By TIOL News Service

NEW DELHI, MAR 01, 2015: IN the matter of excisability of Odoriferous compound/ agarbathi mix arising during the course of manufacture of agarbathi, the Board had with a renewed vigour come out with a Circular 989/13/2014-CX.3, Dated: November 7, 2014 and which read -

“2. It has been reported that some manufacturers of such odoriferous compounds have claimed non-excisability on the ground that such compounds are a trade secret, not sold in the market and hence not excisable. This is despite the fact that such compounds have shelf life and are capable of being marketed as a distinct identifiable commodity.

3. It may be noted that Section 2(d) of the Central Excise Act, 1944 has been amended in 2008 to insert a deeming fiction regarding marketability. Specific cases have been detected, where intermediate masala mix has been found to be actually bought and sold. It is therefore clarified that Board's Circular No. 495/61/1999-CX.3 dated 22.11.1999 is applicable only to such intermediate compound or odoriferous compounds as are not capable of being bought and sold. In cases where on the basis of evidence it is established that such intermediate compounds are capable of being marketed, the same will be excisable, irrespective of whether the compound is actually marketed or not.”

We had, while reporting this Circular in DDT 2471 asked -

How much money are they going to get from the agarbathi (perfumed incense stick) manufacturers as excise duty on the secret odoriferous compounds? Even if it is excisable and dutiable, shouldn't it be exempted - and what is the cost of litigation?

Thankfully, someone in the Board realized the folly of being penny wise and, therefore, the Central Government has come out with the following exemption notification 13/2015-CE , dated 01.03.2015.

This notification inserts a serial no. 8A in the notification 10/96-CE, dated 23.07.1996 thereby granting full exemption from excise duty to all goods which are consumed within the factory of their production in the manufacture of Agarbatti [3307 41 00].

Thankfully, the Board Circular would now no longer give out any odour -Agarbatti or Agarbathi -does not matter - after all, it smells the same!