 |
OFFICE OF THE
COMMISSIONER OF CUSTOMS, |
PUBLIC
NOTICE NO. 94 /2001
Sub: Method of calculation of Duty Leviable in
Terms of Central Excise Notification No.2/95-CE, Dated 4-1-95 on
Goods cleared into Domestic Tariff Area by EOU/EPZ/ETP/STP Units
under Para 9.9(b) of the Exim Policy - Reg.
******
Govt. of India, Min. of Finance,
Dept. of Revenue, New Delhi, Circular No.07/2001-Cus., vide
F.No.305/93/2000-FTT dated 06.02.2001, is reproduced below for the guidance of
the Importers, Clearing Agents, and Trading Public.
C11/10/2001-AP(PORT) (S.
SANKARAVADIVELU)
CUSTOM HOUSE, CHENNAI-1. DY. COMMR. OF CUSTOMS (APPG.)
DATE :24.05.2001
________________________________________________________________________
CIRCULAR NO.07/2001-CUS.
F.NO.305/93/2000-FTT
DATED 06.02.2001
Attention is invited to
Board’s Circular F.NO.512/91/93-CUS.VI, dated 18th May 1994
regarding the duty payable on excisable goods cleared from 100% Export Oriented
Units/Units in the Export Processing Zone into the Domestic Tariff Area (DTA).
Subsequently, another Circular was issued vide F.NO.345/12/99-TRU, dated
24.9.1999, suggesting a method for computing excise duty payable on the DTA
clearances of EOU/EPZ units. As the instructions contained in the two Circulars
referred to above were not in harmony with each other, a doubt has been raised
as to the correct method of calculation of duty for such DTA clearances of
EOUs/EPZ units.
2. The matter has been
carefully examined by the Board. As per the proviso to section 3(1) of the
Central Excise Act, 1944, excisable goods produced or manufactured by EOUs/EPZ
units and brought to any other place in India, are leviable to duties of excise
in an amount equal to the aggregate of the duties of Customs which would be
leviable under section 12 of the Customs Act, 1962 or any other law for the
time being in force on like goods produced or manufactured outside India, if
imported into India. However, under notification No.2/95-CE, dated 4-1-95, the
goods manufactured or produced by EOUs/EPZ units and cleared into DTA in
accordance with certain specified paragraphs of the Exim Policy are charged
to excise duty at a concessional rate which is equal to 50% of each of the
duties of Customs. Such being the case, each of the duty leviable on import
of like goods should be worked out first and thereafter, 50% of the amount of
each duty so calculated, taken together should be collected as excise duty on
such goods produced by EOUs/EPZ units when cleared into the DTA.
3. In view of the
position explained above, it has been decided that in terms of Board’s Circular
F.NO.345/12/99-TRU dated 24-9-1999 with effect from 16-9-1999 (i.e. from
the date of issue of Notification No.38/99-CE dated 16-9-99), excise duty on
goods manufactured or produced by EOUs/EPZ/EHT/STP units and cleared into DTA
in accordance with notification No.2/95-CE, dated 4-1-95 would be collected in
the same manner as given in illustrations showing calculation of aggregate of
Customs duties leviable. However, for purpose of clarification, the detailed
calculation is shown in the Annexure to this Circular.
4. Board’s Circular
F.NO.512/91/93-CUS.VI, dated 18-5-94 stands rescinded. The short levy on or
after 16-9-1999 calculated on the basis of method of calculation shown in the
Annexure, may be recovered from EOUs/EPZ units and action in this regard may be
completed by 15-2-2001.
*****************
Annexure
Assuming the product X has the following value and
chargeable to following duties:
(i)
Value of goods under section14 of Customs Act, 1962
= Rs.100/-
(ii)
Basic Customs Duty = 35%
(iii)
Surcharge = 10%
(iv)
Additional Duty = 16%
(v)
Special Additional Duty = 4%
The
calculation of duty leviable on the goods produced or manufactured by
EOUs/EPZ/STP/EHTP units and cleared into DTA as per specified paragraphs of the
Exim Policy would be as follows:-
Method
of calculation of duty
On assessable value of Rs.100/-, the goods would be
leviable to :-
Basic Customs Duty @ 35% = Rs.35.0/-
Surcharge @ 10% =
Rs.3.5/-
Total Basic Duty +
Surcharge =
Rs.35.0 + Rs.3.5/-
= Rs.38.5/-
Value for the purpose of
calculation of Additional Duty
under section 3 of CTA,
1975 =
Rs.100/- + Rs.38.5/-
=
Rs.138.5/-
Additional Duty of
Customs =
16% of Rs.138.5/-
= Rs.22.160/-
Value for the purpose of
calculation of Special
Additional Duty under
section 3A of CTA, 1975 =
Rs.100/- + Rs.38.5/- +
Rs.22.160/- = Rs.160.660
Special Additional Duty =
4% of 160.660/-
=
Rs.6.426/-
Total Duty Payable =
Rs.35.0 + 3.5 + 22.160 +
6.426/- = Rs.67.086/-
Duty required to be paid =
50% of 67.086
=
Rs.33.543/-
(Read with notification No.2/95-CE, dated 4-1-1995 as amended)
The
amount of duty so calculated above to be payable by the EOUs/EPZ/STP/EHTP units
would be subject to the condition that such duty shall bot be less than the
duty of excise leviable on the like goods produced or manufactured by units in
DTA.
**********
F.NO.512/91/93-CUS VI
DATED 18TH MAY 1994
Sub: Regarding clearance of excisable
goods from 100% Export Oriented
Units/Units in the Export
Processing Zones.
Certain
doubts have been expressed regarding the matter of calculation of the amount of
excise duty payable on clearances of excisable goods manufactured by a 100%
EOU/EPZ unit into Domestic Tariff Area in terms of Notification
No.97/91-Central Excise dated 7-10-91 (since rescinded and Notification
No.101/93-Central Excise, dated 27-12-93.
In terms of section 3 of the Central Excise and Salt Act,
1944, excisable goods produced or manufactured in a 100% EOU/EPZ unit are
liable to such excise duty in an amount equal to the aggregate of duties of
customs which would be leviable under Section 12 of the Customs Act, 1962, on like
goods imported into India. For calculating the amount of said excise duty, the
value of such excisable goods is to be determined in accordance with the
provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. Such like
goods when imported into India are chargeable to the basic duty of customs as
also the additional duties or auxiliary duties as the case may be. For the
purposes of calculating the additional duty under Section 3 of the Customs
Tariff Act, 1975, the value of the goods is the sum total of -
(i)
The value of the goods calculated in terms of
Section 14 of the Customs Act.
(ii)
The basic duty of Customs and
(iii)
The auxillary duty under the relevant Finance Act.
For
such computation, the effective quantum of basic/auxillary customs duty is
added. In terms of the exemption Notification No.97/91-Central Excise or
Notification No.97/91-Central Excise or Notification No.101/93-Central Excise,
excisable goods produced or manufactured in a 100% EOU/EPZ unit are exempted
from so much of the duty of excise as is in excess of the amount calculated at
the rate of 50% of the duties of customs which would be leviable under Section
12 of the Customs Act read with any notification for the time-being in force on
the like goods imported into India.
A question has been raised whether for quantifying the
value for the purpose of additional duty, the basic duty and the auxillary duty
would be 50% of the respective amounts in terms of the aforesaid notifications
or the respective amounts by themselves.
The matter has been
examined by the Board and it has been observed that the two Central Excise
Notifications No.97/91-as also No.101/93 clearly stipulate that 50% of each of
the duties of customs should be levied for DTA clearance. The basic duty is
collected in terms of the schedule to the Customs Tariff Act, Additional Duty
is collected in terms of Section 3 of the Customs Tariff Act, and the auxillary
duty in terms of the respective Finance Act. In this situation, the wording
“each” used in the Notification No.97/91-CE AND No.101/93-CE is significant for
the purposes of calculating/collecting the various duties of customs duty (CV
duty). In short, the effective or the collectable basic customs duty/auxillary
duty is first to be determined in terms of the above Notifications. The
collectable basic duty/auxillary duty in terms of the said exemption
notifications would be the 50% of such basic duties/auxillary duties normally
leviable. For computing the value for the purposes of determining the
additional customs duty under Section 3 of the Customs Tariff Act, 1975, the
effective chargeable basic duty/auxillary duty is to be added to the value of
the goods imported in terms of Section 14 of the Customs Act, 1962. In this
type of cases (or DTA clearances) since the effective basic customs duty or the
auxillary duty is 50% of the normal effective duties, it is only the
concessional 50% basic duty or auxillary duty that would form the add up
component for the purpose of determining the value for levy of additional customs
duty. Hence, while computing the value in terms of notifications 97/91-CE or
101/93-CE should be taken into account. The method of calculation has been
clarified in the example given in the Annexure. It is felt by the Board that
the Method-A is the correct method
of calculating the amount of excise duty in respect of clearance in the DTA.
ANNEXURE
Manner of
calculation of Excise Duty on Clearance effected by EOU/EPZ
units in the Domestic Tariff Area.
Assuming
value of goods under Section 14 = Rs.1000
of
Customs Act, 1962
Basic
Customs Duty = 100%ad valorem
Auxillary
duty = 50% ad valorem
Additional
duty = 20% ad valorem
METHOD
‘A’
Basic
Customs Duty = 50% of Rs.1000
(read
with notification 97/91-CE) = Rs.500
Auxillary
duty = 25% of Rs.1000
(read
with notification 97/91-CE) = Rs.250
Total
basic + Auxillary = Rs.750
Value
for the purposes of calculation of Addl. = Rs.1000+Rs.750
Duty
under Section 3 of CTA, 1975 = Rs.1750
Additional
duty (read with Noft.97/91-CE) = 10% of Rs.1750 = Rs.175
Duty
required to be paid = 750 + 175 = Rs.925
METHOD
‘B’
Basic
Customs Duty @100% = Rs.1000
Auxillary
duty @50% = Rs.500
Rs.1500
Value
for the purpose of calculation of = Rs.1000+Rs.1500
Additional
duty under Section 3 of CTA 75
= Rs.2500
Additional
duty @20% = 20% of Rs.2500
= Rs.500
Total
Duty = Rs.1500+500=Rs.2000
Duty
required to be paid = 50% of Rs.2000
(read
with Notfn. No.97/91-CE) = Rs.1000
Method
A is the correct method to quantify the amount of duty required to be paid by
EOU/EPZ units for clearance into Domestic Tariff Area.
*************
F.NO.345/12/99-TRU
DATED THE 24th SEPTEMBER, 1999
Sub: Notification No.38/99-Central Excise, dated 16.9.99
- Supreme Court Decision in the case of M/s.
Hyderabad Industries Ltd. regarding Changing section for levy of additional
duty of customs - reg.
Reference is invited to the notification 38/99-Central
Excise dated 16.9.99 which amends notification Nos.2/95-CE, dated 4.1.95,
20/97-CE, dated 11.4.97 and 13/98-CE, dated 2.6.98, so as to substitute the
references in the said notifications to “the duties of customs leviable under
section 12 of the Customs Act, 1962” with “the duties of customs leviable under
the Customs Act, 1962 or under any other law for the time being in force”.
2.
The goods cleared by Export Oriented Undertakings
(EOUs) and Free Trade Zones in the Domestic Tariff Area (DTA), are treated at
par with ‘imported’ goods, and the excise duty leviable on such clearances, in
terms of the proviso to section 3(1) of the Central Excise Act shall be an
amount equal to the aggregate of all the customs duties which would be leviable
under section 12 of the Customs Act, 1962 on like goods produced or manufactured,
outside India, if imported into India. Under notification Nos.2/95-CE, dated
4-1-95, 20/97-CE, dated 11-4-97 and 13/98-CE, dated 2-6-98, concessional excise
duties equal to 50%, 50% and 30% of the aggregate of such customs duties
respectively, have been prescribed in respect of the DTA clearances of the
goods specified under the respective notifications.
3.
In the case of M/s Hyderabad industries Ltd.
[1999(108) ELT 321], the Hon’ble Supreme Court has held that the charging
section for the additional duty of customs, leviable under section 3(1) of the
Customs Tariff Act, 1975, is not section 12 of the Customs Act. In view of the
said judgement, duties of customs such as the said additional duty cannot be
considered to be levied under the said section 12 of the Customs Act. Since the
notifications above referred to the duties of customs leviable under section 12
of the Customs Act, 1962 for computation of the excise duty payable on the DTA
clearances, such other duties of customs other than the basic customs duty,
will not be includible in such computation, consequent to the said Supreme
Court judgement.
4.
Notification No.38/99-CE, dated 16-9-99, has been
issued too suitably amend each of the notification Nos.2/95-CE, 20/97-CE, and
13/98-CE. As a result, duty on DTA clearances by EOUs, etc. will be computed in
the same manner as was being done before but with one change.
5.
The change is that the excise duty payable under
the said notifications is subject to the statutory ceiling prescribed in terms
of the proviso to sub-section (1) of section 3 of the central excise act, 1944.
This aspect is illustrated below with two examples.
Illustration 1 :- Suppose product X is liable for only a tariff rate of
basic customs duty of 25% by under an exemption is liable for basic customs
duty of 15% (surcharge 1.5%), and additional duty of customs of 16%, then the
computation of excise duty payable on the DTA clearances of X under
notification No.2/95-CE will be as follows:
|
Maximum excise duty
payable in terms of proviso to section 3(1)
|
15% |
|
Aggregate of customs
duties leviable under the Customs Act or under any other law in force read
with relevant notifications (i.e., equal to the duty in terms of notification
No.2/95-CE leviable prior to the said judgement) |
0.5*[15+1.5+1.165*16] =17.57% |
|
Excise duty payable
under the amended Notification No.2/95-CE |
Min [15%, 17.57%] = 15% |
Illustration 2: Suppose
effective rate of basic customs duty on the product X above is 25% (surcharge
2.5%), then the computation will be as follows:
|
Maximum excise duty
payable in terms of proviso to section 3(1)
|
25% |
|
Aggregate of customs
duties leviable under the Customs Act or under any other law in force read
with relevant notifications (i.e., equal to the duty in terms of notification
No.2/95-CE leviable prior to the said judgement) |
0.5*[25+2.5+1.275*16]=
23.95% |
|
Excise duty payable
under the amended Notification No.2/95-CE |
Min [25%, 23.95%] =
23.95% |
6.
The above changes are effective from 16th
September, 1999.
*****
