| Date: |
12-08-1994
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| Notification No: |
Central Excise Circular No 48/1994
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| Issuing Authority: |
Central Excise
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| Type: |
Circular
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| File No: |
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| Subject: |
Exemption to components of IC engines cleared under Chapter X procedure before the Budget but used after the Budget - Whether exemption applicable
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Exemption to components of IC engines cleared under Chapter X procedure
before the Budget but used after the Budget - Whether exemption applicable
Circular
No. 48 dated 12th August 1994
I
am directed to say that notification No. 217/85-CE dated 8.10.85 exempted
specified component parts of diesel oil operated IC engines intended for use in
'the manufacture of such engines from excise duty. Exemption was subject to the
procedure set out in Chapter X of the Central Excise Rules, 1944. Similarly,
notification No. 112/88-CE exempted specified components for use in the
manufacture of diesel oil operated IC engines which themselves were exempt from
whole of the excise duty leviable thereon.
2.
The above notifications were rescinded as part of the budget changes. A
question has been raised as to the levy of excise duty, if any, on the
components which were cleared from the factories under Chapter X procedure prior
to 1.3.94 but which were not used for the said purpose as on 1.3.94 but used
subsequently or still lying with the end users. It seems that in some cases
field officers have taken a view that with the rescinding of the aforesaid
notifications w.e.f. 1.3.94, the end-user would have to pay excise duty on the
components, which were received prior to 1.3.94 but still not used for the
intended purpose by 1.3.94.
3.
The matter has been examined. It is to be noted that the exemption
applied at the time of clearance of the goods from the factory of manufacture
and the condition of end-use is only a post clearance condition. It is not
necessary that the components ought to have been used for the intended purpose
before 1.3.94. The end-use condition can be satisfied even later and the benefit
of the exemption to the end-users cannot be denied. The only condition is that
the components should be proved to be used for the intended purpose viz. for use
in the manufacture of diesel oil operated internal combustion engines in the
case of components procured under notification No. 217/85-CE. In the case of
components procured under notification No. 112/88-CE, the components should be
proved to be used in the manufacture of diesel oil operated internal combustion
engines which themselves are exempt from the whole of the excise duty leviable
thereon. In other words, in so far as notification No. 112/88-CI is concerned,
if the components are used in the manufacture of such engines which are exempt
under notification No. 1/93-CE the exemption would be applicable even in such a
situation.
4.
It is requested that the pending cases may kindly be decided accordingly.
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