TMI BlogChanges in or clarifications about the scope of the tax proposals changes introduced through the Central Excise & Customs Notifications issued on 24-3-2011X X X X Extracts X X X X X X X X Extracts X X X X ..... otification Nos. 31 and 32/2011-Customs, all dated 24th March, 2011 have been issued to give effect to these announcements. Notification Nos. 8 to 12/2011-Central Excise (NT), dated 24th March, 2011 have also been issued in this regard. 3. The changes introduced through these notifications are discussed in the following paragraphs. In addition, clarifications on some of the salient issues have also been provided. I. CENTRAL EXCISE 3. Branded Ready Made Garments and Made-up Articles of Textiles: 3.1 The following changes have been made with regard to this levy : ( i ) The tariff value notified under section 3 of the Central Excise Act for these items i.e., goods falling under Chapters 61, 62 and 63 (heading Nos. 63.01 to 63.08) has been reduced from 60% to 45% of the Retail Sale Price. Notification No. 12/2011-CE (NT), dated 24th March, 2011 refers, ( ii ) It has been pointed out by industry associations that persons owning a brand often get goods bearing their brand from other manufacturers (normally small units) without providing the raw materials or inputs. Such manufacturers do not answer the description of "job-workers" and are necessarily req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be required to observe the following procedure for this purpose : a . To submit an intimation within 48 hours of the receipt of the returned goods about the value of returned goods received in his factory/registered premises; b . To maintain proper accounts/record of the receipt, finishing operations, and dispatch of returned stock indicating the monthly and cumulative value of the returned stock received during the financial year and to produce the same as and when required; Notification No.31/2011-CE, dated 24th March, 2011 has been issued in this behalf. The benefit of this exemption is available only if the manufacturer does not take Cenvat credit of the duty paid on the garments/ made-ups at the time they were initially cleared from the factory. The procedure prescribed for this purpose does not envisage the physical verification of returned stock by Central Excise officers on receipt of the intimation. It may be ensured that visits by the staff are not made to the factory/ registered premises for such verification. Normal checks could be conducted, if required, at the time of audit of the unit on the basis of records/accounts maintained for the purpose. Owing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules have been amended to prescribe that the person who gets the goods falling under Chapters 61, 62 or 63 (heading 63.01 to 63.08) manufactured on his own account on job work shall pay the duty leviable on such goods as if the goods were manufactured by him. It is evident, therefore, that the brand name owner (and not the job-worker) is required to register and comply with all the provisions of Central Excise law. It is relevant that the brand name owner has been given the option to authorise his job-worker to pay the duty leviable on the goods. If such an authorisation is given, it is the job-worker who would have to obtain registration. 2. If a unit manufactures goods bearing the brand name of another person out of inputs or raw materials which have been purchased independently and not supplied by the brand owner, will the unit be eligible for treatment as a "job-worker"? If not, would it be required to register? Such a unit does not satisfy the definition of "job-worker" contained in the Explanation to Rule 4(1A). It is not enough for a job-worker to manufacture goods or to undertake a process on behalf of and under instructions of the bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be eligible for the simplified export procedure. 7. What is the value for computing the turnover for the purposes of SSI exemption? Would it be the Retail Sale Price, wholesale price or the tariff value? Value for computing the eligibility as well as the exemption limit for purposes of SSI exemption is defined in Explanation (C) to Notification No.8/2003-CE, dated 1st March, 2003. Accordingly, it would be the tariff value of the goods. 8. Would SSI exemption be available to a manufacturer/ unit for goods falling under Chapters 61, 62 or 63 for the full exemption limit of Rs. 1.5 crore for the month of March, 2011? Or, would this limit be applied on a prorata basis for one month i.e., Rs. 12.50 lakh? In the absence of a provision in the SSI notification to curtail the exemption to Rs. 12.5 lakh for March, 2011 benefit up to the full exemption threshold of Rs. 1.50 crore would be available for clearances for home consumption made in March, 2011. Of course, the conditions of the notification would have to be fulfilled. 9. How would the eligibility for SSI exemption be computed for the financial year 2011-12? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracting the duty of 1% are neither allowed to take Cenvat credit nor to pass it on to their buyers, a simplified procedure is being prescribed for them so that physical interface with them is minimized and the levy does not pose a compliance burden on them. The salient features of this are as under : a . Waste, scrap and parings arising in the course of manufacture of items subject to the 1% levy have been fully exempted. The benefit of this exemption is available only to units that exclusively manufacture these items. Notification No. 27/2011-CE, dated 24th March, 2011 refers. The benefit of this exemption is also available to units exclusively manufacturing mobile handsets including cellular phones. b . Post- registration verification of the factory premises shall not be required for such units. c . Visits to such units should not be required in the normal course. If at all the need arises, the officer visiting them should do so only with the prior authorization of the Assistant Commissioner or the Deputy Commissioner Central Excise of the jurisdictional division. The authorisation should be shown to the assessee and his signatures obtained on it at the time of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Rule 12AA of the Central Excise Rules and Rules 2 4 of the Cenvat Credit Rules as amended by Notification Nos. 8/2011-Central Excise (N.T.) and 9/2011-Central Excise (N.T.) both, dated 24th March, 2011 may kindly be referred to. As in the case of branded garments, in case of goods falling under Chapter heading 7113 and 7114 also, where a brand owner gets jewellery or articles other than jewellery made from any other person, and supplies the raw materials such as gold/ silver/ gemstones etc. (of Chapter 71 ) to the job-worker for such manufacture, the duty liability would be on such person who gets jewellery or articles made from the job worker, unless the job worker opts to discharge the duty liability. However, a person manufacturing jewellery of heading 7113 or articles of heading 7114 bearing a brand name or sold under a brand name on his own account will be liable to pay excise duty unless he claims benefit of the SSI exemption. B. What constitutes a Brand name for the purposes of this exemption 5.2.1 It has been prescribed in respect of jewellery and other articles, "brand name" means a brand name or trade name, whether registered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery, which is an accurate determination and official recording of the proportionate content of precious metal in gold and is thus only official marks used as a guarantee of purity or fineness of gold jewellery, cannot be treated as 'branding' for the purposes of the excise levy. II. CUSTOMS : 6. Full exemption from levy of Special Additional Duty of Customs has been provided to Ships; Aircrafts imported by non-scheduled operators and specified parts of personal computers viz., Microprocessor for computer, other than motherboards, Floppy disc drive, Hard disc drive, CD-ROM drive, DVD Drive/DVD Writers, Flash memory and Combo drive. The exemption on parts of personal computers is subject to actual user condition. 7. It may be recalled that excise duty of 1% was imposed on ships and other goods falling under heading 89.01 on the condition that no Cenvat credit is taken. Doubts have been raised about the applicability this levy as CVD to foreign-going vessels. It is clarified that the levy would not apply to such imports which are temporary in nature. 8. In the Budget 2011-12, concessional rate of 5% excise duty/CVD and NIL SAD had been provided for parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput tax neutralization on goods exported to India (akin to availment of input tax credit), whereas on the other hand the domestic manufacturer suffers all the input taxes and 1% excise duty over and above that. Since 5% excise duty rate is payable when the Cenvat credit of duties and taxes paid on inputs and input services is availed of, the tax treatment becomes equitable with the goods being imported into India, the input taxes having been neutralized in the country of export. As such, the CVD of 5% will be applicable in respect of all the goods covered under Notification 1/2011-CE, dated 1-3-2011 and 1% rate will not apply. 11. Some amendments have been proposed in the provisions of the Finance bill, 2011 too. These would be communicated as and when the Bill is enacted. The changes discussed above may kindly be communicated to the field formations under your charge as well as trade. In conclusion, I would take the opportunity to once again emphasize that in the case of new levies all possible help, guidance and facilitation should be provided to the trade. Difficulties, if any, may kindly be brought to my notice immediately. - Circular - Trade Notice - Public Notice - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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