Professional Documents
Culture Documents
Procedures
Madan Lal
contd
Continued..
(iii) Which in relation to the goods
specified in the Third Schedule
involves packing or repacking of such
goods in a unit container or labeling
or re-labeling of containers including
the declaration or alteration of retail
sale price on it or adoption of any
other treatment on the goods to
render the product marketable to the
consumer
Continued
And the word manufacturer
shall be construed accordingly
and shall include not only a
person who employs hired labor
in the production or manufacture
of excisable goods, but also any
person who engages in their
production or manufacture on
his own account.
contd
2) Ingredients of
excisablity
Fact of Manufacture.
Entry availability in CE Tariff.
Marketability.
Manufacture in central
excise
Two concepts
Actual substantive manufacture &
Deemed manufacture
Actual substantive manufacture
does it include mere processing? Yes,
if it leads to manufacture of a
product
Deemed manufacture
What is deemed
manufacture?
Process or activity specified in section
or chapter notes for example:
Labeling or re labeling of containers
Repacking from bulk packs to retail
packs
Adoption of any other treatment to
render the product marketable to the
consumer
Continued.
Addition of chemicals and other
ingredients to certain products of tariff
heading 3808
In relation to products of heading no 3920
& 3921 process of metallization or
lamination or lacquering
In relation to some products of heading
7013 the process of printing , decorating
or ornamenting
Continued.
In relation to flat-rolled iron & steel
products under chapter 72 the
process of hardening or tempering
In relation to articles of iron and steel
under chapter 73 the process of
galvanization
Continued.
In relation to motor vehicles under
chapter no 87 building a body or
fabrication or mounting or fitting of
structures or equipment on the
chassis falling under 8706
Valuation rules.
Rule 8 captive /self
consumption/use solution: tax value
is 110% of the cost of production of
the goods (as per CAS 4)
Rule 9 sales to related persons
solution: resale price of related
person / 110% of the cost where the
related person does not resell but
consumes or uses for self
Valuation rules.
Rule 10 sales to inter-connected
undertakings /holding company
/subsidiary company solution:: do
as per rule 9 above.
Rule 10A job work on behalf of a
principal manufacturer solution:
resale price of the principal
manufacturer
Rule 11 residual method
contd
contd
contd
contd
Royalty.
Amortised Cost of tools/ dies/
moulds received from buyers.
Interest on inventory.
Value of waste retained by
Jobworker.
Packing.
Cost of material supplied by
Customer.
Continued.
ER 4 Annual financial statement for
units paying INR I crore in excise
due by the 30th of November of the
following year
ER 5 CENVAT Annual Return of
information relating to principal
inputs due by 30th April of the
following year some class of
manufacturers given exemption
Continued
ER 6 monthly return of principal cenvat
inputs due by the 10th of the following
month some class of manufacturers
given exemption
ER 7 Annual Installed capacity statement
due by the 30th April of the following year
ER 8 Quarterly Return for assesses
clearing goods at 1% duty
Important procedures in
central excise
Issue of invoice under Rule 11 of central
excise rules 2002
Provisional assessment under Rule 7 &
finalization
Time and manner of payment of duty
under Rule 8
Remission of duty under Rule 21 for
damaged/defective/unfit/unmarketable
goods
Important procedures in
central excise
Credit of duty paid on sales returns
under Rule 16
Rule 16-A removal of any inputs as
such or partially worked outside the
factory for testing, repair etc
Rule 16-B removal of semi-finished
products for further work / finishing
and return
Important procedures in
central excise
Rule -16C removal of finished goods
outside for test etc & return
Export without payment of duty as
well under claim for rebate of duty
LUT (UT1), Bond, ARE
Removal of excisable goods without
duty for export warehousing under
Rule 20
CENVAT CREDIT
The foundation of the value-added
tax system
Avoids cascading effect of tax on tax
on tax
Integrates goods and services
Cenvat credit Rules 2004 apply to
Manufacturers & Service providers
Capital goods..
Chapter 85 electrical / Electronic
machinery & equipment etc
Chapter 90 optical, photographic,
medical , checking, measuring equipment
etc
Abrasives under heading no 6805
Grinding wheels & the like under heading
6904
Capital goods
Pollution control equipment
Components, spares & accessories of
the goods for the above two
categories
Moulds, dies , jigs and fixtures
Refractories, and Refractory materials
Tubes, pipes and fittings thereof
Storage tank
Capital goods
Used in the factory of the
manufacturer of final products, but
does not include any equipment or
appliance used in the office
Or, used for providing output service
Motor vehicles registered in the name
of the following service providers are
allowed courier agency, GTA, Rent a
cab operator , tour operator, outdoor
caterer
Capital goods.
Ownership of capital goods is not
required for a manufacturer or service
provider except for the motor vehicle
credit
Credit to be taken for 50% of the duty
in the first year and the rest in any
subsequent year
Depreciation under Income tax
prohibited
Capital goods..
The 50% restriction does not apply to
special CVD of 4% paid on imported
capital goods
Removal of capital goods requires reversal
of credit 2.5% depreciation on credit for
every quarter of use
Removal on scrapping of capital goods
requires payment of duty on transaction
value
Capital goods.
Provision for removal of capital goods
for test, repair etc
Moulds, dies , jigs and fixtures can be
deployed at the premises of the job
worker
Capital goods can be produced and
used in the factory of production for
manufacture of excisable goods
duty exempt
Capital goods.
Capital goods on which credit is
taken should not be solely used in
the manufacture of exempted goods
Capital goods which are not defined
in the CCR but used in the factory of
production will qualify for credit as
Inputs. Benco Products Vs CCE
CESTAT larger bench decision
INPUTS
New definition in the CCR
Inputs means all goods used by the
manufacture of final products
Includes accessories cleared with the final
products, if their value is included in the
assessable value
All goods used for generation of electricity
or steam for captive use
Inputs.
All goods used for providing any
output service:
But excludes Light diesel oil, high speed diesel oil
and petrol
Any goods used for construction of
a building or a civil structure or part
thereof
Inputs
Or, for laying foundation or for making of
structures for support of capital goods
Capital good themselves unless these are
parts and or components in the
manufacture of the final product
Motor vehicles
Any goods for the personal consumption of
the employees, primarily
Any goods unrelated to manufacture
Input services
For manufacturers:
Any service used by a manufacturer
Whether directly or indirectly
In or in relation to the manufacture of
final products
And clearance of final products upto
the place of removal
Input services..
For service providers:
Any input service used by a provider
of output service for providing an
output service
Common services.
Or an office relating to such factory
or the premises
Advertisement
Sales promotion
Market research
Storage upto the place of removal
Procurement of inputs
Common services.
Accounting
Auditing
Financing
Recruitment and quality control
Coaching and training
Common services.
Computer networking
Credit rating
Share Registry
Security, business convention, legal
services
Inward transportation of inputs & capital
goods
Outward transportation upto the place of
removal