Clearances of exciseable goods from 100% Export Oriented Units/Units in the Export Processing Zones to the Domestic Tariff Area (DTA) - Manner of calculation of duty - Clarification regarding - Customs - F. No. 512/19/93-Cus.VI

Clearances of exciseable goods from 100% Export Oriented Units/Units in the Export Processing Zones to the Domestic Tariff Area (DTA) - Manner of calculation of duty - Clarification regarding F. No. 512/19/93-Cus.VI Dated 18-5-1994 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Clearances of exciseable goods from 100% Export Oriented Units/Units in the Export Processing Zones to the Domestic Tariff Area (DTA) - Manner of calculation of duty - Clarification regarding. Certain doubts have been expressed regarding the manner of calculation of the amount of excise duty payable on clearances of exciseable goods manufactured in a 100% EOU/EPZ unit into Domestic Tariff Area in terms of Notification No. 97/91-C.E., dated 7.10.1991 (since rescinded) and Notification No.101/93-C.E., dated 28-12-1993. 2. In terms of Section 3 of the Central Excises and Salt Act, 1944, exciseable 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 exciseable 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 auxiliary duty under the relevant Finance Act. For such computation, the effective quantum of basic/auxiliary customs duty is added. In terms of the exemption Notification No. 97/91-CE or Notification No.101/93-CE, 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 each 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. 3. A question has been raised whether for quantifying the value for the purposes of additional duty, the basic duty .and the auxiliary duty would be 50% of the respective amounts in terms of the aforesaid notifications or the respective amounts by themselves. 4. The matter has been examined by the Board and it has been observed that the two Central Excises 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 clearances. 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 auxiliary duty in terms of the respective Finance Act. In this situation, the wording "each" used in the Notification 97/91-CE and 101/93-C.E. is significant for the purposes of calculating/collecting the various duties of customs viz., the basic duty, the auxiliary duty and the additional customs duty (CV duty). In short, the effective or the collectable basic duty/auxiliary duty in terms of the said exemption notifications would be the 50% of such basic duties/auxiliary 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/auxiliary 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 clearance) since the effective basic customs duty or the auxiliary duty is 50% of the normal effective duties, it is only the concessional 50% basic duty or the auxiliary duty that would form the add up component for the purposes of determining the value for levy of additional customs duty. Hence, while computing the value in terms of Section 3 of the Customs Tariff Act, 1975, for the DTA clearances the concessional basic duty/auxiliary duty leviable in terms of notifications 97/91-C.E. or 101/93-C.E. 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 excisable duty in respect of clearance in the DTA. 5. All field formations under your charge may kindly be advised to follow the aforesaid method for calculation of the excise duty leviable on DTA clearances from 100% EOU/EPZ units. 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 of Customs Act, 62 = Rs. 1000/- Basic Customs duty = 100% ad valorem Auxiliary duty = 50% ad valorem Additional duty = 20% ad valorem METHOD A Basic Customs duty = 50% of Rs. 1000/- (read with notfn. 97/91-CX) = Rs. 500/-    Auxiliary duty = 25% of Rs. 1000/- (read with notfn. 97/91-CX) = Rs. 250/-     Total basic + auxiliary = Rs. 750/- Value for the purpose of calculation of addl. duty under Section 3 of CTA, 75 = = Rs. 1000 + Rs. 750 Rs. 1750 Additional Duty read with notf. 97/91-C.E.) = 10% of Rs. 1750 = 175/- Duty regd. to be paid = 750 + 175 = Rs. 925/- METHOD B @ 100% Basic Customs duty = Rs.1000/- @50% Auxiliary duty = Rs. 500/- = O Rs. 1500/- Value for the purpose of calculation of Addl. duty under Section 3 of CTA, 75 = = Rs. 1000 + Rs. 1500 Rs. 2500 @ 20% Additional Duty = 20% of Rs. 2500/- = Rs. 500/- Total duty = Rs. 1500 +Rs. 500 = Rs. 2000/- Duty required to be paid (read with notf. 97/91-C.E.) = 50% of Rs. 2000/- = 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.