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Scrap clearances

xxx (no) (24 Points)

05 August 2011

Sir,

My raw materials is Iron-ore and coal and getting iron the by-product is charcoal.

The char coal accumulated i want to cleared the same whether it dutiable or not. please help me.

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Tharun Raj (CMA) (1016 Points)
Replied 05 August 2011

Charcoal is the dark grey residue consisting of impure carbon obtained by removing water and other volatile constituents from animal and vegetationsubstances. Charcoal is usually produced by slow pyrolysis, the heating of wood or other substances in the absence of oxygen (see pyrolysis, char andbiochar). The resulting soft, brittle, lightweight, black, porous material resembles coal.^[1] Note that the current trade nomenclature for charcoal is "lump charcoal" and that products sold as "charcoal briquettes" are made from a mix of materials, such as low-grade coal, sawdust, wax, and starch binders - Wikipedia

Dutiabilty of Charcoal:

1. It should be marketable (In your case it is 'YES'). If not you will be selling for a consideration so DEEMED MARKETABILITY is attached.

2. Waste or scrap to be dutiable must arise out of the process, which is manufacture as per sec. 2(f) of Excise Act, 1944. The process of converting iron ore to iron is manufacture u/s 2(f).

3. If Finished good is exempted then waste is not dutiable. But, sadly IRON is taxable at the rate of 16% (Effective rate 10%) - Ref: Heading No: 7201 50 10 of CETA, 1985 and 7201 50 90 of CETA, 1985.

4. The last resort - Scap to be dutiable must be an excisable good, which means it should be specified in CETA, 1985. The extract of CETA related to charcoal is as follows:

4402 10 10 - Wood charcoal ( inc luding she l l or nut charcoal ) , whether or not agglomerated of Bamboo.

4402 90 10 - Wood charcoal ( inc luding she l l or nut charcoal ) , whether or not agglomerated of Coconut shell.

4402 90 90 - Wood charcoal ( inc luding she l l or nut charcoal ) , whether or not agglomerated of others.

Fortunately, for the above 3 headings, the rate of duty not mentioned. Which means the said product (Charcoal - Residue) can be cleared without payment of duty.

Reference link for CETA:

https://www.cbec.gov.in/excise/cxt-2011-12/chap44-45.pdf

Note: Sir, This is purely my opinion and based on the facts and information available to me i am making this. My advice is to consult an expert and show this information to him. If you need i can give past case laws too.