On clearance of goods manufactured by an Export Oriented Unit (EOU) from an EOU to the Domestic Tariff Area (DTA) under 3 per cent Export Promotion Capital Goods (EPCG) scheme, please advise whether: (i) excise duty of 8.24 per cent needs to be paid; (ii) Terminal Excise Duty (TED) refund of 3.09 per cent can be claimed under deemed export benefits; (iii) the buyer can take Cenvat Credit of 3.09 per cent; and (iv) 3.09 per cent duty can be paid from Cenvat Credit balance?
Goods cleared from EOU to DTA suffer excise duty equivalent to customs duty payable on a like product, if imported. While calculating the duty amount, the customs tariff rate read with any exemption notification has to be reckoned. Benefit of any end-use-based exemption notification can also be taken, if the end-use conditions are satisfied. Therefore, only 3.09 per cent duty has to be paid on clearances by EOU, under EPCG scheme. In this connection, you may refer to DGFT Policy Circular no. 5/2005-09 dated 13.05.2005 and CBEC Instructions issued vide F.No. 305/83/94-FTT dated 15.09.1994.
The customs tariff and customs notifications come into play only for the purpose of duty calculation but the nature of 3.09 per cent duty is excise duty, as held in the case of Vikram Ispat [2000 (120) ELT 800 (Tri.LB)], Shajanand Technologies Pvt. Ltd. [2007 (210) ELT 108 (Tri. Ahmd.)], General Optics (Asia) Ltd. [2005 (191) ELT (Tri. Chennai)], to quote only a few judgments.
As the nature of duty is excise duty, you can utilise the Cenvat Credit balance to pay the 3.09 per cent duty and the buyer can take Cenvat Credit of the 3.09 per cent duty. If the buyer does not take the Credit, refund of the TED can be claimed.
I am a registered dealer. I get HR/CR galvanised in the form of coils which weigh 24-25 MT. The supplier manufacturer makes Cenvat invoice for delivery at registered premises. Coils have to be cut for marketability. In this regard I incur transportation charges to transport coils to cutting machine (job work). Is there any way to avoid transport charges?
You can ask the manufacturer to raise invoice on you but show the name of job-worker as consignee and send the goods to the job-worker. You can follow the challan procedure given in Annexure D to CBEC Circular no. 33/33/94-CX.8 dated 4th May 1994. As per CBEC Circular no. 265/99/96.CX dated 12.11.1996, you can take Credit only after receipt of all the goods (after conversion by job-worker) covered by the invoice.
In the recent Foreign Trade Policy (FTP) announcement, it was mentioned that export incentives need not be surrendered in case of write-off of export proceeds. But, our bankers are insisting that proportionate incentives must be surrendered. Can you please advise?
The FTP refers to a situation where Reserve Bank of India grants a specific write-off based on a letter from the Indian Mission abroad that the export proceeds have become un-recoverable and not to a situation where you seek self write-off.
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