Sl.No.

Issue

Justification

1.

Ethanol / Ethyl Alcohol in the form of undenatured itself classified under Chapter 22 of Central excise Act and used for industrial purposes as an organic compound in the manufacture of organic chemicals, pharmaceuticals etc., is being insisted by the Guntur Commissionerate to Clear without payment of duty under notification No.3/2005 CE dt.24-2-05.

It Can be seen that the Notification 3/2005 CE dt.24-2-05 is exclusively meant to exempt alcohols (Ethanol / Ethyl Alcohol) in the form of undenatured in which the control of State Governments intended to be used for human consumption (potable liquor). But the field formations in Guntur Commissionerate has misinterpreted and forcing the industries to clear all alcohols in the form of undenatured without payment of duty even if the same are used for industrial purposes other than human consumption. The Government's contention is not to exempt the alcohols meant for industrial purposes. If alcohols are exempted for industrial use as per Notification No.3/2005 CE dt.24-2-2005, Government will be definitely losing the revenue in thousands of crores , because some of the industries have already started for clearing without payment of duty.

Suggestion : Keeping in view of huge revenue losses in several crores matter may be carefully examined by the Board and necessary clarification may be given to stop divergent practices followed by the industries.

2.

As per S.No.7 of Notification No.64/95 CE dt.16-3-95 final products supplied to Indian Space Research Organisation are wholly exempted subject to the conditions laid therein.

Since the final products supplied to ISRO are exempted, field formations are insisting payment of duty on intermediate products used in such final products as per provisions of captive consumption Notification No.67/95 CE dt.16-3-95. With the result the manufacturers are forced to pay excise duty on intermediate products and passing on the duty liability to ISRO. Thus the purpose of the Notification 64/95 CE dt.16-395 is being defeated. ISRO is unnecessarily burdned with the cost of intermediate products including excise duties.

Suggestion : The existing Notification 83/92 CE dt.16-9-92 may be amended by the inclusion of S.No.7 of the Notification No.64/95 CE dt.16-395 meant for ISRO.

3.

As per the SEZ Act Final products supplied to SEZ units are exempted as the same are treated as exports.

But the department insisting to pay excise duty on intermediate products used captively in the manufacture of final products supplied to SEZ units on the ground that the captive consumption notification No.67/95 CE dt.16-3-95 does not specify SEZ units.

Suggestion : In order to mitigate such undue problems to the manufactures the Government may issue and amendment to the said Notification by replacing the word Free Trade Zone with SEZ or by incorporating both FTZ or SEZ.

4.

Dutiability of waste and scrap.

As per the present provisions of Tariff Act certain categories of waste scrap are duty payable and certain categories are exempted. As a result of which manufactures are finding great difficulty in segregation and accounting of waste and scrap.

Suggestion : Keeping in view of revenue involved is very negligible in respect of waste and scrap it is suggested that the Government may exempt all the categories of waste and scrap.

NOTE : Losses can be compensated by levying duty on Alcohols as explained at Sl. No.1 above.

5.

5% of the value of Bagasse generated in Sugar manufacture being insisted by the department as per the provision of Rule 6 (3) of Cenvat credit Rules 2004.

Being Bagasse is a waste / Residual exempted products incidentally generated in the manufacture of Sugar and no cenvatable inputs are used upto stage of the production of Bagasse, it is suggested that the Government may exclude the Bagasse for the payment of 5% of value of exempted Bagasse, under the Rule 6 (3) of Cenvat credit rules.

6.

Interest on erroneous availment of Cenvat due to interpretation of Cenvat credit Rules.

It is suggested that the rules 14 of Cenvat credit rules may be amended so as to do away with the interest liability on erroneous availment of credit. Interest may be levied only in respect of such credit is utilized as there will be no revenue loss to the Government.

7.

Facility to transfer the unutilized Cenvat credit amounts from one unit to another unit of the same manufacturer may be extended.

The relevant rules may be suitably amended to provide for the transfer of credit from one unit to another unit of the same manufacturer as already provided to Large Tax Payers. Otherwise the purpose of the Cenvat credit scheme is being defeated and shows the discrimination.

SERVICE TAX

1

Cenvat credit facility of service tax may be extended to outward transport.

Rules may be amended by extending the facility of service of service tax paid on outward transport arranged for the delivery of the goods at buyer's premises even in respect of beyond the place of removal.

2.

Writing – Off of cenvat credit on capital goods, which are lying in the factory.

Reversal of credit in proportion to the value being written off be made in case of partial write off of the partly used capital goods lying in the factory for repairs or further use in future.