Circular No. 270 dated 18^th November 1996

Representations have been received regarding difficulties being faced in despatching liquid gases in tanker lorry on account of the exceptional nature of the gods whereby the quantity of delivery can be ascertained only after the goods are actually delivered from the specialised cryogenic tankers into the tankers of the buyers. As a result it is not possible to ascertain the quantum of the goods and the duty involved therein at the time of clearance and therefore the preparation of Modvatable invoice meant for an individual buyer, and payment of duty at the time of clearance is difficult. a request for prescribing a suitable procedure has been made.

2.     The matter has been examined by the Board.

3.     The scope of Rule 173G (i) (iv) has been examined in the light of various instructions, which were issued from F.No. 1/73/70-CX 6 dated 12th April, 1971, F.No. 201/34/71-CX.6 dated 12th March, 1972 and from F.No. 202/6/72-CX.6 dated 15th March 1973. These circulars were issued to permit post-debit entries in the Personal Ledger Account with the condition that the debit should be raised against the date when the actual clearance takes place. The Board Circular dated 15th March, 1973 (copy enclosed) brings out the intentions for introduction of a new clause (iv) in sub-rule (1) of rule 173G substituting the existing clues (iv) and (v). This is a general clause, which can be made applicable to ay commodity under the exceptional circumstances provided the prior permission of the Board is obtained in this regard.

4.     Keeping in view the exceptional nature of the Liquid Gases, the Board has decided to permit the removal of Liquid gases in a tanker lorry from the factory of the manufacturer without payment of Central Excise duty at the time of clearance and to prepare invoice, to determine the duty and debit the account current (PLA or RG 23A Part II/RG 23A Part II subject to applicability of Modvat Rules) afterwards subject to the observance of the following procedure:

(i)     The assessee shall submit a written request and CCE alongwith a undertaking that he shall maintain sufficient balance in the account current and abide by all conditions, restrictions as may be prescribed by the Commissioner, for following the Pass-Out System for Liquid Gases.

(ii)    The liquid gases shall be removed in the tanker lorry under the Pass-out document (as per proforma enclosed as Annexure-I) duly filled in without payment of Central Excise duty. The pass-out document shall indicate the description and net quantity of goods despatched. It shall be made out in quadruplicate by using double side carbon paper. All pass - out documents shall bear printed serial numbers and shall be pre-authenticated by the proper central excise officer before they are put to use. The original and duplicate copy of the aforesaid document will accompany the goods to the destinations. Triplicate copy of the document with part-I thereof completely filled in shall be handed over to the sector Officer on the same day immediately after the despatch of the goods. The quadruplicate copy shall be retained by the assessees.

(iii)   It should be ensured that there is sufficient balance in the PLA or RG 23A Part II/ RG 23C Part II wherever applicable to cover the estimated/ likely duty liability of the goods intended to be removed under the Pass-out system in a particular day.

(iv)    The quantity delivered to or received by each customer shall stand recorded on original and duplicate copies of each pass-out document under the customer's signature.

(v)    On completion of deliveries, the quantity actually delivered, the quantity actually returned in tanker lorry and the quantum of loss, if any, shall be duly recorded in a separate register to be maintained in respect of goods cleared under the special procedure (as per proforma in Annexure-II) and shall also be recorded as quantity in stock in the RGI Register (col.6) immediately after the return of the lorry tanker after a single trip/ transportation or latest by next morning.

(vi)    After return of the tanker lorry, customer wise Invoice/ A.R.3A may be prepared basing on the quantity actually delivered and central excise duty where payable shall be determined and paid by the assessee not only on the total quantity of the non-exempted liquid gases delivered to the customers but also on the quantity of transit loss and other losses, if any their own initiative.

(vii)   In case, deliveries are effected to both non-exempted and exempted customers form the same tankers, the covering invoice/ A.R. 3A as raised subsequently must reflect the nature of each delivery very distinctly.

(viii)  In case of transit and/ or other losses, over and above any loss permitted by the Board, if any, the assessee shall be liable to pay central excise duty on the quantity of such losses as determined at the highest effective rate prevailing on the date of removal of the consignment of the liquid gases transported by the tanker lorry. The assessee shall give a written undertaking in this regard, on each copy of Pass-out document covering the goods.

(ix)    All Invoice/ A.R. 3As and P.L.A./ RG 23A/ RG23C debit entries shall be dated as per the dated of despatch of the consignment and cross reference shall be maintained in the pass-out document/ Invoice/ A.R. 3A etc.

(x)    The original of the Pass-out document showing particulars of the quantity despatched, quantity delivered to the individual consignees/ customers, particulars of payment of central excise duty under PLA/ RG 23A Part II/ RG 23C Part entry, invoice relating to both the delivered and unaccounted/ lost quantities, if any, quantity returned and accounted for shall be handed over to the Sector Officer immediately after the return of the lorry tanker and immediate accountal, as stated above. An acknowledgment for the submission of the original Pass-out document should be obtained by the consignor factory. The duplicate copy of the completed Pass-out document shall be retained by the assessee for his record.

(xi)    Before filling the lorry tanker for the next supply/ clearance, the quantity of the goods already contained therein (left over undelivered goods of the previous supply) should be re-ascertained and any difference between the quantity returned from the previous clearance and the quantity re-ascertained as above shall be treated as storage loss within the factory on which the assessee will immediately pay the central pay the central excise duty at the highest effective rate prevailing on the dated of the previous clearance, on his own. Such payment of duty shall be made before taking that next clearance. Such differential quantity and the particulars of payment of duty thereon should be shown in the appropriate column of the register in Annexure-II, as also by a separate endorsement in RG-I.

5.     The Commissioner of Commissioner of Central Excise may prescribe any additional conditions or restrictions or relax any provisions of this circular, as deemed fit, keeping in view the local requirements and the revenue safeguards.

6.     The Commissioner of Central Excise may also withdraw this special facility to a manufacturing unit if the procedure prescribed in the regard in not followed scrupulously and which results into any loss of revenue.

ANNEXURE - I

Pass - Out Document for removal of Liquid Oxygen, Liquid nitrogen and other gases in terms of Rule 173- G (1) (iv)

(Original/ Duplicate/ Triplicate/ Quadruplicate)

1. Name & Address of the manufacturer_________________________________________ Sl. No________________  

2. Reference No.___________________________ Date: _______________________  

3. P.L.A. No. _______________________________

Range: 
Division:
Commissionerate:
ECC No.:

Part - I

1. Description of the goods and its Tariff Heading/ Sub-Heading No. 

2. Lorry Tanker No. ____________ 

3. Gross weight of the loaded tanker at the time of despatch.

4. Tare Weight of Kg. ____M³ Lorry Tanker _____________ (Kgs) 

5. Net weight of goods despatched (i.e. less tare weight of the tanker lorry) Kg._____M³

Part -II

(i)     Supply Schedule

(ii)

1.     Quantity of goods returned to factory in lorry tanker.  Kg. __________ M3

2.     Quantity of goods lost in transit & other losses, if any Kg.__________ M3

I/ We hereby solemnly declare that information above are true and correct in all respects and we have sufficient balance in PL, RG 23A Part II RG 23C Part II*

(Please tick mark in the relevant box) to cover the duty)

Signature of the Registered person or his authorised agent__________________

Part - III

Duty Paid

Signature of the registered person or his authorised agent_______________________

Undertaking

I/ We am/ are taking clearance of the aforesaid goods under special procedure as per Commissioner of Central Excise permission P. No. __________________ dated ________________ under a specific condition that any quantity not shown as delivered to the customer/ consignees including the quantity attributable to all kinds of losses will be liable to full payment of duty by me/ us. Accordingly I/ we hereby undertaken that I/ We will pay central excise duty on the entire quantity of such unaccounted goods including all types of losses at the highest effective rate prevailing on the date of removal of the consignment.

Place:

Date:

Signature of the Registered person or his authorised agent______________________

Register for Removal of Liquid Oxygen/ Nitrogen and other Gases under Special Procedure

Name of the Product:

This register shall be separately maintained for each type of goods.

*Subject to applicability of Modvat Scheme.

Enclosure to Circular No. 270 dated 18^th November 1996

Central Excise - Clearance of excisable goods - Procedure for determining duty and debit in personal ledger account under rule 173 G of Central Excise Rules, 1944

I am directed to enclose a copy of notification No. 26/73-C.E. dated the 24th February, 1973 substituting the existing clauses (iv) and (v) of the proviso to sub-rule (1) of rule 173 G of the Central Excise Rules, 1944, by a new clause (iv).

2.     In this connection it may be stated that the original clause (iv) of proviso to sub-rule (1) of rule 173 G empowers the Collectors to permit assessees manufacturing or warehousing goods falling under Items Nos. 6 to 11A of the Central Excise Tariff to determine the duty on the quantity cleared from storage tanks in such manner as may be prescribed by the Collector for determining the duty and debiting it in the account-current. Similarly, existing clause (v) of the said proviso was inserted vide notification No. 19/72-C.E. dated 26.2.1972 conferring similar powers on Collectors in respect of iron and steel products manufactured by major steel plants for devising a suitable procedure for permitting the assessees to cost debit entries in their personal ledger account within a period of one week from the date of actual clearance, as specially permitted vide Board's orders contained in their letter F. No. 1/73/70-CX.6, dated 12.4.1971, and F.No. 201/34/71-CX.6 dated 16.3.1972.

3.     It has been brought to Board's notice that similar difficulties are being faced in their case of some other commodities in following the normal procedure under rule 173 G, In order, therefore, to provide necessary authority under the rules under which suitable special procedures could be adopted in respect of particular commodities in exceptional circumstances as and when considered necessary, it has been decided to insert a general clause in the proviso to sub-rule (1) of rule 173 G in place of the existing clauses (iv) and (v) which relate only to commodities falling under items Nos. 6 to 11A and 25, 26 and 26AA of the Central Excise Tariff. A new clause (iv) has accordingly been inserted in the said proviso under notification No. 26/73-CE dated 24.2.1973. In this connection it may be clarified that the special procedures that are already being followed in the case of goods falling under tariff items Nos. 6 to 11A and 25,26, and 26AA will continue to be followed under the new clause (iv) now being introduced.

4.     It may please be noted that the now clause (iv) of the proviso to sub-rule (1) of rule 173 G should be invoked only in cases where a departure from the normal procedure laid down in rule 173G has been specifically authorised by the Board. Board's prior permission in all other cases, where it is felt that normal procedures cannot be applied, should be obtained.