Duty Free Shops - Rule 6 of CCR, 2004 pitches in to promote BRAND INDIA
A netizen writes in -
"On the subject of clearance of excisable goods under exemption for sale in Duty Free Shops at International Airports in India, I am worried about the exemption granted in terms of notification 19/2013-CE dated 23/05/2013 from the perspective of Rule 6 of the CENVAT Credit Rules, 2004.
When the fact of the matter is that these goods would be sold from the DFS against foreign exchange, would this not tantamount to export so as not be brought within the ambit of rule 6 of the CCR, 2004. I would have expected the Board to consider this aspect too while issuing the notifications and not left any scope for the jurisdictional authorities and the CERA to feast on the same.
As for the present, it is clear that when I clear these exempted goods, I would be required to pay 6% of the value of the exempted goods in terms of Rule 6 of the CCR, 2004 as I do not maintain separate records and manufacture both dutiable and exempted goods. In case, I forget to do the same, I would be allowing myself to be visited with recoveries, penalties & interest - all because I fell for Government's idea of promoting Brand India.
There is another issue that bothers me.
The Notification 19/2013-CE mentions that if the value of the goods purchased exceeds the maximum permissible allowance allowed to be cleared duty free, the purchaser is required to pay duty thereon.
In such an eventuality since the goods were already cleared under exemption, how would these goods which were later subjected to Central Excise duty be accounted by the manufacturer? In the context of rule 6 of CCR, 2004, this would be another painful blow.
The Board Circular 970 only discusses the situations of duty payment when the goods cleared from the indigenous manufacturer do not reach the "destination" or are removed after the expiry of the warehousing period but conveniently ignores this.
By the way, I have a simple suggestion - in case the Government is so enthusiastic about promoting Brand India they could have devised a simple procedure like refunding 5% of the bill amount to all the passengers at the airports as they do in London for VAT.