CENTRAL EXCISE GUIDELINES

With the introduction of HSN based tariff and coming into force of Central Excise Tariff Act,1985 rationalisation and codification were done and Notification No. 175/86 CE dated 01.03.86 was issued providing certain exemptions to the SSI units.

Notification No. 175/86 CE was superseded and new Notification No. 1/93 dated 28.02.93 was issued effective from 01.04.93.

Notification No. 01/93 CE dated 28.02.93 was superseded by Notification No. 07/97 CE dated 01.03.97. This Notification was superseded within one month of its issue by Notification No. 16/97 CE dated 01.04.97. Notification No. 16/97 has been superseded time and again and at present Notification No. 8/2001-CE dated 01.03.2001 is in force.

Since earlier notifications do not provide for availment of MODVAT Credit. Notification No. 38/97 CE dated 27.06.97 was issued providing for availment of MODVAT (now CENVAT) Credit by the Small Scale Sector of duty for value of clearance upto Rupees One Hundred Lakhs. Notification No. 38/97 has been superseded time and again and at present Notification No. 09/2002-CE dated 01.03.20022 is in effect.

LATEST POSITION

Presently there are two streams of concession to the Small Scale Sector without availing CENVAT Credit upto an aggregate value not exceeding Rupees One Hundred Lakhs and another availing CENVAT Credit and paying concessional rate of duty upto an aggregate value of Rupees One Hundred Lakhs only. Both the situations mentioned above are given below :-

A manufacture can opt for this option any time determining his eligibility for concession and the concessional rate of duty. The clearances already made in the financial year shall be taken into account, but no duty need be paid within the exemption limits. A manufacturer who intend to avail the said option shall exercise his option in writing and shall not be withdrawn during the remaining part of the financial year.

The aggregate value of the clearances for home consumption (including exports to Bhutan/Nepal) should NOT have exceeded RS. 300 lakhs in the preceding financial year.

Where goods are cleared from One/More factories value of all such clearance of factories should be CLUBBED.

Where goods are cleared by one/more manufacturers from a factory, value of all such clearances of all manufacturers, should be Clubbed.

EXCLUSIONS FROM AGGREGATE VALUE

1. Wholly exempted goods (not based on the quantity/value) or on which no excise duty is payable.
2. bearing the brand/trade name of another person which are NOT eligible for exemption.
3. used for captive consumption.
4. Strips of plastics used captively.

BRAND/TRADE  NAME

The exemption shall NOT apply to goods bearing brand/trade name (whether registered or not) of another person except the following cases :-

(a) Where the specified goods are in the nature of components or parts of any machinery/equipment/appliances for use as original equipment subject to following chapter X procedure.

In stead of chapter X procedure, a declaration stating that the value of such goods does not exceeds Rs. 100 lakhs in a financial year.

(b) Where the goods bearing brand/trade name of Government undertaking specified as under :-

1. The Khadi and Village Industries Commission.
2. A State Khadi and Village Industry Board.
3. The National Small Industries Corporation.
4. A State Small Industries Development Corporation.
5. A State Small Industries Corporation.

(c) where the specified goods are manufactured in a factory located in a rural area.

Value of goods cleared by such factory ALONE shall be taken into account, if the said factories are owned/maintained by State/Central Governments.

Simple accounts can be maintained. No separate accounts for Central Excise are required private records are adequate for Excise purpose also.

A simple quarterly return may be filed.

Their own documents, challans invoices are accepted.

Visits of SSI Units can be made only with the written permission of the jurisdictional Asstt. Commissioner / Deputy Commissioner.

SSI Units are required to use pre-printed Excise control Code No. on all invoices, challans bills etc.

The progressive total of quantity and value since Ist April, should be shown on invoice / Delivery Challan.

DECLARATION

If the value of clearances are below 100 lakhs, a declaration in the prescribed form should be filed before 15^th of April ever year, before the Asstt. Commissioner / Deputy Commissioner and get the dated acknowledgement.

The value of investment in Plant & Machinery can be upto Rs. 3 Crores as per industries (Development Regulation) Act,1951.

SIMPLIFIED   EXPORT  PROCEDURE FOR SSI

Manufacturers whose value of clearances are below 100 lakhs (for home consumption), instead of AR-4 procedure, the following simplified procedure may be followed.

1. GENERAL EXPORT

Such manufacture will not be required to take Central Excise Registration. They shall, however, file a declaration to the Central Excise Department and obtain declarant’s code number.

DOCUMENTATION

CLEARANCE DOCUMENT

1. Such manufacturers are permitted to use their own printed delivery challan / invoices or other similar documents bearing printed Serial Numbers for the purpose of clearances for home.
2. The declarant\s Code Number should be mentioned on all clearance documents. In case a manufacturer does not posses the declarant’s Code Number, he may indicate on the relevant invoice, the date of filing of declaration.
3. Such clearance documents should contain particulars of the description of goods, name and address of the buyer, destination, value progressive total of total value of excisable goods cleared for home consumption since beginning of the financial year, vehicle number, date and approximate time of the removal of the goods.
4. The clearance document will be pre-authenticated by the manufacturer or his authorised agent.
5. In case of export through merchant exporters, the manufacturer will also mention on the top "EXPORT THROUGH MARCHANT EXPORTERS" and will mention the Export Import Code No. of such merchant exporters.
6. In case of direct export by the manufacturer exporters, he will mention on the top "FOR EXPORT" and his own Export Import Code No. if any.

RECORDS

Such units should maintain a simple record of production and clearance. Entries in production record should be made at the close of the day or before the commencement of the production on the following day. Entries need not be made on days when there is no production or clearance of goods.

STATEMENT

Such unit shall file a quarterly statement to the Jurisdictional Range Superintendent containing all the required information relating to the production, clearance, duty payment etc.

Following document can be accepted as proof of export.

1. Duly attested photocopy of shipping bill (Export Promotion copy) bearing the particulars and date of clearance document under which the date of clearance document under which the goods are cleared from the factory of production having endorsement on its by the customs of the particulars of mates receipt no. wherever applicable) name of the ship/flight no. of the aircraft - by which the goods were exported exported out, date of export and EGM Number or Airway bill No. having endorsement on its reverse by the Customs of the particulars of mate’s receipt No. (wherever applicable name of the ship/flight no. of the aircraft - by which the goods were exported out date of export, and EGM Number/Airway Bill No. (wherever applicable):
2. Duly attested copy of Bill of Lading; and
3. Foreign exchange Remittance Certificates.

2. Export through Merchant Exporter

It has been decided to accept the document prescribed by Sales Tax Department as the proof of export Sales made by manufacturer of the goods to the merchant exporters which ultimately are to be exported out are exempted from Central Sales Tax. The Sales Tax Department issues booklet to the merchant exporters containing serially numbered forms /ST-XXII form. After the goods have been exported by the Merchant exporters, the latter issues these forms to the to the manufacturers of the goods from whom the goods were purchased by them. The merchant exporters in turn have to account all these serially numbered form to the Sales Tax Department by furnishing a proof that the goods have been exported out. These proofs are in the form of presentation of the shipping bill duly completed by the Customs ,Bill of lading, Foreign Exchange remittance Certificates etc. The liability of the manufacturers to the Central Sales Tax gets waived only when they submit these forms to the Sales Tax Department. It is, therefore ,seen that indirectly exports get accounted for through the issue of H-Form or ST-XXII Form. Therefore it has been decided that to except photocopy of II-Form of ST-XXII form or any other equivalent Salex Tax Form duly attested and stamped by the manufacturer or his authorised agent should be submitted for the purpose of proof of export.

1. The proof of export should be submitted to the Range Officer within a period of six months from the date of clearance of goods from the factory of production.
2. If Range Superintendent finds that the clearances for home consumption and the clearances for export ,where proof of exports have not been furnished within 6 months, when taken together, are likely to exceed the exemption limit he issues show cause notices for safeguarding revenue.
3. The Range Superintendent will maintain manufacture-wise record on the basis of the quarterly return and the proof of export submitted by the manufacturer from time to time in order to ascertain that the clearance for exports and the proof of exports are duly accounted for and in case of failure on the part of exporters to submit proof of export an action can be initiated under the law.
4. In case of clearances of such manufacturers for home consumption plus clearance for export where proof of export where not furnished within 6 months, exceed the exemption limit, they should take Central Excise Registration and follow the regular AR-4/AR-5 procedure.

JOB WORK BY SSI UNITS

1. A S.S.I. unit (Principal manufacturer) can send any specified raw material/semi finished goods without payment of duty to a job worker.
2. The unit shall give an undertaking to the AC / DC that specified goods on return from the job work shall be used in his factory in or in relation to the manufacture of specified goods which are wholly/partially exempt.
3. If he fails to do so, duty shall be paid on such goods.
4. The S.S.I. Unit shall give an undertaking to the AC/DC of job worker that the specified goods received back from the job worker shall be used in his factory in or in relation to the manufacture of specified exempted goods.
5. If he fails to do so he shall pay duty on such goods.
6. Waste or by - product, if any, shall be used by the job worker / by the SSI Unit (on return from job work), in the manufacture of the specified goods.

GENERAL PROVISION

1. Challans should be pre-authenticated, be serially machine numbered ,prior intimation S. Nos. be initiated to Assistant / Deputy Commissioner.
2. Original and Duplicate challans should accompany the consignment.
3. The processed goods be returned within 180 days.
4. Simple Account of removal and return of goods be maintained.