Separate records for home sales

CHATROOM

The SSI exemption is available only for home clearances of specified excisable goods.

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We are a small scale industry with a domestic clearance less than Rs 1 crore. We also have exports to the extent of Rs 1.5 crore. We want to take Cenvat credit on inputs that we use for export production and avail exemption from payment of duties on our domestic clearances. Our excise officials say that if we opt for exemption from payment of duties under the SSI exemption notification, we cannot take Cenvat credit. Please clarify.

The SSI exemption notification no.8/2003-CE dated 1.3.2003 says that a manufacturer opting to avail the exemption from payment of duty upto the Rs.1 crore limit shall not avail of the credit of duty paid on the inputs used in the manufacture of final products cleared for home consumption till the exemption limit is reached. The SSI exemption is available only for home clearances of specified excisable goods. Export clearances are not covered under the said notification.

So, you can very well take Cenvat credit of duty paid on the inputs used in export production. However, you must note to maintain separate records for export production and domestic production. The CBEC Circular no. 323/39/97-CX dated 14.07.1997 squarely covers the issue on hand.

We are having accumulated Cenvat credit due to clearances without duty payment to Export Oriented Units under notification no 23/2003-CE dated 31.03.2003. Could you please tell us as to whether we can get refund of the unutilised credit.

Rule 5 of Cenvat Credit Rules, 2004 permits refund of unutilised credit only when the credits remain unutilised on account of physical exports under bond or UT1. The said Rule does not cover refund of unutilised credit on account of exemptions granted for clearances to EOU.

You can utilise the credit to pay duty on final products cleared to EOU and claim a refund of terminal excise duty from the licensing authorities under deemed exports provisions of the Foreign Trade Policy. Alternately, you may ask the EOU to pay duty on the final products and take Cenvat credit. The EOU can then use the credit to pay duty on export product under rebate claim under Rule 18 of Central Excise Rules, 2002 or claim refund of unutilised credit under Rule 5 of Cenvat Credit Rules, 2004.

In your earlier question and answer column, you have mentioned that we can take Cenvat credit of the service tax paid on the mobile phone bills. Our Central Excise Superintendent has, however, objected to the same. We have pointed out that while the earlier Service Tax Credit Rules, 2003 specifically barred taking credit of mobile phone services, the present Cenvat Rules, 2004 do not bar taking the credit. However, the officials object saying that mobile phones are used mostly for personal calls. Please advise.

So long as the service is covered under the definition of 'input services' given in the Cenvat Credit Rules 2004, the Cenvat credit of service tax that you pay cannot be denied to you. Regarding the contention that mobile phones can be used for making personal calls, even landlines can be used for making personal calls. When credit of service tax paid on landline services can still be allowed, there is no warrant to deny the credit of service tax paid for mobile phone services. The contention of your Central Excise officials, therefore, is devoid of merit.

We had presented certain export documents under LC calling for Bill of Exchange 60 days from Bill of Lading date. We had included the date of Bill of Lading to calculate the maturity date. However, the LC opening bank has rejected the document stating that for calculating the maturity date, the date of Bill of Lading must be excluded. Our contention is that the Bill of Lading date must be excluded only where the LC calls for Bills of Exchange 60 days 'after' the date of Bill of Lading. Please advise.

The Uniform Customs and Practices for Documentary Credits (UCP 500) provides no guidance where the words "from" and "after" are used to determine maturity dates of drafts. Reference to "from" and "after" in the UCP 500 refer solely to date terminology for periods of shipment

Where the word "from" is used International Standard Banking Practices (ISBP-645) for examination of documents under documentary credits would exclude the date mentioned, unless the credit specifically provides that "from" includes the date mentioned.

For the purposes of determining the maturity date of a time draft, the words "from" and "after" have the same effect.. Calculation of maturity commences the day following the date of the document, shipment, or other event. i.e. 10 days after or from March 1 is March 11.

This point is specifically dealt with in ISBP-645 brought out by the International Chamber of Commerce.