be allowed immediately on receipt of the capital goods in the factory of a
manufacturer.
(In above proviso the portion beginning with the words and figure "as amended by clause 72"
and ending with the words "the force of law," has been omitted vide Notification No. 22/2005-
CE(N.T.), dated 13/05/2005)
(Above 2nd proviso has been inserted vide Notification No. 13/2005-CE(N.T.), dated
01/03/2005)
(b) The balance of CENVAT credit may be taken in any financial year subsequent to the
financial year in which the capital goods were received in the factory of the manufacturer, or
in the premises of the provider of output service, if the capital goods, other than components,
spares and accessories, refractories and refractory materials, moulds and dies and goods
falling under heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the
Excise Tariff Act, are in the possession of the manufacturer of final products, or provider of
output service in such subsequent years.
Illustration.- A manufacturer received machinery on the 16th day of April, 2002 in his factory.
CENVAT of two lakh rupees is paid on this machinery. The manufacturer can take credit upto
a maximum of one lakh rupees in the financial year 2002-2003, and the balance in
subsequent years..
(3) The CENVAT credit in respect of the capital goods shall be allowed to a manufacturer,
provider of output service even if the capital goods are acquired by him on lease, hire
purchase or loan agreement, from a financing company.
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(4) The CENVAT credit in respect of capital goods shall not be allowed in respect of that part
of the value of capital goods which represents the amount of duty on such capital goods,
which the manufacturer or provider of output service claims as depreciation under section 32
of the Income-tax Act, 1961( 43 of 1961).
(5) (a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or
after being partially processed are sent to a job worker for further processing, testing, repair,
re-conditioning, or for the manufacture of intermediate goods necessary for the
manufacture of final products or any other purpose, and it is established from the records,
challans or memos or any other document produced by the manufacturer or provider of output
service taking the CENVAT credit that the goods are received back in the factory within one
hundred and eighty days of their being sent to a job worker and if the inputs or the capital
goods are not received back within one hundred eighty days, the manufacturer or provider of
output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs
or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider
of output service can take the CENVAT credit again when the inputs or capital goods are
received back in his factory or in the premises of the provider of output service
(In clause (a), words ",or for the manufacture of intermediate goods necessary for the
manufacture of final products" has been inserted vide Notification No. 27/2005-CE(N.T.),
dated 16/05/2005)
(b) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent
by a manufacturer of final products to a job worker for the production of goods on his behalf
and according to his specifications.
(6) The Deputy Commissioner of Central Excise or the Assistant Commissioner of Central
Excise, as the case may be, having jurisdiction over the factory of the manufacturer of the
final products who has sent the input or partially processed inputs outside his factory to a job-
worker may, by an order, which shall be valid for a financial year, in respect of removal of
such input or partially processed input, and subject to such conditions as he may impose in
the interest of revenue including the manner in which duty, if leviable, is to be paid, allow final
products to be cleared from the premises of the job-worker.
(In sub-rule (6), words "Deputy Commissioner of Central Excise or the Assistant
Commissioner of Central Excise, as the case may be," has been substituted vide Notification
No. 27/2005-CE(N.T.), dated 16/05/2005)
(7) The CENVAT credit in respect of input service shall be allowed, on or after the day which
payment is made of the value of input service and the service tax paid or payable as is
indicated in invoice, bill or, as the case may be, challan referred to in rule 9.
Where any input or input service is used in the manufacture of final product which is cleared
for export under bond or letter of undertaking, as the case may be, or used in the intermediate
product cleared for export, or used in providing output service which is exported, the CENVAT
credit in respect of the input or input service so used shall be allowed to be utilized by the
manufacturer or provider of output service towards payment of,
(i) duty of excise on any final product cleared for home consumption or for export on payment
of duty; or
(ii) service tax on output service, and where for any reason such adjustment is not possible,
the manufacturer or the provider of output service shall be allowed refund of such amount
subject to such safeguards, conditions and limitations, as may be specified, by the Central
Government, by notification:
Provided that no refund of credit shall be allowed if the manufacturer or provider of output
106
service avails of drawback allowed under the Customs and Central Excise Duties Drawback
Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such
duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of
such tax.
Provided further that no credit of the additional duty leviable under sub-section (5) of section 3
of the Customs Tariff Act shall be utilised for payment of service tax on any output service.
Explanation: For the purposes of this rule, the words 'output service which is exported' means
the output service exported in accordance with the Export of Services Rules, 2005.
(Above rule 5 has been amended vide Notification No. 04/2006 - CE (N.T.), dated
14/03/2006)
(1) The CENVAT credit shall not be allowed on such quantity of input or input service which is
used in the manufacture of exempted goods or exempted services, except in the
circumstances mentioned in sub-rule (2).
Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule
12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the
manufacture of goods cleared without payment of duty under the provisions of that rule.
(Above 2nd proviso has been inserted vide Notification No. 13/2005-CE(N.T.), dated
01/03/2005)
(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of
any inputs or input services, [OMITTED- except inputs intended to be used as fuel,] and
manufactures such final products or provides such output service which are chargeable to
duty or tax as well as exempted goods or services, then, the manufacturer or provider of
output service shall maintain separate accounts for receipt, consumption and inventory of
input and input service meant for use in the manufacture of dutiable final products or in
providing output service and the quantity of input meant for use in the manufacture of
exempted goods or services and take CENVAT credit only on that quantity of input or input
service which is intended for use in the manufacture of dutiable goods or in providing output
service on which service tax is payable.
(In sub-rule (2), the words "except inputs intended to be used as fuel," has been omitted vide
Notification No. 27/2005-CE(N.T.), dated 16/05/2005)
(3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the
provider of output service, opting not to maintain separate accounts, shall follow either of the
following conditions, as applicable to him, namely:-
(i) goods falling within heading No. 22.04 of the First Schedule to the Excise Tariff Act
(hereinafter in this rule referred to as the said First Schedule);
(ii) Low Sulphur Heavy Stock (LSHS) falling within Chapter 27 of the said First Schedule used
in the generation of electricity;
(iii) Naphtha (RN) falling within Chapter 27 of the said First Schedule used in the manufacture
of fertilizer;
(iv) Naptha (RN) and furnace oil falling within Chapter 27 of the said First Schedule used for
generation of electricity;
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(v) newsprint, in rolls or sheets, falling within heading No.48.01 of the said First Schedule;
(vi) final products falling within Chapters 50 to 63 of the said First Schedule,
(vii) goods supplied to defence personnel or for defence projects or to the Ministry of Defence
for official purposes, under any of the following notifications of the Government of India in the
Ministry of Finance (Department of Revenue), namely:-
(1) No. 70/92-Central Excise, dated the 17th June, 1992, G.S.R. 595 (E), dated the 17th
June, 1992;
(2) No. 62/95-Central Excise, dated the 16th March, 1995, G.S.R. 254 (E), dated the 16th
March, 1995;
(3) No. 63/95-Central Excise, dated the 16th March, 1995, G.S.R. 255 (E), dated the 16th
March, 1995;
(4) No. 64/95-Central Excise, dated the 16th March, 1995, G.S.R. 256 (E), dated the 16th
March, 1995,
the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to inputs
and input services used in, or in relation to, the manufacture of such final products at the time
of their clearance from the factory; or
(viii) Liquefied Petroleum Gases (LPG) falling under tariff items 2711 12 00, 2711 13 00 and
2711 19 00 of the said First Schedule;
(Sub-clause (viii) has been substituted vide Notification No. 20/2005-CE(N.T.), dated
02/05/2005)
(ix) Kerosene falling within heading 2710 of the said First Schedule, for ultimate sale through
public distribution system.
(Sub-clause (viii) & (ix) has been inserted vide Notification No. 18/2005-CE(N.T.), dated
12/04/2005)
(b) if the exempted goods are other than those described in condition (a), the manufacturer
shall pay an amount equal to ten per cent. of the total price, excluding sales tax and other
taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer
for the sale of such goods at the time of their clearance from the factory;
(c) the provider of output service shall utilize credit only to extent of an amount not exceeding
twenty per cent. of the amount of service tax payable on taxable output service.
Explanation I.- The amount mentioned in conditions (a) and (b) shall be paid by the
manufacturer or provider of output service by debiting the CENVAT credit or otherwise.
Explanation II.- If the manufacturer or provider of output service fails to pay the said amount, it
shall be recovered along with interest in the same manner, as provided in rule 14, for
recovery of CENVAT credit wrongly taken.
Explanation III.- For the removal of doubts, it is hereby clarified that the credit shall not be
allowed on inputs and inputs services used exclusively for the manufacture of exempted
goods or exempted services.
(Explanation III has been inserted vide Notification No. 27/2005-CE(N.T.), dated 16/05/2005)
(4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the
108
manufacture of exempted goods or in providing exempted services, other than the final
products which are exempt from the whole of the duty of excise leviable thereon under any
notification where exemption is granted based upon the value or quantity of clearances made
in a financial year.
(5) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of
service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za),
(zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of
the Finance Act shall be allowed unless such service is used exclusively in or in relation to the
manufacture of exempted goods or providing exempted services.
(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the
excisable goods removed without payment of duty are either-
(iv) supplied to the United Nations or an international organization 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 Excise, dated the 28th August, 1995, number G. S R. 602 (E), dated the
28th August, 1995; or
(v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002;
or
(vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of
manufacture of copper or zinc by smelting; or.
(vii) all goods which are exempt from the duties of customs leviable under the First Schedule
to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under section 3
of the said Customs Tariff Act when imported into India and supplied against International
Competitive Bidding in terms of notification No. 6/2002-Central Excise dated the 1 st March,
2002 or notification No. 6/2006-Central Excise dated the 1 st March, 2006, as the case may
be
(In clause (vii) the words and figures "notification No. 6/2002-Central Excise dated the 1 st
March, 2002 or notification No. 6/2006-Central Excise dated the 1 st March, 2006, as the
case may be" has been substituted vide Notification No. 09/2006-CE(N.T.), dated 21/04/2006)
(In Above item (vi), the words "zinc by smelting; or" substituted vide & item (vii) has been
added vide Notification No. 03/2005-CE(N.T.), dated 28/01/2005)
The input service distributor may distribute the CENVAT credit in respect of the service tax
paid on the input service to its manufacturing units or units providing output service, subject to
the following condition, namely:-
(a) the credit distributed against a document referred to in rule 9 does not exceed the amount
of service tax paid thereon; or
(b) credit of service tax attributable to service use in a unit exclusively engaged in
manufacture of exempted goods or providing of exempted services shall not be distributed.
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The Deputy Commissioner of Central Excise or the Assistant Commissioner of Central
Excise, as the case may be, having jurisdiction over the factory of a manufacturer of the final
products may, in exceptional circumstances having regard to the nature of the goods and
shortage of storage space at the premises of such manufacturer, by an order, permit such
manufacturer to store the input in respect of which CENVAT credit has been taken, outside
such factory, subject to such limitations and conditions as he may specify:
Provided that where such input is not used in the manner specified in these rules for any
reason whatsoever, the manufacturer of the final products shall pay an amount equal to the
credit availed in respect of such input.
(1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or
input service distributor, as the case may be, on the basis of any of the following documents,
namely :-
(I) inputs or capital goods from his factory or depot or from the premises of the consignment
agent of the said manufacturer or from any other premises from where the goods are sold by
or on behalf of the said manufacturer;
(ii) an importer;
(iii) an importer from his depot or from the premises of the consignment agent of the said
importer if the said depot or the premises, as the case may be, is registered in terms of the
provisions of Central Excise Rules, 2002;
(iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the
provisions of Central Excise Rules, 2002; or
Explanation.- For removal of doubts, it is clarified that supplementary invoice shall also
include challan or any other similar document evidencing payment of additional amount of
additional duty leviable under section 3 of the Customs Tariff Act; or
(e) a challan evidencing payment of service tax by the person liable to pay service tax under
sub-clauses (iii), (iv), (v) and (vii) of clause (d) of sub-rule (1) of rule (2) of the Service Tax
Rules, 1994; or
110
(In clause (e) the words, brackets and figures "sub-clauses (iii), (iv), (v) and (vii)" has been
amended vide Notification No. 10/2006-CE(N.T.), dated 25/04/2006)
(In clause (e) words ", (iv) and (v)" has been substituted vide Notification No. 28/2005-
CE(N.T.), dated 07/06/2005)
(f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of,
September, 2004; or
(g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service
Tax Rules, 1994.
(2) The CENVAT credit shall not be denied on the grounds that any of the documents
mentioned in sub-rule (1) does not contain all the particulars required to be contained therein
under these rules, if such document contains details of payment of duty or service tax,
description of the goods or taxable service, assessable value, name and address of the
factory or warehouse or provider of input service:
Provided that the Deputy Commissioner of Central Excise or the Assistant Commissioner of
Central Excise, as the case may be, having jurisdiction over the factory of a manufacturer or
provider of output service intending to take CENVAT credit, or the input service distributor
distributing CENVAT credit on input service, is satisfied that the duty of excise or service tax
due on the input or input service has been paid and such input or input service has actually
been used or is to be used in the manufacture of final products or in providing output service,
then, such Deputy Commissioner of Central Excise or the Assistant Commissioner of Central
Excise, as the case may be, shall record the reasons for not denying the credit in each case.
(3) The manufacturer or producer of excisable goods or provider of output service taking
CENVAT credit on input or capital goods or input service, or the input service distributor
distributing CENVAT credit on input service shall take all reasonable steps to ensure that the
input or capital goods or input service in respect of which he has taken the CENVAT credit
are goods or services on which the appropriate duty of excise or service tax as indicated in
the documents accompanying the goods or relating to input service, has been paid.
(b) on the basis of a certificate given by a person with whose handwriting or signature he is
familiar; or
(c) on the basis of a certificate issued to the manufacturer or the supplier or, as the case may
be, the provider of input service by the Superintendent of Central Excise within whose
jurisdiction such manufacturer has his factory or such supplier or provider of output service
has his place of business or where the provider of input service has paid the service tax,
and where the identity and address of the manufacturer or the supplier or the provider of input
service is satisfied on the basis of a certificate, the manufacturer or producer or provider of
output service taking the CENVAT credit or input service distributor distributing CENVAT
credit shall retain such certificate for production before the Central Excise Officer on demand.
(4) The CENVAT credit in respect of input or capital goods purchased from a first stage dealer
111
or second stage dealer shall be allowed only if such first stage dealer or second stage dealer,
as the case may be, has maintained records indicating the fact that the input or capital goods
was supplied from the stock on which duty was paid by the producer of such input or capital
goods and only an amount of such duty on pro rata basis has been indicated in the invoice
issued by him.
(5) The manufacturer of final products or the provider of output service shall maintain proper
records for the receipt, disposal, consumption and inventory of the input and capital goods in
which the relevant information regarding the value, duty paid, CENVAT credit taken and
utilized, the person from whom the input or capital goods have been procured is recorded and
the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the
manufacturer or provider of output service taking such credit.
(6) The manufacturer of final products or the provider of output service shall maintain proper
records for the receipt and consumption of the input services in which the relevant information
regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the
input service has been procured is recorded and the burden of proof regarding the
admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output
service taking such credit.
(7) The manufacturer of final products shall submit within ten days from the close of each
month to the Superintendent of Central Excise, a monthly return in the form specified, by
notification, by the Board:
Provided that where a manufacturer is availing exemption under a notification based on the
value or quantity of clearances in a financial year, he shall file a quarterly return in the form
specified, by notification, by the Board within twenty days after the close of the quarter to
which the return relates.
(8) A first stage dealer or a second stage dealer, as the case may be, shall submit within
fifteen days from the close of each quarter of a year to the Superintendent of Central Excise,
a return in the form specified, by notification, by the Board.
(9) The provider of output service availing CENVAT credit, shall submit a half yearly return in
form specified, by notification, by the Board to the Superintendent of Central Excise, by the
end of the month following the particular quarter or half year.
(10) The input service distributor, shall furnish a half yearly return in such form as may be
specified, by notification, by the Board, giving the details of credit received and distributed
during the said half year to the jurisdictional Superintendent of Central Excise, not later than
the last day of the month following the half year period.
(Sub-rule (10) has been substituted vide Notification No. 28/2005-CE(N.T.), dated
07/06/2005)
(1) A manufacturer of final products shall furnish to the Superintendent of Central Excise,
annually by 30th April of each Financial Year, a declaration in the Form specified, by a
notification, by the Board, in respect of each of the excisable goods manufactured or to be
manufactured by him, the principal inputs and the quantity of such principal inputs required for
use in the manufacture of unit quantity of such final products:
Provided that for the year 2004-05, such information shall be furnished latest by 31st
December, 2004.
(2) If a manufacturer of final products intends to make any alteration in the information so
furnished under sub-rule (1), he shall furnish information to the Superintendent of Central
112
Excise together with the reasons for such alteration before the proposed change or within 15
days of such change in the Form specified by the Board under sub-rule (1).
(3) A manufacturer of final products shall submit, within ten days from the close of each
month, to the Superintendent of Central Excise, a monthly return in the Form specified, by a
notification, by the Board, in respect of information regarding the receipt and consumption of
each principal inputs with reference to the quantity of final products manufactured by him.
(4) The Central Government may, by notification and subject to such conditions or limitations,
as may be specified in such notification, specify manufacturers or class of manufacturers who
may not be required to furnish declaration mentioned in sub-rule (1) or monthly return
mentioned in sub-rule (3).
Explanation: For the purposes of this rule, “principal inputs”, means any input which is used in
the manufacture of final products where the cost of such input constitutes not less than 10%
of the total cost of raw-materials for the manufacture of unit quantity of a given final products.
(Above rule 9A. has been added vide Notification No. 38/2004-CE(N.T.), dated 25/11/2004)
(1) If a manufacturer of the final products shifts his factory to another site or the factory is
transferred on account of change in ownership or on account of sale, merger, amalgamation,
lease or transfer of the factory to a joint venture with the specific provision for transfer of
liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT
credit lying unutilized in his accounts to such transferred, sold, merged, leased or
amalgamated factory.
(2) If a provider of output service shifts or transfers his business on account of change in
ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a
joint venture with the specific provision for transfer of liabilities of such business, then, the
provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in
his accounts to such transferred, sold, merged, leased or amalgamated business.
(3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the
stock of inputs as such or in process, or the capital goods is also transferred along with the
factory or business premises to the new site or ownership and the inputs, or capital goods, on
which credit has been availed of are duly accounted for to the satisfaction of the Deputy
Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of
Central Excise.
(1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as
they existed prior to the 10th day of September, 2004 or by a provider of output service under
the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004,
and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer
or provider of output service under these rules, and be allowed to be utilized in accordance
with these rules.
(2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on
goods manufactured by him under a notification based on the value or quantity of clearances
in a financial year, and who has been taking CENVAT credit on inputs or input services before
113
such option is exercised, shall be required to pay an amount equivalent to the CENVAT
credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in
final products lying in stock on the date when such option is exercised and after deducting the
said amount from the balance, if any, lying in his credit, the balance, if any, still remaining
shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods,
whether cleared for home consumption or for export.
Notwithstanding anything contained in these rules, where a manufacturer has cleared any
inputs or capital goods, in terms of notifications of the Government of India in the Ministry of
Finance (Department of Revenue) No. 32/99- Central Excise, dated the 8th July, 1999
[G.S.R. 508(E), dated the 8th July, 1999] or No. 33/99- Central Excise, dated the 8th July,
1999 [G.S.R. 509(E), dated the 8th July, 1999] or No. 39/2001-Central Excise, dated the 31st
July, 2001 [G.S.R. 565(E), dated the 31st July, 2001] or notification of the Government of
India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue)
No.56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated 14th
November, 2002]or No.57/2002-Central Excise, dated the 14th November, 2002 [ GSR
765(E), dated the 14th November, 2002] or notification of the Government of India in the
Ministry of Finance (Department of Revenue) No. 56/2003-Central Excise, dated the 25th
June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003] or 71/2003-Central Excise, dated the
9th September, 2003 [G.S.R.717 (E), dated the 9th September, 2003, the CENVAT credit on
such inputs or capital goods shall be admissible as if no portion of the duty paid on such
inputs or capital goods was exempted under any of the said notifications.
13. Power of Central Government to notify goods for deemed CENVAT credit.-
Where the CENVAT credit has been taken or utilized wrongly or has been erroneously
refunded, the same along with interest shall be recovered from the manufacturer or the
provider of the output service and the provisions of sections 11A and 11AB of the Excise Act
or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such
recoveries.
(1) If any person, takes CENVAT credit in respect of input or capital goods, wrongly or without
taking reasonable steps to ensure that appropriate duty on the said input or capital goods has
been paid as indicated in the document accompanying the input or capital goods specified in
rule 9, or contravenes any of the provisions of these rules in respect of any input or capital
goods, then, all such goods shall be liable to confiscation and such person, shall be liable to a
penalty not exceeding the duty on the excisable goods in respect of which any contravention
has been committed, or ten thousand rupees, whichever is greater.
(2) In a case, where the CENVAT credit in respect of input or capital goods has been taken or
utilized wrongly on account of fraud, willful mis-statement, collusion or suppression of facts, or
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contravention of any of the provisions of the Excise Act or the rules made thereunder with
intention to evade payment of duty, then, the manufacturer shall also be liable to pay penalty
in terms of the provisions of section 11AC of the Excise Act.
(3) If any person, takes CENVAT credit in respect of input services, wrongly or without taking
reasonable steps to ensure that appropriate service tax on the said input services has been
paid as indicated in the document accompanying the input services specified in rule 9, or
contravenes any of the provisions of these rules in respect of any input service, then, such
person, shall be liable to a penalty which may extend to an amount not exceeding ten
thousand rupees.
(4) In a case, where the CENVAT credit in respect of input services has been taken or utilized
wrongly by reason of fraud, collusion, willful mis-statement, suppression of facts, or
contravention of any of the provisions of the Finance Act or of the rules made thereunder with
intention to evade payment of service tax, then, the provider of output service shall also be
liable to pay penalty in terms of the provisions of section 78 of the Finance Act.
(5) Any order under sub-rule (1), sub-rule (2), sub-rule (3) or sub-rule (4) shall be issued by
the Central Excise Officer following the principles of natural justice.
(1) Any notification, circular, instruction, standing order, trade notice or other order issued
under the CENVAT Credit Rules, 2002 or the Service Tax Credit Rules, 2002, by the Central
Government, the Central Board of Excise and Customs, the Chief Commissioner of Central
Excise or the Commissioner of Central Excise, and in force at the commencement of these
rules, shall, to the extent it is relevant and consistent with these rules, be deemed to be valid
and issued under the corresponding provisions of these rules.
(2) References in any rule, notification, circular, instruction, standing order, trade notice or
other order to the CENVAT Credit Rules, 2002 and any provision thereof or, as the case may
be, the Service Tax Credit Rules, 2002 and any provision thereof shall, on the
commencement of these rules, be construed as references to the CENVAT Credit Rules,
2004 and any corresponding provision thereof.
(Above sub-rule (2) has been inserted vide Notification 24/2004 - Central Excise (N.T.),
dated 17/09/2004
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CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY FOR
MANUFACTURE OF EXCISABLE GOODS) RULES, 1996
Notification No. 36/96-cus. (N.T.) dated 23-7-1996 as amended
In exercise of the powers conferred by section 156 of the Customs Act, 1962 (52 of 1962), the
Central Government hereby makes the following rules, namely :-
1. Short title and commencement. - (1) These rules may be called the Customs (Import of
Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) rules, 1996.
(2) They shall come into force on the first day of September, 1996.
2. Application. - (1) These rules shall apply to an importer who intends to avail of the benefit
of an exemption notification issued under sub-section (1) of section 25 of the Customs Act,
1962 (52 of 1962) and where the benefit of such exemption is dependent upon the use of
imported goods covered by the notification for the manufacturer of any excisable commodity.
(1A) These rules shall apply only in respect of such exemption notification which prescribes
for the observance of these rules.
(2) These rules shall also apply even if the excisable goods in or in relationto the manufacture
of which the imported goods are used are not chargeable to excise duty or are exempted from
whole of excise duty.
(3) The Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise
shall issue a certificate to the manufacturer indicating the particulars referred to in sub-rule
(2).
4. Application by the manufacturer to obtain the benefit. -(1) A manufacturer who has
obtained a certificate referred to in sub-rule (3) of rule 3 and intends to import any goods for
use in his factory at concessional rate of duty, shall make an application to this effect to the
Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise
indicating the estimated quantity and value of such goods to be imported, particulars of the
notificaiton applicable on such import and the port of import.
(1A) The manufacturer may, at this option, file the applicaiton specified under sub-rule (1),
either in respect of a particular consignment, or indicating his estimated requirement of such
goods for a quarter.
(2) The manufacturer shall also give undertaking on the application that the imported goods
shall be used for the intended purpose.
(3) The application shall be countersigned by the Assistant Commissioner of Central Excise
or Deputy Commissioner of Central Excise who shall certify therein that the manufacturer is
registered in his office and has executed a bond to his satisfaction in respect of end use of the
imported goods in the manufacturer's factory and indicate the particulars of such bond.
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5. Procedure to be followed by Assistant Commissioner of Customs or Deputy Commissioner
of Customs. - (1) On the basis of the application countersigned by the Assistant
Commissioner of Central Excise or Deputy Commissioner of Central Excise, the Assistant
commissioner of Customs or Deputy Commissioner of Customs at the port of importation
shall allow the benefit of the exemption notification to the importer.
Provided that where the importer has filed the application in respect of his estimated
requirement for a quarter, the said Assistant commissioner of Customs or Deputy
Commissioner of Customs shall debit in the said application, the quantity and value of imports
made under a particular consignment, also indicating particulars of the bill of entry, before
allowing the benefit of the exemption notification to the importer.
7. Manufacturer to give information regarding receipt of the imported goods and maintain
records. - The manufacturer, obtaining benefit in these rules, shall, -
(a) give information of the receipt of the imported goods in his factory, within two days
(excluding holidays, if any) of such receipt, to the Superintendent of Central Excise having
jurisdiction over his factory; and
(b) maintain a simple account indicating the quantity and value of goods imported, the
quantity of imported goods consumed for the intended purpose , and the quantity remaining in
stock, bill of entry wise and shall produce the said account as and when required by the
Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise.
8. Recovery of duty in certain case.- The Assistant Commissioner of Central Excise or Deputy
Commissioner of Central Excise shall ensure that the goods imported are used by the
manufacturer for the intended purpose and in case they are not so used take actionto recover
the amount equal to the difference between the duty leviable on such goods but for the
exemption and that already paid at the time of importation.
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[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE
GAZETTEE OF INDIA, (EXTRAORDINARY) ]
Government of India
Ministry of Finance
Department of Revenue
New Delhi, dated the 30th December, 2006
9, Pausa,1928 Saka
NOTIFICATION
No. 32/2006 - Central Excise (N.T.)
G.S.R. (E).- In pursuance of rule 12CC of the Central Excise Rules, 2002, and rule
12AA of the CENVAT Credit Rules, 2004, the Central Government, hereby declares
that where a manufacturer, first stage or second stage dealer, or an exporter including
a merchant exporter is prima facie found to be knowingly involved in any of the
following,-
(a) removal of goods without the cover of an invoice and without
payment of duty;
(b) removal of goods without declaring the correct value for payment of
duty, where a portion of sale price, in excess of invoice price, is received
by him or on his behalf but not accounted for in the books of account;
(c) taking of CENVAT Credit without the receipt of goods specified in
the document based on which the said credit has been taken;
(d) taking of CENVAT Credit on invoices or other documents which a
person has reasons to believe as not genuine;
(e) issue of excise duty invoice without delivery of goods specified in
the said invoice;
(f) claiming of refund or rebate based on the excise duty paid invoice or
other documents which a person has reason to believe as not genuine,
an officer authorized by the Board may order for withdrawal of facilities or impose
certain restrictions as specified in para 2 of this Notification.
2. Facilities to be withdrawn and imposition of restrictions:
(1) Where a manufacturer is prima facie found to be knowingly involved in
committing the offences as specified in para 1, the following restrictions may be
imposed on the facilities, namely:-
(i) the facility of monthly payment of duties may be withdrawn and the
assessee shall be required to pay excise duty for each consignment at the
time of removal of goods;
(ii) payment of duty by utilisation of CENVAT credit may be restricted and
the assessee shall be required to pay excise duty without utilising the
CENVAT credit:
Provided that where a person is found to be knowingly involved in committing
any one or more type of offences as specified in para 1 for the second time or
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subsequently, every removal of goods from his factory may be ordered to be under an
invoice which shall be countersigned by the Inspector of Central Excise or the
Superintendent of Central Excise before the said goods are removed from the factory
or warehouse.
Explanation I.- It is clarified that a person against whom the order under sub-para (3)
of para 4 has been passed may continue to take CENVAT credit; however, he would
not be able to utilize the credit for payment of duty during the period specified in the
said order.
Explanation II.- For second time or subsequent offence, the restriction specified in
clauses (i) and (ii) may also be imposed.
(2) Where a first stage or second stage dealer is found to be knowingly involved
in committing the type of offence specified at clauses (d) or (e) of para 1, the
registration granted under rule 9 of the Central Excise Rules 2002 may be suspended
for a specified period.
Explanation.- During the period of suspension, the said dealer shall not issue any
Central Excise Invoice. However, he may continue his business and issue sales
invoices without showing excise duty in the invoice and no CENVAT credit shall be
admissible to the recipient of goods under such invoice.
(3) Where a merchant exporter is found to be knowingly involved in committing
the type of offence specified at clause (f) of para 1, the self sealing facility for export
consignment may be withdrawn whereby each export consignment shall be examined
and sealed by the jurisdictional Central Excise Officer:
Provided that any other facility available to a manufacturer, first stage or
second stage dealer or an exporter provided by a circular or an order issued by the
Board may also be ordered to be withdrawn for a specified period.
3. Monetary Limit.- The provisions of this notification shall be applicable
only in a case where the duty or CENVAT Credit alleged to be involved in the
offences specified in para 1 is more than Rs.10 lakhs.
4. Procedure.- (1)The Commissioner of Central Excise or Additional
Director General of Central Excise Intelligence, as the case may be, after examination
of records and other evidence, and after satisfying himself that the person has
knowingly committed the offence as specified in para 1, may forward a proposal to
the Chief Commissioner or Director General of Central Excise Intelligence, as the
case may be, specifying the facilities to be withdrawn and restriction to be imposed
and the period of such withdrawal or restrictions, within 30 days of the detection of
the case, as far as possible.
(2) The Chief Commissioner of Central Excise or Director General of Central
Excise Intelligence, as the case may be, shall examine the said proposal and after
satisfying himself that the records and evidence relied upon in the said proposal are
sufficient to form a reasonable belief that a person has knowingly committed the
offences specified in para 1, may forward the proposal along with his
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recommendations to the Board. However, the Chief Commissioner of Central Excise
or Director General of Central Excise Intelligence, before forwarding his
recommendations, shall give an opportunity of being heard to the person against
whom the proceedings have been initiated and shall take into account any
representation made by such person before he forwards his recommendations to the
Board.
(3) An officer authorized by the Board shall examine the recommendations
received from the Chief Commissioner of Central Excise or Director General of
Central Excise Intelligence and issue an order specifying the type of facilities to be
withdrawn or type of restrictions imposed, along with the period for which said
facilities will not be available or the period for which the restrictions shall be
operative.
F.No.224/40/2006-CX.6
Rahul Nangare,
Under Secretary to the Government of India.
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DUTY EXEMPTION & REMISSION SCHEMES
4.1
Duty exemption schemes enable duty free import of inputs
required for export production. An Advance Licence is issued as a duty exemption
scheme. A Duty Remission Scheme enables post export replenishment/ remission of
duty on inputs used in the export product. Duty remission schemes consist of (a)
DFRC (Duty Free Replenishment Certificate) and (b) DEPB
(Duty Entitlement Passbook Scheme). DFRC permits duty free replenishment of
inputs used in the export product. DEPB allows drawback of import charges on inputs
used in the export product.
Value Addition
4.1.2
The value addition for the purposes of this chapter shall be:-
A-B
V.A. = ----------- x 100, where
B
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ADVANCE LICENCE
Advance Licence
4.1.3
An Advance Licence is issued to allow duty free import of
inputs, which are physically incorporated in the export product
(making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc.
which are consumed in the course of their use to obtain the export product, may also
be allowed under the scheme. Duty free import of mandatory spares upto 10% of the
CIF value of the licence which are required to be exported/ supplied with the resultant
product may also be allowed under Advance Licence. Advance Licences are issued
on the basis of the inputs and export items given under SION. However, they can also
be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of
Handbook.
Duty free import of mandatory spares upto 10% of the CIF
value of the licence which are required to be exported/
supplied with the resultant product may also be allowed under Advance Licence.
Advance Licence can be issued for:-
a) Physical exports:- Advance Licence may be issued for
physical exports including exports to SEZ to a manufacturer exporter or merchant
exporter tied to supporting manufacturer(s) for import of inputs required for the
export product.
b)Intermediate supplies:- Advance Licence may be issued for
intermediate supply to a manufacturer-exporter for the import of inputs required in
the manufacture of goods to be supplied to the ultimate exporter/deemed exporter
holding another Advance Licence
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4.1.5 Advance Licence and/or materials imported there under shall not
be transferable even after completion of export obligation.
Export Obligation
4.1.8 The period for fulfilment of the export obligation under
Advance Licence shall be as prescribed in the Handbook (Vol.1). Supplies to
SEZ would also be counted for fulfillment of export obligation under the
Advance Licence for physical exports.
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applying for an Advance Release Order, avail of the facility of Back-to-Back Inland
Letter of Credit in accordance with the procedure specified in Handbook (Vol.1).
Prohibited Items
4.1.13 Prohibited items of imports mentioned in ITC(HS) shall
not be imported under the licence issued under the scheme.
Admissibility of Drawback
4.1.14 In the case of an Advance Licence, the drawback shall be
available in respect of any of the duty paid materials, whether imported or indigenous,
used in the goods exported, as per the drawback rate fixed by Ministry of Finance
(Directorate of Drawback). The Drawback shall however be restricted to the duty paid
materials as mentioned in the licence.
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DUTY FREE REPLENISHMENT CERTIFICATE
(DFRC)
4.2 DFRC is issued to a merchant-exporter or manufacturer-exporter
for the import of inputs used in the manufacture of goods without payment of basic
customs duty. However, such inputs shall be subject to the payment of additional
customs duty equal to the excise duty at the time of import.
4.2.5 The export products, which are eligible for modified VAT, shall
be eligible for CENVAT credit/ service tax credit. However, non excisable, non
dutiable or non CENVAT products shall be eligible for drawback at the time of
exports in lieu of additional customs duty to be paid at the time of
imports under the scheme.
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4.2.7 Import of goods, including those mentioned as restricted in
ITC(HS) but excluding prohibited items, supplied free of cost, may be permitted for
the purpose of jobbing without a licence/certificate/ permission as per the terms of
notification issued by Department of Revenue from time to time.
Similarly, import of goods for carrying out repairs, re-conditioning, re-engineering,
testing etc. shall be allowed as per the terms and conditions of the
Customs notification even though the goods may be restricted for imports under the
Exim Policy/ITC(HS) Classification of Imports and Exports Book.
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DUTY ENTITLEMENT PASSBOOK SCHEME
(DEPB)
4.3 The objective of DEPB is to neutralise the incidence of Customs
duty on the import content of the export product. The neutralization shall be provided
by way of grant of duty credit against the export product. The DEPB scheme will
continue to be operative until it is replaced by a new scheme which will be drawn up
in consultation with exporters.
4.3.1 Under the DEPB, an exporter may apply for credit, as a specified
percentage of FOB value of exports, made in freely convertible currency.
The credit shall be available against such export products and at such rates as may be
specified by the Director General of Foreign Trade by way of public notice issued in
this behalf, for import of raw materials, intermediates, components, parts, packaging
material etc.
4.3.2 The holder of DEPB shall have the option to pay additional
customs duty, if any, in cash as well.
Validity
4.3.3 The DEPB shall be valid for a period of 24 months from the date
of issue.
Transferability
4.3.4 The DEPB and/or the items imported against it are freely
transferable. The transfer of DEPB shall however be for import at the port specified
in the DEPB, which shall be the port from where exports have been made.
Imports from a port other than the port of export shall be allowed under TRA facility
as per the terms and conditions of the Notification issued by Department of Revenue.
Applicability of Drawback"
4.3.5 Normally, the exports made under the DEPB Scheme shall not
be entitled for drawback. However, the additional customs duty/excise duty paid in
cash or through debit under DEPB shall be adjusted as CENVAT Credit or Duty
Drawback as per rules framed by the Department of Revenue.
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TARGET PLUS SCHEME
Objective
Eligibility Criteria
3.7.2 All Star Export Houses (including Status Holders as defined in para 3.7.2.1
of Exim Policy 2002-07) which have achieved a minimum export turnover
in free foreign exchange of Rs 10 crores in the previous licencing year are
eligible for consideration under the Target Plus Scheme .
Entitlement
3.7.3 The entitlement under this scheme would be contingent on the percentage
incremental growth in FOB value of exports in the current licencing year over the
previous licencing year, as under:
Percentage incremental growth Duty Credit Entitlement (as a % of the
incremental growth)
20% and above but below 25% 5%
25% or above but below 100% 10%
100% and above 15% (of 100%)
Note:
(1) Incremental growth beyond 100% will not qualify for computation of duty
credit entitlement.
(2) For the purpose of this scheme, the export performance shall not be transferred
to or transferred from any other exporter. In the case of third party exports, the name
of the supporting manufacturer/ manufacturer exporter shall be
declared.
(3) Exporters shall have the option to apply for benefit either under the Target Plus
Scheme or under the Vishesh Krishi Upaj Yojana, but not both in respect of the same
exported product/s. Provided that in calculating the entitlement under Para 3.7.3 the
total eligible exports shall be taken into account for computing the percentage
incremental growth but the duty credit entitlement shall be arrived at on the eligible
exports reduced by the amount on which the benefit is claimed under para 3.8.2.
(4) All exports including exports under free shipping bill verified and authenticated by
Customs and Gems& Jewellery shipping bills but excluding exports specified
under para 3.7.5, shall be eligible for benefits under the Target Plus Scheme.
Applicant Companies
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3.7.4 Companies which are Star Export Houses as well as part of a Group company
shall have an option to either apply as an individual company or as a Group based on
the growth in the Group’s turnover as a whole. (For the purpose of this scheme the
definition of Group Company’ as given in Chapter 9 will be applicable. Further more ,
only such companies of the Group as are Star Export Houses will be considered).
If a Group company chooses to apply based on the export of one or more of its
individual Star Export House companies, the entitlement would be calculated
considering the export performance of the applicant company during the previous
licencing year and current licencing year. It shall be necessary that the adjusted export
performance of all the Star Export House companies of the Group during the current
licencing year does not fall below the combined performance of all Star
Export House companies of the Group in the previous licencing year. In case the
Group chooses to apply based on the overall growth in Group’s turnover (i.e the
turnover of all the Star Export House companies) , any one of the Star Export House
companies of the Group may file an application on behalf of all the Star Export
House companies of the Group.
3.7.5 The following exports shall not be taken into account for calculation of export
performance or for computation of entitlement under the scheme:
(a) Export of imported goods covered under Para 2.35 of the Foreign Trade
Policy or exports made through transshipment.
(c) Deemed exports (even when payments are received in Free Foreign
Exchange and payment is made from EEFC account).
(e) Rough, uncut and semi polished diamonds and other precious stones
(f) Gold, silver, platinum and other precious metals in any form, including plain
jewellery thereof. However exports of studded jewellery and any item as may be
notified from time to time will be counted for the entitlement
under the scheme.
3.7.6 The Duty Credit may be used for import of any inputs, capital goods
including spares, office equipment, professional equipment and office furniture
provided the same is freely importable under ITC (HS), for their own use or that of
supporting manufacturers as declared in Appendix 17 D. Agricultural products listed
in Chapter 1 to 24 of ITC (HS) except as may be notified from time to time, shall not
be permissible for imports under this scheme.
Cenvat/ Drawback
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3.7.7 Additional customs duty/excise duty paid in cash or through debit
under Target Plus shall be adjusted as CENVAT Credit or Duty
Drawback as per rules framed by the Department of Revenue.
Special Provision
3.7.8 Government reserves the right in public interest, to specify from time to time
the category of exports and export products, which shall not be eligible for calculation
of incremental growth/entitlement. Similarly, Government may from time to time
also notify the list of goods, which shall not be allowed for import under the duty
credit entitlement certificate issued under the scheme.
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EXPORT PROMOTION CAPITAL GOODS SCHEME
EPCG Scheme
5.1
The scheme allows import of capital goods for pre
production, production and post production (including CKD/SKD thereof as
well as computer software systems) at 5% Customs duty subject to an export
obligation equivalent to 8 times of duty saved on capital goods imported under
EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of
issuance of licence. Capital goods would be allowed at 0% duty for exports of
agricultural products and their value added variants. However, in respect of
EPCG licences with a duty saved of Rs.100 crore or more, the same export
obligation shall be required to be fulfilled over a period of 12 years. In case
CVD is paid in cash on imports under EPCG, the incidence of CVD would not
be taken for computation of net duty saved provided the same is not Cenvated .
The capital goods shall include spares (including refurbished/reconditioned
spares) , tools, jigs, fixtures, dies and moulds. EPCG licence may also be issued
for import of components of such capital goods required for assembly or
manufacturer of capital goods by the licence holder. Second hand capital goods
without any restriction on age may also be imported under the EPCG scheme.
Spares (including refurbished/ reconditioned spares), tools, refractories, catalyst
and consumable for the existing and new plant and machinery may also be
imported under the EPCG scheme . However, import of motor cars, sports
utility vehicles/ all purpose vehicles shall be allowed only to hotels, travel
agents, tour operators or tour transport operators whose total foreign
exchange earning in current and preceding three licencing years is Rs 1.5
crores. However, the parts of motor cars, sports utility vehicles/ all purpose
vehicles such as chassis etc cannot be imported under the EPCG Scheme.
Eligibility
5.2 The scheme covers manufacturer exporters with or without supporting
manufacturer(s)/ vendor(s), merchant exporters tied to supporting
manufacturer(s) and service providers.
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Conditions for import of Capital Goods
5.3 Import of capital goods shall be subject to Actual User condition till the export
obligation is completed.
Export obligation
5.4 The following conditions shall apply to the fulfillment of the export obligation:-
(i) The export obligation shall be fulfilled by the export of goods capable of
being manufactured or produced by the use of the capital goods imported under the
scheme. The export obligation may also be fulfilled by the
export of same goods, for which EPCG licence has been obtained, manufactured or
produced in different manufacturing units of the licence holder/specified supporting
manufacturer (s). When Capital Goods are imported for pre/ post-production or
license is taken for import of spares, the license holder shall fulfill the export
obligation by export of products manufactured from the plant / project to which the
pre/ post- production capital goods/ spares are related. The import of capital goods for
creating storage and distribution facilities for products manufactured or services
rendered by the EPCG licence holder would be permitted under the EPCG
Scheme.The export obligation under the scheme shall be, over and above, the average
level of exports achieved by him in the preceding three licensing years for same and
similar products except for categories mentioned in Handbook (Vol.1). Alternatively,
export obligation may also be fulfilled by exports of other good(s) manufactured or
service(s) provided by the same firm/company or group company/ managed hotel
which has the EPCG licence. However, in such cases, the additional export obligation
imposed under EPCG scheme shall be over and above the average exports achieved
by the unit/company/group company/ managed hotel in preceding three years for
both the original and the substitute product(s) /service (s) even in cases where the
average is exempt for the substitute product (s)/ service (s) as given in para 5.7.6 of
the Handbook (Vol 1). The incremental exports to be fulfilled by the licence holder
for fulfilling the remaining export obligation can include any combination of exports
of the original product/ service and the substitute product (s)/ service(s). The exporter
of goods can opt to get the export obligation refixed for the export of services and
vice versa. The licencee can also opt for the re-fixation of the balance export
obligation based on 8 times of the duty saved amount for the CIF value in proportion
to the balance Export obligation under the scheme. The guidelines for the re-fixation
of export obligation is given in para 5.19 of the Handbook (Vol 1). The aforesaid
facilities shall only be available to manufacturer exporters/ service provider on all the
licences where export obligation period including extended export obligation period is
valid on the date of application. In this regard, exports made only on or after
submission of application for alternate item and/ or re-fixation of the export obligation
based on duty saved amount will be taken into account for fulfillment of export
obligation.
(ii) The export obligation under the scheme shall be, in addition to any other export
obligation undertaken by the importer, except the export obligation for the same
product under Advance Licence, DFRC, DEPB or Drawback scheme.
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(iii) The export obligation can also be fulfilled by the supply of ITA-1 items to the
DTA provided the realization is in free foreign exchange.
(iv) Exports shall be physical exports. However, deemed exports as specified in
paragraph 8.2 (a), (b), (d), (f), (g) & (j) of Policy shall also be counted towards
fulfilment of export obligation alongwith the usual benefits available under paragraph
8.3 of the Policy. Royalty payments received in freely convertible currency and
foreign exchange received for R& D services shall also be counted for discharge
under the EPCG scheme. Payment received in rupee terms for the port handling
services, in terms of Chapter 9 of the Foreign Trade Policy shall also be counted for
export obligation discharge under the Scheme.
5.5.1 Any firm/company registered with BIFR or any firm/ company acquiring a
unit, which is under BIFR shall be allowed EO extension as per the rehabilitation
package prepared by the operating agency subject to subsequent approval of BIFR.
However, in cases where the rehabilitation package does not specify the EO extension
period, a time period upto 12 years reckoned from the date of issue of licence would
be permitted on merits of the case for fulfillment of export obligation. Similarly,
small-scale SSI units shall also be entitled for similar facility as per the rehabilitation
scheme of the concerned State government. However, in cases where the State
rehabilitation scheme does not specify the export obligation extension period, a time
period upto 12 years reckoned from the date of issue of licence would be permitted on
merits of the case for fulfillment of export obligation
5.5.2 In the case of EPCG licences issued to agro units in the agri export zones, a
period of 12 years reckoned from the date of issue of the licence would be permitted
for the fulfillment of export obligation. The agro units in the agri export zones would
also have the facility of moving the capital good (s) imported under the EPCG within
the agri export zone. An LUT/ Bond in lieu of BG may be given for EPCG licence
granted to units in the Agri Export Zones provided the EPCG licence is taken for
export of the primary agricultural product (s) notified in Appendix 15 or their value
added variants.
5.6 A person holding an EPCG licence may source the capital goods from a
domestic manufacturer instead of importing them. The domestic manufacturer
supplying capital goods to EPCG licence holders shall be eligible for deemed
export benefit under paragraph 8.3 of the Policy.
5.7 In the event of a firm contract between the EPCG licence holder and domestic
manufacturer for such sourcing, the domestic manufacturer may apply for the
issuance of Advance Licence for deemed exports for the import of inputs including
components required for the manufacturer of said capital goods. The domestic
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manufacturer may also replenish the inputs including components after supply of
capital goods to the PCG licence holders.
5.7A In case of direct imports, the export obligation relating to the EPCG
licence shall be reckoned with reference to the duty saved value on the CIF value of
capital goods (including spares, jigs, fixtures, dies and moulds) actually imported. In
case of domestic sourcing, the export obligation relating to EPCG shall be reckoned
with reference to the notional Customs duties saved on the FOR of capital goods
(including spares, jigs, fixtures, dies and moulds).
5.8 Service provider in Agri export zone shall have the facility to move or shift
the capital goods within the zone provided he maintains accurate record of such
movements. However, such equipments shall not be sold or leased by the licence
holder.
5.9 As per the provisions of para 5.4(i) , the EPCG licence holder would have to
maintain the average level of exports equivalent to the average of the exports in the
preceding three licencing years for the same and similar products except for
exempted categories given in Handbook (Vol 1) during the entire period of export
obligation. Notwithstanding the above, the licence holder shall maintain at least 75%
of the average exports in any particular year (s) provided the same is offset by excess
exports to fulfil the average in other year (s).
5.10 EPCG licence holders can opt for Technological Upgradation of the existing
capital good imported under the EPCG licence. The conditions governing the
Technological Upgradation of the existing capital good are as under:
(i) The minimum time period for applying for Technological Upgradation of
the existing capital good imported under EPCG is 5 years from the date of issuance of
the licence.
(ii) The minimum exports made under the old capital good must be 40% of the
total export obligation imposed on the first EPCG licence
(iii) The export obligation would be refixed such that the total export
obligation mandated for both the capital goods would be the sum total of 6 times the
duty saved on both the capital goods.
(iv) The procedure governing the replacement of capital good is given in para
5.20 of the Handbook (Vol1).
M.L.MAHESHWARI
INSPECTOR, CEN. EXCISE
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