Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
New Delhi, dated the 28th June, 2010.
Circular No. 928 /18 /2010-CX
All Director Generals,
All Chief Commissioners of Central Excise (including LTU),
All Commissioners of Central Excise (including LTU).
Subject: Amendment to Notification no. 42/2001-CE (NT) dated 26.06.2001-reg.
It has been brought to the notice of the Board that some of the manufacturers
of exempted goods are exporting such goods under bond. Subsequently, they claim
refund of accumulated input credit under Rule 5 of the CENVAT Credit Rules,
2004. The department had objected to this procedure on the ground that if the
goods are exempted from payment of excise duty, in that case the goods cannot be
exported under bond for the reason that bond is executed only when goods are
liable for payment of excise duty and if there is no excise duty, there is no
question of exporting under bond. However, it has been observed that in some
cases, the judicial pronouncements on the issue have been against the
- The matter has been examined. The policy of the govt. is not to tax the
exports. There are different methodologies and procedures for refund in
different situations. If the goods are exempted, then the department has
prescribed a detailed procedure for refund of input taxes through Notification
No. 21/2004-CE (NT) dated 06.09.2004, wherein a detailed procedure requiring
verification of details like manufacturing process, input-output ratio, wastages
etc., by the departmental officer is prescribed. The reason for the same is that
in case of exempted goods, the department does not exercise control. It appears
that the exporters are exporting the exempted goods under bond to avoid detailed
verification and scrutiny by the department for claiming of refund of input
taxes. Accordingly, it was felt necessary to correct the anamoly.
- In view of above, an amendment to the conditions for exporting under bond
under the Notification No. 42/2001-CE (NT) dated 26.06.01, has been notified
through Notification No. 24/2010-CE (NT) dated 26.05.10, wherein, goods which
are exempted from payment of duty or chargeable to nil rate of duty, have been
disallowed to be exported under bond. Since, 100% EOU’s are also required to
export the goods under bond, in terms of Customs and Excise notifications, the
exports from 100% EOU’s have been specifically excluded from the purview of this
- Trade & Industry as well as field formations may be suitably informed.
- Receipt of this circular may kindly be acknowledged.
- Hindi version will follow.
(Amish Kumar Gupta)