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Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
Circular No. 1046/34/2016-CX
New Delhi, the 16th September, 2016
To
The Chief Commissioners of Customs Central Excise & Service Tax (All);
The Chief Commissioners of Customs (All);
The Director Generals/Directors of Customs, Central Excise & Service Tax (All);
Webmaster, CBEC.
Subject: Supply of goods manufactured by EOUs without payment of Central Excise
Duty against Advance Licence/Authorisation- reg.
Madam/Sir,
Representations have been received from trade and field formations regarding
applicability of second proviso to para 6 of
notification no. 22/2003-CE dated
31.03.2003 as amended, when goods manufactured by EOU are supplied to Advance Licence /Authorisation holder in DTA. The said proviso seeks to deny the
exemption from central excise duty on inputs, in cases where goods cleared into
DTA are either non-excisable or in case of imports attract NIL rate of Customs
duty and additional Customs duty. Identical proviso exists under para 3 of
notification 52/3003-Cus dated 31.03.2003 as amended to deny exemption from
customs duties on similar grounds. The said proviso reads as under,
“Provided further that where such articles (including rejects, waste, scrap and
remnants), are either non excisable or such articles (including rejects, waste,
scrap and remnants), if imported, are leviable to nil rate of duty of customs
specified under First Schedule to the Customs Tariff Act, 1975 and nil
additional duty leviable under section 3 of the said Customs Tariff Act, read
with exemption notification in this regard, if any, no exemption in respect of
inputs utilized for the purpose of processing, manufacture, production or
packaging of such articles (including rejects, waste, scrap and remnants) shall
be available under this notification”
2. The issue was discussed in the last Central Excise Tariff Conference wherein
it was decided that the same is required to be clarified by the Board.
3. The issue has been examined. It is seen that s.no. 22 of
notification no.
23/2003-CE dated 31.03.2003 as amended, issued in respect of goods manufactured
by EOUs and cleared in DTA, specifically exempts Central Excise duty when such
manufactured goods are supplied to an Advance Licence/Authorisation Holder. In
fact, clearance from EOU or DTA unit to Advance Licence/Authorisation holder has
been allowed without payment of Central Excise duty, as both the cases are of
"Import substitution." In case of supply of goods to Advance Licence/Authorisation
holder, the export obligation is cast upon person holding Advance Licence/Authorisation
and in case of default in export obligation recovery from the person holding
Advance Licence/Authorisation is provided for in law.
4. Further, if the EOUs are made liable to pay back the amount availed as
exemption on the inputs in case of supplies to Advance Licence/ Authorisation
Holder, with reference to the said proviso under
notification no. 22/2003-CE
dated 31.03.2003, then the EOUs would be placed in a disadvantageous position
when compared to a DTA unit which supply manufactured goods to Advance Licence
Holder without payment of Central Excise duty in terms of
notification no
44/2001-CE(N.T.) dated 26.06.2001 and without reversal of the CENVAT credit
availed on inputs. This position has been clarified by Board vide
circular no.
785/18/2004-CX dated 17.05.2004.
5. Accordingly, it is clarified that the second proviso to para 6 of the
notification no. 22/2003-CE dated 31.03.2003 and the proviso to para 3 of
notification no. 52/2003-Cus dated 31.03.2003 (refer para 1 of the circular)
would not be applicable, in case of supply of manufactured goods by EOU to
Advance Licence/Authorisation holder in DTA, without payment of Central Excise
duty.
6. Hindi version of the circular would follow. Difficulty; if any, in
implementation of the circular may be brought to the notice of the Board.
F. No. 268/01/2016-CX.8
(Rohan)
Under Secretary to the Govt. of India
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