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SSI Exemption - Determination of Turnover of the previous year of 4 crores

Central Excise - Started By: - Rama Krishana - Dated:- 7-4-2016 Last Replied Date:- 13-4-2016 - As per the Paragraph no. 3A of the Notification no. 8/2003 CE dated 1.3.2003 for the purpose of Calculation of Rs. four hundred lakhs (4 crores) of the previous year, certain amount shall be excluded. Other than excluded items, all turnover of excisable goods shall be included. My query is related to the term excisable goods used in the SSI exemption notification above. As per Section 2(d) of the Cent .....

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Because if these are excisable goods , the value shall be included in the turnover of the previous year and if these are not excisable goods , the value shall not be included in computing the limit of 4 crores. I have no doubt that goods exempted under a notification are excisable goods and are liable to be included as above. But the doubt arises in respect of goods where tariff rate itself is empty or tariff rate itself is Nil. - Reply By CS SANJAY MALHOTRA - The Reply = Dear Mr. Rama Krishana .....

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ff) are excluded. NIL Tariff duty goods are not excluded while determining the limit of ₹ 400 lacs. Further the Notification No. 08/2003-CE dated 01.03.2003 specifically provides for Non inclusion of Goods chargeable to NIL rate of duty or are Exempted from duty of Excise in determining the value of first clearances of ₹ 150 Lacs. Please do refer Annexure to Notification No 08/2003-CE also as the same specifies the list of goods which don';t qualify for SSI Exemption. Chapter 53 .....

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85 (5 of 1986) (ii) as being subject to a duty of excise. Where tariff rate are empty itself or provides Nil rate, whether such goods would be held as subject to a duty of excise Therefore, it need to be examined the depth and scope of the term subject to a duty of excise before deciding that goods are excisable goods or not. Please elaborate. - Reply By KASTURI SETHI - The Reply = Sh.Rama Krishana Ji, The excisable goods attracting 'NIL'rate of duty' as per Central Excise Tariff Act .....

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no doubt or question about the scope of inclusion or exclusions of certain items from the turnover of excisable goods as per the Para 3A of the Notification no 8/2003 CE dated 1.3.2003. The query is on the basic term excisable goods . If the goods are excisable then only the scope of inclusion or exclusion comes into picture. If goods are not excisable, there is not question of inclusion or exclusion. Therefore a detailed and depth examination of section 2(d) is required to see whether goods are .....

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definition of Exempted Goods includes Goods chargeable to NIL Rate of Duty and Exempted from whole of Duty of Excise. (Refer Rule 2D of CCR 2004 for Definition of Exempted Goods). Sec 2(D) of Central Excise Act mentions of Excisable goods falling under First & Second Schedule irrespective of the rate of duty.... Supplementary Mannual of CBEC has even specified that the Term Excisable includes both dutiable and not dutiable goods. Just imagine what happens if the goods are subject to NIL Tar .....

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t exempts goods from duty of excise. Where goods are mentioned in the tariff as Empty rate of duty or Nil rate of duty, how can we call such goods as exempted goods? - Reply By CS SANJAY MALHOTRA - The Reply = Dear Surender ji, Section 5A empowers Central Govt to issue Notification thus providing Exemption to Goods specified in Tariff. You will appreciate the fact that the character of Goods can either be EXCISABLE or NON-EXCISABLE and nothing else. EXCISABLE includes exempted goods as the Centr .....

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have been feasible to claim rebate / refund for Input duty from department. Further Central Excise Tariff Act is in place since 1985 and by virtue of Notifications issued under Sec 5A of Central Excise Act, goods have been subjected to Exemption i.e. to NIL rate of Duty. Hence it is out of place not to treat the same as exempted goods. Furthermore the CENVAT Credit Rules are confimed to Excisable and Exempted in terms of CENVAT Reversal, etc etc...... Exempted goods defintion has not been challe .....

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goods for home consumption, mentioned in clause (vii) of paragraph 2 of this notification (the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees four hundred lakhs in the preceding financial year) the following clearances shall not be taken into account, namely:- (a) clearances of excisable goods without payment of duty- (i) to a unit in a free trade zone; .....

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se, dated the 28th August, 1995, vide number GSR. 602 (E), dated the 28th August, 1995. (b) clearances bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4; (c) clearances of the specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods; [9](d) omitted (e) clearances, which are exempt from the whole of the excise duty leviable there .....

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lakhs. If your argument is to be accepted then you have to challenge para 3A of the notification as ultra vires of section 2 (d) of Central Excise Act, 1944. This can be done by filing a writ under Article 226 of the Constitution in a High Court. However it will take time to get a decision from the court. - Reply By KASTURI SETHI - The Reply = Sir, NIL tariff rate of duty is also rate of duty. - Reply By CS SANJAY MALHOTRA - The Reply = Endorse the views of Sh. Kasturi ji that NIL Duty goods are .....

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issues and place the same on desktop as ready reckoner for future consultancy.This is a fact and no exaggeration. What you have expressed and in a style you have expressed on the present issue is really matchless. Actually, reply to cross query raised by Sh.Surinder Gupta, CA, Sir was under preparation by me but in the meanwhile I came across your reply to the query which was asked to me. Thus you saved my time and energy and I got ready-to-eat views. Thanks a lot. With regards.KASTURI SETHI - R .....

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ear though nil rated/exempted to be included to calculate the limit of clearance of ₹ 300 lakhs for availing SSI exemption - Mere fact that goods attracted nil rate of duty does not mean that they are not excisable - Value of clearance of refined edible oil (excisable though exempt) being more than ₹ 7 crores, exemption not available - Notification No. 8/2003, dated 1-3-2003. [para 4] - Reply By CS SANJAY MALHOTRA - The Reply = Dear Sh Kasturi Ji,Appreciate the way you put the citati .....

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me non-excisable goods merely by the reason of the exemption given under a notification. I have no doubt above the above position and no have no question about its validity. But please appreciate, it is with reference to Exemption Notification only. This case no where examine the issue where the rate of duty has been prescribed as Nil or column of rate of duty is Empty itself in the Tariff. All the decision which has been referred or discussed involves the situation after exemption notification. .....

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s and that's what Courts have decided. But, whether goods are Excisable or not where tariff rate itself is Empty or Nil requires to be examined. - Reply By KASTURI SETHI - The Reply = Sh.-Rama Krishana Ji, Pl. refer to your queries and views detailed against query ID no.110151 dated 7.4.2016. I am discussing this issue in a sportsman spirit and you would not mind it. Sir, you have used a word, empty again and again in your queries and views. It is not digestible.There is a world of differenc .....

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y ? - Reply By KASTURI SETHI - The Reply = Dear Sir, Pl. go through para no. 12 of the judgement of Supreme Court which is appended below:- 1996 (2) TMI 138 - 1996 (83) E.L.T. 3 (S.C.) IN THE SUPREME COURT OF INDIA - CCE, HYDERABAD Vs. VAZIR SULTAN TOBACCO CO. LTD. - Reply By Rama Krishana - The Reply = Yes Kasturi Ji, With due regards, As you have pointed out, In Chapter 1, 6, 10, 12 of Central Excise Tariff Act, 1985, the column of rate of duty has been left empty. The word, NIL has also not b .....

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ludes salt; They could have defined the term as: (d) 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; ) So the existence of the words as being subject to a duty of excise and includes salt; creates a point of contention in my mind. Therefore, a decision by the Apex Court in the context of interpretation of an Exemption notification may not be applicable t .....

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s below: Additional Notes : 1(c) : (c) tariff item means a description of goods in the list of tariff provisions accompanying either eight-digit number and the rate of the duty of excise or eight- digit number with blank in the column of the rate of duty; Empty Rate Goods as per you but defined as BLANK RATE in Central Excise Tariff are also EXCISABLE GOODS. 2007 (6) TMI 112 - CESTAT, AHMEDABAD - Other Citation: 2007 (218) E.L.T. 152 (Tri. - Ahmd.) G .....

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specially, it being free of cost. - Reply By CS SANJAY MALHOTRA - The Reply = Dear Sh. Kasturi ji,Am also like one of you to contribute at this platform to ensure Governance, as we have both have practically gone through the issues faced by Industry at the ground level. (rather you have your entire life in CENTRAL EXCISE DEPT possessing far knowledge as compared to us).Not wanted to bring this CESTAT judgement earlier as you rightly mentioned that NIL rate of Duty goods are Excisable goods and b .....

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s not get rid of the issue until or unless we arrive at any concrete conclusion. I feel all the experts have We Feeling in this forum. I also consider you in the list of experts. If we leave the issue inconclusive, it is the defeat of all experts. I reply to your cross queries as under:- By mere finding entry in First Schedule and Second Schedule of Central Excise Tariff Act, 1985, goods do not become excisable.Definition of 'manufacture' under Section 2 (f) has also undergone changes in .....

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duty has been prescribed the goods are treated as excisable goods being subject to duty of excise. Why rate of duty has been mentioned NIL and why has been left blank need to be researched. Why do you not consider NIL rate of duty as rate of duty in terms of the judgement of Apex Court ? If we consider NIL rate of duty as rate of duty, then your condition of subject to a duty of excise' stands fulfilled. You may pl. guide what is the difference between 'Leaving the column blank' and .....

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ty is that I find majority of the goods are PRODUCED and not MANUFACTURED hence subject to Blank Rate at present as you correctly use the terminology Manufacture in your recent revert to query raised.Will share other reasons too afterwards, but let others too do some brain storming. - Reply By KASTURI SETHI - The Reply = SH.CS SANJAY MALHOTRA JI, Agreed Sir. By your reply dated 12.4.16 we are back to square one. Thus we cannot budge even an inch from the stand taken already on the issue. Your re .....

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one point Mr. Kasturi Sethi Ji is agreed with me that, Where rate of duty is left Blank would not be excisbale goods at all. The relevant portion of his reply is as under: Still I am of the view that where the column of rate of duty has been left blank the goods are not excisable and where NIL rate of duty has been prescribed the goods are treated as excisable goods being subject to duty of excise... I hope, all may agree on the first part of the issue that where rate of duty column has been lef .....

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