Plastic materials processed in India – exemption
Sl. No. 73 of the table to Notification No. 6/2002-Central Excise, exempts plastic materials processed in India out of certain materials. Now this notification is amended to delete Chapter 55 (man-made staple fibre) from the list of inputs for this process.
Incidentally, this notification is strange; it exempts goods processed in INDIA. Why India is specifically mentioned in this particular exemption? Are all other goods not manufactured in India and not exempt? Can the government tax goods manufactured outside India or for that matter exempt goods not manufactured in India?.
The confusion does not end here. The explanation to this notification clarifies that this exemption is not applicable to goods cleared from
1. FTZ
2. SEZ
3. EOU
The notification reads like this
73
39.01 to 39.14
Plastic materials reprocessed in India out of the scrap or the waste of goods falling within Chapters 39, 54, 56, 59, 64, 84, 85, 86, 87, 90, 91, 92, 93, 94, 95 and 96
Explanation. - For the removal of doubts it is hereby clarified that nothing contained in this exemption shall apply to plastic materials reprocessed in a free trade zone, a special economic zone or a hundred per cent export-oriented under-taking and brought to any other place in India.
First of all Section 5A of the Central Excise Act clearly stipulates that exemption notifications unless specified are not applicable to EOU/FTZ/SEZ. So none of the exemption notifications are applicable to these units. Then why should this notification specifically say that the exemption is not applicable to these units?.
Secondly and more importantly excise duty is not leviable on units in the SEZ. But this notification does not understand that concept.
If at all this notification had to be amended, these issues should have been addressed. But the government in its wisdom amended the notification to delete chapter 55.
NOTIFICATION NO. , Dated : August 12, 2005