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Excise Duty on Scrap

Prathmesh Gharia (Oracle Apps Financials Functional Consultant) (54 Points)

15 March 2009

Hi All,

I am working in engineering company. The scrap generated from production is sold by company. so my query is can we charge excise duty on this scrap while selling this scrap?

Thanks in advance.

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14 Replies

CA.SHAHZAD SAYYED (CHARTERED ACCOUNTANT) (1000 Points)
Replied 15 March 2009

Originally posted by :Prathmesh Gharia
"		"

if Scrap fulfill following condition then Excise Duty will levy

1) Manufactured Commodity

2) Movable

3) Marketable Commodity

4) Find seperate heading in Tarrif List

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 16 March 2009

Srap is dutiable in your case. You should pay excise duty.

RAMU (SERVICE) (120 Points)
Replied 21 March 2009

Hi Friend,

If you taken CENVAT whilr purchase the Fresh goods, then you have to pay duty. Other wiase not required.

S. Banerjee (Practising Cost Accountant. Core area- Central Excise. Service Tax Costing system installation including maintenance of Cost Records and Cost Audit and Management Audit mainly Revenue leakages Audit) (622 Points)
Replied 21 March 2009

Mr. Dutta has rightly pointed out.

I am including one point with Mr. Dutta for that you are to maintain separate acoounts for Dutiable goods and Exempted goods.

Otherwise Mr Rajesh Kumar's opinion is correct.

Thanks,

S. Banerjee

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 21 March 2009

Well, I donot agree with Mr. Dutta and Mr. Banerjee.

Excisability of a product doesnot depend upon the factum that whether you have taken cenvat on inputs or not. If a product is excisable, duty is to be paid irrespective of the fact whether you have taken credit or not. Thus even if you have not taken credit on the inputs, but the scrap is excisbale, duty is required to be paid.

A waste/scrap is dutiable if wo conditions are satisfied- firstly it has been generated during course of an activity amountining to manufacture and secondly it should be specifically mentioned in the tariff. If these two conditionas are satisfied, scrap is dutiable.

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Sachin Adsul (HOD Excise dept) (178 Points)
Replied 25 March 2009

Originally posted by :Rajesh Kumar
"	Well, I donot agree with Mr. Dutta and Mr. Banerjee. Excisability of a product doesnot depend upon the factum that whether you have taken cenvat on inputs or not. If a product is excisable, duty is to be paid irrespective of the fact whether you have taken credit or not. Thus even if you have not taken credit on the inputs, but the scrap is excisbale, duty is required to be paid. A waste/scrap is dutiable if wo conditions are satisfied- firstly it has been generated during course of an activity amountining to manufacture and secondly it should be specifically mentioned in the tariff. If these two conditionas are satisfied, scrap is dutiable.	"

Respected Sir

I agree With You.

Tushar Joshi (Service) (34 Points)
Replied 25 March 2009

Well, I agree with the points raised by all of you. just a clarification needed to be given on Mr. Dutta & Mr. Banerjee's point.

As per Mr. Dutta & Mr. Banarjee If the goods/ Input received on which you have availed the credit is used in production / manufacturing process. Then scarp generated out of it is taxable. If it is not your productive scrap then you need not to pay duty on it.

Tushar Joshi (Service) (34 Points)
Replied 25 March 2009

Well, I agree with the points raised by all of you. just a clarification needed to be given on Mr. Dutta & Mr. Banerjee's point.

Janardhan Reddy Cheemala (Manager Finance) (22 Points)
Replied 16 November 2009

I am working in pesticide company. The scrap generated from production is sold by company. so my query is can we charge excise duty on this scrap while selling this scrap?

Thanks in advance

Arros (RM) (69 Points)
Replied 16 November 2009

I am including one point with Mr. Dutta for that you are to maintain separate acoounts for Dutiable goods and Exempted goods.

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 16 November 2009

If the pesticide are dutiable (you are paying duty), the scrap is dutiable and duty is required to paid. If however, the whole production of the unit is exempt, no duty is required to be paid on scrap.

kalpesh (Student) (43 Points)
Replied 17 November 2009

sir,

if it is an EOU or SEZ, then what will be the liability of duty on the scrap sold....

Also if the scrap sold is in the nature of Packing materials whether excise duty has to be paid on it and wgether tcs must be collected.. (as packing material is not a manufacturing scrap i guess)..

Kindly give solutions

Punit (Article) (22 Points)
Replied 06 September 2011

Hii, I am currently working in DTY, POY Plant in Jaipur. Company basically manufacturer of Recycled Plant means Draw Textured Yarn, Partially Oriented Yarn whether this commodity is excisable or not in Rajasthan and whether scrap generated from this material is excisable or not. please clear this matter its urgent for me........... can anyone help me??????????