Exemption of excise duty on tow arising during course of manufacture of polyester staple fibre (PSF) or polyester filament yarn (PFY) - CBEC Clarifies
AS per Sl. No. 172A of notification No. 12/2012-Central Excise, dated 17.03.2012 excise duty on polyester staple fibre (PSF) or polyester filament yarn (PSY), manufactured from plastic waste including waste polyethylene terephthalate bottles, is exempted.
As per Board's Circular No. 19/MMSF/88-CX.1 dated 26.5.1998, tow arising during the course of manufacture of such PSF/PSY is chargeable to excise duty since the final product is exempt. Tow arising during the manufacture of such PSF/PFY contributes to 90% of the value of such PSF/PSY defeats the purpose of granting exemption from excise duty to such PSF/PSY.
Representations have been received requesting for granting exemption from excise duty on tow arising during the manufacture of such PSF/PFY.
The Board had informed the Chief Commissioners in letter F. No. 345/2/2013-TRU dated 14.03.2014 (please see DDT 2347) that the matter was under consideration in the Ministry and the field formations were requested to keep the show cause-cum-demand notices on the above issue, if any, in the Call Book pending further instructions from the Ministry.
Now, the Board informs the Chief Commissioners:
In the Budget 2014-15, excise duty on Polyester Staple Fibre (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles (which was already exempt w.e.f. 08.05.2012) has been exempted retrospectively w.e.f. 29.06.2010 to 07.05.2012 [section 110 of the Finance (No. 2) Act, 2014 refer]. Intermediate product, "Tow" arising during the course of manufacture of such PSF/PFY has also been exempted retrospectively w.e.f. 29.06.2010 to 10.07.2014 so as to provide relief to the manufacture of such PSF/PFY [section 110 and 111 of the Finance Act (No.2) Act, 2014 refer].
Board wants Show Cause Notices to be disposed of accordingly.
CBEC Letter in F.No. 345/2/2013-TRU, Dated: September 22 2014