Excise Exemption to Industrial Units Located in J&K – Value Addition Norms Prescribed for 19 Categories

[Central Excise Notification No. 01 dated 6th February 2010]

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than goods specified in Annexure  appended hereto, and cleared from a unit located in the state of Jammu and Kashmir , from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit.

2.   The duty payable on value addition shall be equivalent to the amount calculated as a percentage of the total duty payable on the said excisable goods of the description specified in column (3) of the Table below (hereinafter referred to as the said Table) and falling within the Chapter of the said First Schedule as are given in the corresponding entry in column (2) of the said Table, when manufactured in a factory starting from inputs specified in the corresponding entry in column (5) of the said Table in the same factory, at the rates specified in the corresponding entry in column (4) of the said Table:

Table

Serial No.

Chapter of the First Schedule

Description of goods

Rate (%)

Description of inputs for manufacture of goods in column (3)

(1)

(2)

(3)

(4)

(5)

1.

17 or 35

Modified starch or glucose

75

Maize, maize starch or tapioca starch

2.

18

Cocoa butter or powder

75

Cocoa beans

3.

25

Cement

75

Lime stone and gypsum

4.

25

Cement clinker

75

Lime stone

5.

29

All goods

29

Any goods

6.

29 or 38

Fatty acids or glycerine

75

Crude palm kernel, coconut, mustard or rapeseed oil

7.

30

All goods

56

Any goods

8.

33

All goods

56

Any goods

9.

34

All goods

38

Any goods

10.

38

All goods

34

Any goods

11.

39

All goods

26

Any goods

12.

40

Tyres, tubes and flaps

41

Any goods

13.

72

Ferro alloys, namely, ferro chrome, ferro manganese or silico manganese

75

Chrome ore or manganese ore

14.

72 or 73

All goods

39

Any goods, other than iron ore

15.

72 or 73

Iron and steel products

75

Iron ore

16.

74

All goods

15

Any goods

17.

76

All goods

36

Any goods

18.

85

Electric motors and generators, electric generating sets and parts thereof

31

Any goods

19.

Any chapter

Goods other than those mentioned above in S.Nos.1 to 18

36

Any goods

Provided that where the duty payable on value addition exceeds the duty paid by the manufacturer on the said goods, other than the amount paid by utilization of CENVAT credit during the month, the duty payable on value addition, shall be deemed to be equal to the duty so paid other than by CENVAT credit.

3.   In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be subject to the condition that the manufacturer first utilizes whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash.

4.   The exemption contained in this notification shall be given effect to in the following manner, namely:-

(a)  the manufacturer shall submit a statement of the total duty paid and that paid by utilization of CENVAT credit, on each category of goods specified in the said Table and cleared under this notification, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 7th day of the next month in which the duty has been paid;

(b)  the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification as may be deemed necessary, shall refund the duty payable on value addition, computed in the manner as specified in paragraph 2 to the manufacturer by the 15th day of the month following the one in which the statement as at clause (a) has been submitted.

5.   Notwithstanding anything contained in paragraph 4,-

(a)  the manufacturer at his own option, may take credit of the amount calculated in the manner specified in paragraph 2  in his account current, maintained in terms of the Excise Manual of Supplementary Instructions issued by the Central Board of Excise and Customs. Such amount credited in the account current may be utilized by the manufacturer for payment of duty, in the manner specified under rule 8 of the Central Excise Rules, 2002,  in subsequent months, and such payment shall be deemed to be payment in cash;

(b)  the credit of the refund amount may be taken by the manufacturer in his account current , by the 7th day of the month following the month under consideration;

(c)  a manufacturer who intends to avail the option under clause (a) shall exercise his option in writing for availing such option before effecting the first clearance in any financial year and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year;

(d)  the manufacturer shall submit a statement of the total duty payable as well as the duty paid by utilization of CENVAT credit or otherwise and the credit taken as per clause (a), on each category of goods manufactured and cleared under the notification and specified in the said Table, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 15th day of the month in which the credit has been so taken;

(e)  the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall determine the amount correctly refundable to the manufacturer and intimate to the manufacturer by the 15th day of the next month to the month in which the statement under clause (d) has been submitted. In case the credit taken by the manufacturer is in excess of the amount determined, the manufacturer shall, within five days from the receipt of the intimation, reverse the said excess credit from the account current maintained by him. In case, the credit taken by the manufacturer is less than the amount of refund determined, the manufacturer shall be eligible to take credit of the balance amount;

(f)   in case the manufacturer fails to comply with the provisions of clauses (a) to (e), he shall forfeit the option, to take credit of the amount calculated in the manner specified in paragraph 2 in his account current on his own, as provided for in clauses (a) to (c);

(g)  the amount of the credit availed irregularly or availed of in excess of the amount determined correctly refundable under clause (e) and not reversed by the manufacturer within the period specified therein, shall be recoverable as if it is a recovery of duty of excise erroneously refunded. In case such irregular or excess credit is utilised for payment of excise duty on clearances of excisable goods, the said goods shall be considered to have been cleared without payment of duty to the extent of utilisation of such irregular or excess credit.

Explanation.-For the purposes of this paragraph, duty paid by utilisation of the amount credited in the account current, shall be taken as payment of duty by way other than utilisation of CENVAT credit under the CENVAT Credit Rules, 2004.

6.   (1) Notwithstanding anything contained in paragraph 2, the manufacturer shall have the option not to avail the rates specified in the said Table and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under this notification, if the manufacturer finds that the actual value addition in the production or manufacture of the said goods is at least 115 per cent of the rate specified in the said Table and for the said purpose, the manufacturer may make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, not later than the 30th day of September in a financial year for determination of such special rate, stating all relevant facts including the proportion in which the material or components are used in the production or manufacture of goods:

Provided that the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, may, if he is satisfied that the manufacturer was prevented by sufficient cause from making the application within the aforesaid time, allow such manufacturer to make the application within a further period of thirty days:

Provided further that the manufacturer supports his claim for a special rate with a certificate from his statutory Auditor containing a calculation of value addition in the case of goods for which a claim is made, based on the audited balance sheet of the unit for the  preceding financial year.

(2)  Nothing contained in sub- para (1) shall apply to a unit manufacturing goods falling under serial numbers 1, 2, 3,4, 6, 13 or 15 of the Table.

(3)  On receipt of the application referred to in sub-paragraph (1), the Commissioner of Central Excise or Commissioner of Customs and Central Excise, as the case may be, after making or causing to be made such inquiry as he deems fit, shall fix the special rate within a period of three months of such application;

(4)  Where the manufacturer desires that he may be granted refund provisionally till the time the special rate is fixed, he may, while making the application, apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, in writing for grant of provisional refund at the rate specified in column (4) of the said Table for the goods of description specified in column (3) of the said Table and falling in Chapter of the First Schedule of the Central Excise Tariff Act, 1985 (5 of 1986) as in corresponding entry in column (2) of the said Table, and on finalization of the special rate, necessary adjustments be made in the subsequent refunds admissible to the manufacturer in the month following the fixation of such special rate.

(5)  Where the Central Government considers it necessary so to do, it may-

(a)  revoke the special rate or amount of refund as determined under sub-paragraph (3) by the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, or

(b)  direct the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, to withdraw the rate so fixed.

Explanation .- For the purpose of this paragraph the actual value addition in respect of said goods shall be calculated on the basis of the financial records of the preceding financial year, taking into account the following, namely:-

(i)   sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods;

(ii)  Less: Cost of raw materials and packing material consumed in the said goods;

(iii) Less: Cost of fuel consumed if eligible for input credit under CENVAT Credit Rules, 2004;

(iv) Plus: Value of said goods available as inventory in the unit but not cleared, at the end of the financial year;

(v)  Less: Value of said goods available as inventory in the unit but not cleared, at the end of the financial year preceding that under consideration.

Special rate shall be the ratio of actual value addition in the production or manufacture of the said goods to the sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods.

(6)  The manufacturer shall be entitled to refund at the special rate fixed under sub-paragraph (3) in respect of all clearances of excisable goods manufactured and cleared under this notification with effect from the 1st day of April of the year in which the application referred to at sub-paragraph (1) was filed with the Commissioner of Central Excise or Commissioner of Central Excise and Customs, as the case may be.

(7)  A manufacturer who commences commercial production on or after the 6th  day of February, 2010, shall be entitled to refund at the special rate fixed under sub-paragraph (3) against his first application in respect of all clearances of excisable goods manufactured and cleared under this notification with effect from the date of commencement of such commercial production and the difference between the refund payable at such special rate and the actual refund paid to him from the date of commencement of commercial production till the date of fixation of special rate, shall be refunded to him.

(8)  Where a special rate is fixed under sub-paragraph (3), the refund payable in a month shall be equivalent to the amount calculated as a percentage of the total duty payable on such excisable goods, at the rate so fixed.

Provided that the refund shall not exceed the amount of duty paid on such goods, other than by utilization of CENVAT credit.

7    (1) In case the total amount of refund paid or payable to a manufacturer in respect of goods cleared from a unit during a financial year is less than the total duty paid by him on the said goods, other than the amount paid by utilization of CENVAT credit, for the year, the differential amount, if any, shall be refunded to him subject to the condition that the total refund made to him during the year, including the aforesaid differential amount, does not exceed the total duty payable on value addition whether at the rate specified in the Table or at the special rate fixed under paragraph 6.

(2)  The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall refund the differential amount, if any, to the manufacturer not later than the 15th day of May in the subsequent financial year.

8.   The exemption contained in this notification shall apply only to the following kind of units, namely:-

(a)  New Industrial units which commence commercial production on or after the 6th  day of February, 2010;

(b)  Industrial units existing before the 6th day of February, 2010; but which have,-

(i)   undertaken substantial expansion by way of increase by not less than 25% in the value of fixed capital investment in plant and machinery for the purposes of expansion of capacity or modernization and diversification and have commenced commercial production from such expanded capacity on or after the 6th day of February, 2010

Or

(ii)  made new investments on or after the 6th day of February, 2010, and such new investment is directly attributable to the generation of additional regular employment of not less than twenty-five per cent over and above the base employment limit, subject to the conditions that,-

(1)  the unit shall not reduce regular employment after claiming exemption, and once such employment is reduced below one hundred and twenty-five per cent. of the base employment limit, such industrial unit shall be debarred from claiming the exemption contained in this notification in future:

Provided that, the exemption availed by such industrial unit, prior to such reduction, shall not be recoverable from such industrial unit.

(2)  the manufacturer shall produce a certificate, from General Manager of the concerned District Industries Centre to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, to the effect that the unit has created such additional regular employment.

Explanation.- for the purposes of this notification,-

(a)  "base employment limit" means maximum number of regular employees employed at any point of time, by the concerned industrial unit, during last five years;

(b)  "new investment" shall not include investments which are used for paying off old debts or making payments for the plant or machinery installed prior to the 6th day of February 2010, or paying salaries to the employees;

(c)  "regular employment" shall not include employment provided by the industrial unit to daily wagers or casual employees.

9.   The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification or from the date of commercial production whichever is later.

10.  The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labelling or re-labelling of containers, sorting, declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacturer in the State of Jammu and Kashmir.

ANNEXURE

1.     Cigarettes or cigars of  tobacco;

2.     Manufactured tobacco and substitutes thereof;

3.     Soft drinks and their concentrates.

[F.No. 354/226/2009-TRU]