TMI BlogExcise duty liability on empty bags,corrugated boxes & wooden scrap.X X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Sir, If we removed the scrap items like empty poly bags, empty corrugated box, wooden pallet scrap from our factory. In the above case excise duty liability will attract or not ? As these scraps are not our process scrap. Regards Swapneswar Muduli. - Reply By YAGAY AND SUN - The Reply = Settled legal position say no payment of excise duty is required on such goods. But as per the amended provisions of Rule 6 of the CENVAT credit Rules, 2004 in last Budget 2016, payment of amount @ 6% is mandatory. - Reply By Swapneswar muduli - The Reply = Thank you Sir for your reply. I go through the Rule-6 of CENVAT credit Rule,2004 but i don't get this provision. Can you please help me for provide this provision. Regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds Swapneswar Muduli - Reply By YAGAY AND SUN - The Reply = NOTIFICATION No. 6/2015-Central Excise (N.T.) New Delhi, the 1st March, 2015 .................... 4. In the said rules, in rule 6, in sub-rule (1) , after the proviso, the following Explanations shall be inserted, namely: Explanation 1. For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of valuation contained in the Excise Act and the rules made thereunder. . - Reply By KASTURI SETHI - The Reply = M/s.YAGAY AND SUN, Dear Sirs, With due respect, I agree with your views to the extent that no Central Excise duty is leviable on the sale/clearance of empty poly bags, empty corrugated box, wooden pallet scrap i.e. packing/packaging material, (in which cenvatable inputs were received and on which credit has been taken) from the factory, in terms of Board s Circular No. 721/37/2003-CX., dated 6-6-2003 based on the judgement of Supreme Court in the case of M/s. West Coast Industrial Gases Ltd. Vs.CCE. Reversal of credit is also not warranted. But these are not non-excisable goods as you have mentioned. On the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that non-excisable goods are included in the definition of Exempted Goods , you have arrived at the conclusion that an amount of 6% is to be paid under Rule 6(3) of Cenvat Credit Rules, 2004, this is not correct inasmuch as all these goods are excisable and duty-paid.The cost of packing material/packaging material/containers i.e. empty poly bags, empty corrugated box, wooden pallet scrap was included in the price of inputs (Cenvatable) and cenvat was availed on that value portion also. .Neither CE duty is to be paid on these nor proportionate cenvat is to be reversed at the time of clearance/sale of these from the factory in terms of Board's Circular No. 721/37/2003-CX., dated 6-6-2003 which is appended below:- Circular N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 721/37/2003-CX., dated 6-6-2003 This Board's Circular is still in force. As per Section 2 (d) of Central Excise Act , excisable goods means goods specified in [[the First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986)] as being subject to a duty of excise and includes salt; irrespective of the fact that whether CE duty is chargeable NIL by virtue of tariff rate or through any notification . Non-excisable goods are those which are not specified in the First Schedule and Second Schedule of the Central Tariff Act, 1985 (5 of 1986) Since the said goods i.e. empty poly bags, empty corrugated box, wooden pallet scrap i.e. packing/packaging material are NOT non-excisable goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence do not fall in the definition of 'exempted goods' cleared for a consideration from the factory, payment of an amount equal to 6% of the value of exempted goods is not required under Rule 6(3) (1) as amended vide Notification no.6/15-CE(NT) dated 1.3.2015 . To cap it all, Board's circular should prevail. Dear Sir, Pl. let me know if I am in the wrong. - Reply By Mahir S - The Reply = In a number of cases, the Tribunal had to look at the issue of dutiability of empty barrels, empty containers, wooden crates, cardboard boxes and gunny bags in which duty-paid inputs were received. The Tribunal had, in almost all the cases, held that Modvat/Cenvat credit need not be reversed, as the packing materials in which the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs were received were not used in, or in relation to, the manufacture of the final product. The issue has reached its finality after the Supreme Court decision in the In West Coast Industrial Gases Ltd vs Commissioner of Central Excise , Cochin case.= 2003 (4) TMI 110 - SUPREME COURT OF INDIA In view of above, no duty is payable for Removal of empty containers, cardboard boxes and barrels, empty bags, wooden scrap etc. - Reply By Mahir S - The Reply = Sir, With due respect, it is to clarify that as regards the issue of reversal of proportionate credit, it must be noted that any material required for manufacturing would necessarily be received in packed condition and removal of these packing material would not amount to remov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of input. For instance, when chemicals are received in barrels, the removal of empty barrels, by any stretch of imagination, cannot be construed as removal of chemicals. This being so, it therefore appears that the question of reversal of credit under rule 6 utilized on the chemicals does not arise. - Reply By KASTURI SETHI - The Reply = Sh.Mahir S, Thanks a lot Sir. - Reply By Rajagopalan Ranganathan - The Reply = Sir, On going through your query I feel some audit objection has been raised regarding this. However such objections will not survive in view of excellent replies provided by the experts. - Reply By Mahir S - The Reply = Thanks R. Ranganathan for the appreciation to all.. - Reply By KASTURI SETHI - The Reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = Sh.Rajagopalan Ranganathan Ji, Thanks a lot Sir. - Reply By NANDAKUMAR PANICKER - The Reply = Dear all, I would like invite your kind attention to the explanation 1 inserted vide notification No. 6/2015 CE-NT dated 01.03.15 which states: for the purpose of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for consideration from the factory With the above, I feel that one has to pay 6% on the consideration received on such non-excisable goods. Please enlighten me. Thanks - Reply By KASTURI SETHI - The Reply = SH.NANDAKUMAR PANICKER Ji, Sir, You are highly qualified and experienced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consultant. Pl. let me know specifically why are you not satisfied the replies of Sh.Mahir S, Sir and M/s.YAGAY AND SUN, Sirs. How you rebut the arguments of both experts or with which views are you not convinced ? I am sure you know the difference between non-excisable and exempted goods. Your further detailed queries will also enrich our knowledge. - Reply By Ganeshan Kalyani - The Reply = I was going through this query in details. I have got satisfactory conclusion from this site the discussion made by learned experts. Thanks to all experts. - Reply By Janarthanan J - The Reply = Excellent views are posted by Shri Kasturi Sethi Sir, I would like to say at this movement I used to read his view and his views are perfect a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in line with provisions With due respect i would like to state here that Rule 6 of CCR, 2004 states that RULE 6. [ Obligation of a manufacturer or producer of final products and a [provider of output service ]]. - [(1) The CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods..... 1.One of the condition for Rule 6 of CCR, 2004 is Manufacturer who manufacture both excisable and exempted goods. 2. If the manufacturer also doing Trading activity of Goods / security services shall follow Rule 6 of CCR, 2004 . Please refer Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 (3D)(c) of CCR, 2004 3. The scrap is not generated during the course of manufacturing process. Therefore in my view the above points are to be considered and requested your views. I humbly request Shri Kasturi Sethi Sir please provide your views. Regards, J.Janarthanan Dated: 8-2-2016 By:- KASTURI SETHI - Reply By Arunachalam siva - The Reply = Dear sir, I gone through query and replies. Very useful. In my view, 1. Excise duty is payable on unused packing material(Material purchased for in use of wrapping/packing final product) removed in form of scrap as it is deteriorated in storage. 2.Excise duty is payable on scrap generated during the process of manufacturing. 3. Excise duty is not payable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal of wood scrap(came along with machines), empty barrels/containers(packing of oil/grease etc.) - Excise duty liability on empty bags,corrugated boxes & wooden scrap. - Query Started By: - Swapneswar muduli Dated:- 7-2-2016 Central Excise - Got 15 Replies - Central Excise - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... 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