Cement
in Packaged Form – Unpack The Confusion Please
By TIOL News Service
NEW DELHI,
MAR 19, 2012: THE post
budget duty structure has been explained by the TRU ( save the typo error
of double NOT appearing in Table) as under:
S.No . |
Description of goods |
Earlier rate |
Revised rate |
1. |
Packaged cement manufactured in a mini-cement plant – |
|
|
| |
( i ) Of retail sale price not exceeding  190 per 50 kg bag or of per tonne RSP not exceeding 3800 |
10% ad valorem |
6% ad valorem
+ 120 PMT |
| |
(ii) Of retail sale price not exceeding 190 per 50 kg bag or of per tonne RSP not exceeding 3800 |
10% ad valorem + 30 PMT |
2. |
Packaged cement manufactured in a plant other than a mini-cement plant – |
|
|
| |
( i ) Of retail sale price not exceeding 190 per 50 kg bag or of per tonne RSP not exceeding 3800 |
10% ad valorem + 80 PMT |
12% ad valorem
+ 120 PMT |
| |
(ii) Of retail sale price not exceeding ` 190 per 50 kg bag or of per tonne RSP not exceeding 3800 |
10% ad valorem + 160 PMT |
3. |
Cement, not cleared in packaged form |
10% ad valorem |
12% ad valorem |
4. |
Cement clinker |
10% ad valorem + 200 PMT |
12% ad valorem |
It has also been clarified that the Portland cement is notified under section 4A of the Central Excise Act. Accordingly, the value for the purpose of charging duty on packaged cement would be determined on the basis of the Retail Sale Price. An abatement of 30% from the RSP is also notified.
The Tariff Rate for Portland Cement is Rs 600 PMT ( CETH 2523 29 10).
Now, let us compute the duty payable by a major Cement Plant falling under item 2(ii) above. Let us assume the RSP of 50 Kg bag be Rs 300/-. The duty payable per Tonne will be as under:
20 bags of 50 Kg of RSP Rs 300/-
RSP Value = 20X300 = 6,000/-
Value after abatement of 30% = 4,200/-
Duty @ 12% = Rs 504/-
Add Specific duty of Rs 120 PMT
Total duty payable will be Rs 624/- PMT , MORE than the Tariff Rate and you call this exemption????
The Tariff Rate of Rs 600/- in the above computation was taken as shown in the CBEC website. However, the correct Tariff Rate is Rs 900/- as amended in the Finance Act, 2008 as hence this problem does not arise. So partly the confusion is removed. (We thank the Netizen who bought this to our notice - Editor)
If the cement is sold in bulk to the industrial consumer, the duty payable @ 12% on the value will be equal to the Tariff rate at PMT value of Rs 5,000/-
Secondly, what about the cement cleared in packaged from cleared to institutional buyers where RSP is not required to be printed? Can they pay duty @12% ad valorem under Sl No 3 of the Table? Will the Departmental officers not raise objection and seek to demand full duty on the ground that the cement was not cleared in packaged form?
In Notification No 4/2006 CE, fortunately we had this proviso to take care of the above situation:
Provided also that where the retail sale price of the goods are not required to be declared under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form
This proviso is missing in the Notification No 12/2012 CE. Let us wait for a clarification / amendment or Show Cause Notices!