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Excise duty on waste

AMIT KUMAR (Manager Accounts & Taxation) (46 Points)

17 August 2011

Dear All,

i have one question about levy of Excise Duty on waste.

Suppose XYZ co. purchased Polyster under Annexure 45 (without payment of Excise Duty ) for the purpose that final product made from that raw material on which duty not paid should be export within specified time.

The purchases were made for Export, certain quantity considering wastage as per SION (Standard Input Output Norms)

Now Deptt. demand Excise Duty on the Waste which is arising from manufacturing of Final Product. XYZ co. is exempted from Excise Duty on final Product being unit Established in Excise Exemption Area.

Are we liable to pay Excise Duty on Waste of Domestic Sale or on Input part of Raw Material generated as Waste?

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4 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 17 August 2011

waste is dutiable, and for DTA clearance of waste you have to remit duty, ( use a minimum possible valuation for such clearance, stating that its not re-cyclable, and used to fill the dumping grounds as garbage only)

in absence , short consumption of materials and duty impositon on such short fall will get intiated by department.

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CA.Sampath Rao (In Practice) (78 Points)
Replied 21 August 2011

If the waste is cleared to DTA , we have to remit duty on the Transaction value of waste even if the final product is empted and waste is listed in the tariff item colomn in the CET Act

CA Saiyum khan (Practicing CA) (690 Points)
Replied 21 August 2011

excise duty is leviable on the scrape which has been generated in producing the goods meant for export.

Monuettan (Sr.Executive) (59 Points)
Replied 24 August 2011

Excise duty for waste is dutiable.

1. The materials you have purhcased under annexure 45/ARE3 A , which might be cleared on basis of CT1/CT3 exemption.

Check whether the material your received and waste is appropriate to SION. If your scrap is more contact DGFT office for fixation of ahoc norms.

As per central exise, all the goods mentioned in tariff schedule are dutiable, There are certain exemptions and certificates to clear the goods without payment of duty. For that purpose CT1/CT3 certificates are used . This will allow a manufcature to clear the goods without payment of excise duties for exporter /EOU/SEZ e.t.c with certain procedures.

After receiving the material you have processed for export, Any product which are exported to outside from india are not dutiable. But if it is sold in DTA, Excise duty is payable , either if you have cleared by product or scrap, both becomes dutiable and excise duty has to be paid.

Ct1/Ct3 certificate are obtained for goods which are dutiable.