Customs Complications - Board solutions?
Recently Member (Cus & EP) of CBEC, SK Goel chaired a meeting of the Customs Consultative Group in Mumbai. We bring you some of the queries raised and the Member's crisp replies.
CENVAT credit lying accumulated at the time of conversion of DTA unit into EOU unit: A DTA Unit is permitted to avail of the credit of Excise and CVD paid on the inputs and capital goods and use the same for payment of Excise Duty on the clearance of finished goods. When the DTA unit becomes an EOU, there is no Excise Duty payable on the export clearances. The Excise Duty is however payable on the DTA clearances. It happens that a DTA unit has accumulated Cenvat credit with it at the time of conversion to EOU. It is logical that the accumulated credit lying with it should be allowed to be used for payment of excise duty on DTA clearances. This does not entail any loss of revenue to the Government. However, as is reported, the Central Excise field formations have taken the view that the accumulated CENVAT Credit can not be used by an EOU and that such credit must be reversed and paid back to the Government.
It is, suggested that suitable clarification to this effect may be issued with a view to provide relief to the EOUs.
Board has clarified, vide Circular No. 77/99-Customs, dated 18.11.199, that:
++ If the DTA unit has availed of the Cenvat credit on plant, machinery and equipment and also utilised such credit for payment of duty on goods manufactured and cleared before its conversion into EOU / EHTP / STP, the same is not required to be demanded on its conversion into EOU / EHTP / STP.
++ If the Cenvat credit so availed of is lying in balance as unutilized on the date of conversion into EOU / EHTP / STP, it would lapse on conversion of DTA unit into EOU / EHTP / STP unit and can not be utilized after such conversion.
Since the accumulated credit stands lapsed, the same can not be used for payment of duty on DTA clearances.
Validity of B1 General Bond & Factory stuffing permission: Currently, only one year validity is given by the Central Excise Department for B1 General Bond under which clearance of excisable items for export is allowed without payment of Duty. Similarly, the validity of Factory Stuffing permission is also given for only one year. Every year, exporters have to do the exercise of filing fresh B1 Bond and Applications for Factory Stuffing permission. This involves unproductive paper work and increase in transaction time and cost.
The RCMCs of Export Promotion Councils are issued for 3 to 5 years. It is, suggested that the facility of B1 Bond and Factory Stuffing should also be given validity till the expiry of the RCMC.
It was informed that the matter would be examined in detail by the Central Excise wing of the Board.