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Central Excise

Who is covered by the SSI scheme

At present, in terms of notification nos. 8/2000-CE and 9/2000- CE, both dated 1st March, 2000 , and effective from 1st April, 2000 , a general small scale excise duty exemption scheme has been made operational providing slab-rated concessions from excise duty in respect of clearances of specified excisable goods.

  • Under these notifications, all goods specified in the First Schedule to the Central Excise Tariff Act, 1985 are eligible to avail the exemptions/concessions except for those goods which are chargeable to NIL rate of duty or which are exempt from whole of the duty and certain products as given in the Annexure to these notifications.
  • With effect from 1st April, 2000, the hitherto commodity specific exemption schemes for SSI units manufacturing cosmetics, refrigerating and air conditioning equipment, tread rubber and for articles of plastics have also been merged with the general small scale exemptions, as provided under the aforesaid notifications.

The salient features of these exemption schemes, as contained in the aforesaid notifications are as under:

  • Where the SSI unit does not avail CENVAT Notification No.8/2000-CE, dated 1st March, 2000 as amended. For first clearances effective from 1st April of a financial year up to an aggregate value of Rs. 1 Crore, duty is exempted in respect of those SSI units which do not intend to avail CENVAT up to a value of clearances of rupees one crore.
  • Where the SSI unit avails CENVAT Notification No.9/2000-CE, dated 1st March, 2000 as amended. The graded scheme of exemption in respect of those SSI units which intend to avail CENVAT is as under:

Sr. No. Value of Clearances Rate of Duty

  1. First clearances effective from 1st April of a financial year Up to an aggregate value of Rs.1 crore 60% of the normal rate of duty
  2. Subsequent Clearances at the normal rate of duty
    The following clearances are excluded from computation of value of clearances
  • Clearances of the specified goods which are used as inputs for further manufacture of specified goods within the factory irrespective of the value of clearances.
  • Clearances of excisable goods affixed with the brand name or trade name of another person who is not eligible for availing the exemption under the aforesaid notification. However, the clearances of goods affixed with the brand name or trade name of another person - other than those which are in the nature of components or parts of machinery or equipment for use as original equipment in the manufacture of the said machinery, goods bearing the brand name of KVIC, NSIC or a State Small Industries Corporation or State KVIB or those goods manufactured in a factory located in a rural area are not eligible for the exemption/concession from excise duty irrespective of the value of clearances.
  • Clearances which are fully exempt from excise duty under any other notification (other than those giving exemption based on quantity or value of clearances).

The conditions for availing the aforesaid exemption/concession from excise duty are as under

  • 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 three hundred lakhs in the preceding financial year.
  • The manufacturer does not avail of the credit of duty under the CENVAT scheme upto an aggregate value of clearances of rupees one hundred lakhs.

The thresholds of excise duty concessions under the aforesaid small-scale schemes act as a ladder for enabling the small units to grow and graduate into bigger units. Units availing SSI exemption are permitted to remove specified goods to a place outside the factory for getting any job work done on any specified goods without payment of duty (Notification number 83/94 and 84/94 Central Excise dated 11.4.94 as amended)

How to avail Cenvat/Capital goods Credit

  • The Cenvat scheme is a system whereby a manufacturer can avail of credit of the duties paid by a manufacturer of his raw materials, inputs, parts and components or his capital goods to pay his own Central Excise Duty.
  • This is intended to ensure that no manufacturer is forced to pay duty on the duty portion of his product. Briefly, in order to avail the CENVAT credit, the goods manufactured or produced have to pay duty. All inputs if used in the manufacture of the final product are eligible for Cenvat {except high-speed diesel oil and motor spirit (petrol)}.
  • All capital goods actually used in the manufacture of the final products are also eligible.
  • All finished goods are eligible for the benefit of Cenvat except matches. However, availment of Cenvat on capital goods will be spread over two years, half in the first year.
  • A manufacturer availing cenvat on capital goods must not avail depreciation under the income tax act on the duty part of the cost of the capital goods.
  • An SSI (Small Scale Industry) who is to take the benefit of Cenvat scheme must give a letter of C.Ex . and maintain the appropriate registers. Before availing cenvat , the SSI must physically receive the goods under a duty paying document or a proper invoice issued by a registered dealer. The SSI must maintain an registers giving details of receipt and disposed of inputs & capital goods and payment of duty by credit. Registers. Once he has availed cenvat on a duty paying document the documents must be defaced so that it can not be used again. These duty paying document already defaced and the record along with his own delivery documents must be shown to the Central Excise officers on demand. There is a provision for removing raw materials, inputs or capital goods on which cenvat credit has been taken out of the factory for further processing, repairs or job work. Details of the cenvat scheme may be obtained from the local Central Excise officer. Please note that when duty is being paid vide cenvat credit, the credit accruing on goods received after the last day of the month in which duty is due to be paid, can not be utilized. ( CBEC's circular 542/38/2000-Cx. Dated 25.8.2000)

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