All these items included in the Third Schedule to the Central Excise Act
Do you know that the Central Excise Act has three schedules? The First Schedule was the Central Excise Tariff and with the Tariff Act in 1986, this First Schedule was omitted. But the Second Schedule continued without a first one. The Second schedule actually deals with tobacco and should have been deleted long before the Tariff Act came into force. But it merrily continues in the statute. And in 2003, a new schedule christened as Third Schedule was inserted. When there is no first schedule, why can't they at least re-number these schedules? There is no first schedule, the second schedule is irrelevant and what is the sanctity of the Third schedule?
The Third Schedule gets its right to exist from section 2(f) (iii) of the Central Excise Act, which defines manufacture as, "manufacture" includes any process,—
(i) Xxxxx
(ii) Xxxxxx
(iii) which, in relation to any goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer
So, for the products listed in the Third Schedule, packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, would amount to manufacture.
The 3 rd Schedule itself is a big confusion and is best deleted from the statute. The 3 rd Schedule consists of about 100 and odd items which are also the same items as notified under Section 4A for MRP valuation. Now for the items listed under Section 4A , MRP based assessment is required only if those goods are covered under the Standards of Weights and Measures Act or any other Act requiring mandatory printing of MRP on the package. There is no such requirement for the goods mentioned under the Third Schedule .
To cite a specific example, Paint under Chapter 32 is covered under MRP ( Standards of Weights & Measures Act) and is also covered under Notification issued under Section 4A as well as under the Third Schedule. Now Paint in bulk packing for industrial use is not covered by SW&M Act and so is automatically out of Section 4A . But it does not go out of the Third Schedule as Schedule 3 does not mention about SM&W Act.
The result is, if you re-pack or re-label a drum containing 500 Ltrs of paint, the activity amounts to manufacture simply because the item finds a place in 3 rd Schedule. This could not have been the intention of the Government. The easiest thing the Government could have done was to mention in Section 2f (iii) that for the goods assessed to duty under Section 4A , packing, re-packing, alteration of retail price etc. would amount to manufacture. Instead of doing this simple thing, the Government has inserted a new Schedule to the Central Excise Act and lands itself and trade in confusion. Every time a new product is brought under Section 4A , it should remember to amend the 3 rd Schedule, which the Government is sure to forget. Why, but why this confusion?
But to be fair to the bright boys of TRU , this time around they did not forget to amend the Third Schedule – actually they amended it nearly a year ago. In the Budget 2007, to be precise!
The Finance Act, 2007 had amended the Third Schedule to include the items now brought under MRP valuation, but this was to be effective from a date to be notified by the Government. Now the Government has notified today that is 25 th day of January 2008 as the effective date.
Just imagine the tremendous amount of work our poor babus have to do to draft, administer and manage such complicated laws. The best professional organisations in the world would have failed miserably in keeping track of these provisions, but then they would not have such complicated procedures.
NOTIFICATION NO. , Dated: January 24, 2008