How units located at kutch in gujarat can avail credit?

This query is : Resolved

CAKINGOFKINGS (Querist)
Follow

29 October 2009 As far as i have read,

say mrX of kutch buy goods from mr Y of Ahmedabad with say rs 20 p.u. duty.

now he does value addition & then clear them outside the factory with payment of duty of rs 100 p.u.

they are exempted from duty by notification issued under sec 5A so the OP duty paid by them is refundable as per sec 11B.

and the IP duty credit(RS 20) is also usable by them & if unused they can get refund of the same.

QUESTIONS:
1 AM I CORRECT IN ABOVE? IF YES ISN'T IT DOUBLE BENEFIT?

2 WHAT IF OP ARE EXEMPT FROM DUTY OR TAXABLE AT NIL RATE OF DUTY?

3 WHAT IS ONE TO ONE CORRELATION REQUIRED WITH RESPECT TO THIS UNIT? IS IT MEAN THAT ONE TO ONE UNIT OF PRODUCT OR UNIT OF KUTCH WITH RESPECT TO UNIT OUTSIDE OF KUTCH ARE TO BE SEPARATED?

ANIL JANGID

ANIL JANGID (Expert)
Follow

30 October 2009 KUCH EARTHQUAKE EFFECT AREA HAVING CENTRAL EXCISE EXEMPTION.SO YOU CAN NOT AVAIL CENAVT FACILITY.
IN CASE IF YOU CAN NOT OPT EXEMPTION OF KUCH THEN YOU SHOULD PAY EXCISE ON FINAL PRODUCT AND AVAIL CENVAT ON INPUT CREDIT.

CAKINGOFKINGS

CAKINGOFKINGS (Querist)
Follow

30 October 2009 THANKS,
BUT THEN WHAT IS 2ND PROVISO TO RULE 3(4) MEANS WHEN IT SAYS THAT "CENVAT CR OF DUTY OR ST PAID ON IP/IPS SHALL BE UTILIZED ONLY FOR PAYMENT OF DUTY ON FINAL PRODUCTS IN RESPECT OF WHICH EXEMPTION IS AVAILED"(i.e. Kutch exemption).So would this mean that as they are not able to take the credit of input against exempted output so that credit needs to be refunded?
PLS ANS. 2 & 3 QUE. also.

Upgrade to CAclubindia Pro. Subscribe Now!

ANIL JANGID

ANIL JANGID (Expert)
Follow

30 October 2009 Q.2.YES,IF U OPT NIL RATE OF EXCISE DUTY.
Q.3.YES AGREE

CAKINGOFKINGS

CAKINGOFKINGS (Querist)
Follow

31 October 2009 please elaborate A2 & A3

Guest

Guest (Expert)

07 November 2009 Units located in Kuttch & Northan Gujarat can avail the Cenvat credit.

Notionally they have to charge duty on goods sold by them on invoice prepared by them. so that purchaser can take Cenvat credit in full.

By charging excise in the invoice they have to calculate the balance amount payable after deduction of input credit and render the payment to tresury.

Afterwards they have to lodge a refund application to superitendent authorised over the area.

They got the refund of amount paid to the treasury in full.

in short above mentioned prosedure is followed by the industried.