Surprise checks, survey to identify erring units

After the centre amended provisions to disallow excise duty exemptions to industries involved only in peripheral activities in Uttarakhand and Himachal Pradesh, a survey is being conducted in this regard to identify the erring units.

Surprise checks are also being conducted on some units in the industrial hubs of Selaquie and Haridwar, sources in the office of the Central Excise and Service Tax Division, Dehra Dun said.

So far, the department has taken action against at least 4 to 5 units and recovered duty from them, the sources said.

"A survey is being conducted following the amendment to exclude benefits of area-based exemptions to those units which undertake only peripheral activity," said a top official.

The Central government's notification of June 6, 2003 provides full exemption from excise duty to the units located in specified areas of Uttarakhand and Himachal Pradesh.

However, the Centre on January 18 this year carried out amendments disallowing any benefit to all those units which do not set up manufacturing facilities in these states, and carry out only packaging and labeling work.

In order to ensure genuine industrial activities in these regions, it has been decided that benefits of duty exemption should not be admissible to industrial goods which involve only peripheral activities like preservation during storage, cleaning operations, packing, re-packing, labeling or re-labeling, sorting, alteration of retail sale price etc.

This will ensure that the intended purpose of promoting substantial industrial/manufacturing activities through grant of fiscal incentives is fully met.

The sources pointed out that even in respect of special category states in the North-East (States of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh and Sikkim), the benefit of excise duty exemption has been disallowed to units carrying out only such peripheral activities.

Meanwhile, under the surprise check, duty worth lakhs of rupees was recovered from a shoe unit in Selaquie area, the sources said. "We have also served notice to this unit not to go for mere packaging inside the unit," the official said.

The benefit under the new notifications will not be now available to goods, which have been subjected to only peripheral activities. In other words, units carrying out only such processes would be required to pay duty as per normal procedure, the sources said.