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Regarding applicability of Notification No. 8/97-CE dated 1.3.97 -
Clarification
Circular
No. 442 dated 4th March 1999
I
am directed to refer to Notification No. 8/97-CE dated 1.3.97 which exempts the
finished products, rejects and waste or scrap, produced of manufactured in a
100% EOU or FTZ wholly from raw-materials produced or manufactured in India, and
allowed to be sold in India, from so much of duty of excise leviable thereon
under Section 3 of the Central Excise Act on like goods produced or manufactured
in India other than in 100% EOU or a FTZ, if sold in India. Subsequently,
Circular No. 389/22/98-CX dated 5/5/98 was issued, restricting the benefit of
the said notification to only those units, which manufacture goods only from
indigenous raw materials. Representations were received from the trade that even
though the finished goods sold into the DTA by them was produced from indigenous
raw materials only and that for export from imported raw materials, benefit of
Notification No. 8/97 was being denied simply because the said circular
clarified that the benefit of the notification was available to units which
manufacture from indigenous raw materials only. The circular is interpreted by
the field officers to mean that to avail benefit under this notification no
import should be made by the unit, irrespective of the fact whether the imported
goods are to be/being used in the manufacture of a different final product or
not.
2.
The matter has been examined. It is clarified that benefit of
afore-mentioned notification may be allowed to units importing as well as
indigenously procuring raw materials, provided, the unit is able to satisfy the
jurisdictional Central Excise Authorities beyond doubt that inputs used in the
manufacture of goods to be sold in DTA are manufactured out of indigenous raw
materials only by way of maintenance of records, physical scrutiny/verification
and the manufacturing process etc. The jurisdictional Assistant Commissioner,
keeping in mind the nature of goods produced, may get the input-output norm
fixed by a Cost Accountant so as to ensure that imported inputs, if common, are
not used for manufacture for final products to be cleared in DTA. In case of
common inputs or final products, adequate precautions should be taken and unless
it is conclusively provided the goods for sale in DTA are manufactured wholly
out of indigenous raw materials, benefit of notification should not be allowed.
3.
In case where inputs/final products are common, manufacturing lines are
not separate or if the inputs/final products are difficult to identify, in spite
of the above, benefit of the notification should be denied in such doubtful
cases to avoid misuse of the exemption notification.
4.
All pending cases may be resolved in the light of the above.
5.
Para 3 of the Circular No. 389/22/98 dated 5.5.98 stands modified to that
extent.
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