Stock Transfer by an EOU to DTA, whether Additional Duty of Custom leviable under Sub-section (5) of Section 3 of the Customs Tariff Act, 1975 is applicable – Regarding. - Customs - DGEP/EOU/29/2012/ 1018

Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Dated 29-07-2012 Subject : Stock Transfer by an EOU to DTA, whether Additional Duty of Custom leviable under Sub-section (5) of Section 3 of the Customs Tariff Act, 1975 is applicable Regarding. C AG has raised an objection regarding leviability of Special Additional Duty of Customs in case of stock transfer by an EOU. The gist of the audit objection is an under : According to the proviso to serial no. 2 of the notification no. 23/2003-C.E., dated 31 March, 2003 as amended, it is stipulated that while calculating the aggregate of the Customs Duties, Additional Duty of Customs leviable under Sub-section (5) of Section 3 of the Customs Tariff Act shall be included, if the goods cleared into Domestic Tariff Area (DTA) are exempt from payment of Sales Tax or Value Added Tax (VAT). Further, in terms of Notification No. 19/2006-Cus., dated 1 March 2006 , an Additional Duty of Customs shall be levied at the rate of four percent ad valorem on all the imported goods. Thus is the case of finished goods cleared in DTA which are exempt from payment of Sale Tax or VAT, the Special Additional Duty of Customs at the rate of four percent becomes leviable. 2. The objection has been accepted by the department. 3. S. No. 1 of the table to the Notification No. 23/2003-C.E., dated 31-3-2003 as amended, exempts Duty of Excise leviable thereon as is equivalent to the Additional Duty of Customs leviable on such goods under Sub-section (5) of Section 3 of the Customs Tariff Act, 1975 (51 of 1975) , read with the proviso to Sub-section (1) of Section (3) of the said Central Excise Act, subject to the condition that such goods are not exempted by the State Government from payment of Sales Tax or Value Added Tax (VAT). Further, Circular No. 38/2003-Cus., dated 6-5-2003 has categorically clarified that stock transfers of goods by an EOU Unit to another division/unit of the same company tantamount to DTA sale. However, since Sales Tax/VAT is not leviable on stock transfer, such clearances get covered under the not exempted category in the condition specified at S. No. 1 of the Table annexed to Notification No. 23/2003-C.E., dated 31-3-2003. 4. In the view of the above, it is clarified that in the case of finished goods cleared in DTA as stock transfer, if exempt from payment of Sale Tax or VAT the Additional Duty of Customs shall be leviable at the prescribed rate. 5. The above clarification may please be circulated to all the filed formations and Trade for necessary compliance. [DGEP/EOU/29/2012/ 1018]