Honeymoon of manufacturers in Excise Free Zones is over

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Honeymoon of manufacturers in Excise Free Zones is over

Excise Free Zone AIT News Network

NEW DELHI. The Government has disallowed the benefit of area based exemption in the State of Himachal Pradesh and Uttarakhand to those units which undertake only peripheral activities.

The CBEC has amended provisions of Notification Nos. 49/2003-C.E. and 50/2003-C.E., both dated 10.06.2003, provide full exemption from excise duty to the units located in specified areas of Uttarakhand and Himachal Pradesh; vide Central Excise Tariff Notification No. 1/2008 and Central Excise Non-Tariff Notification Nos. 3/2008 and 4/2008 all dated 18.1.2008 to exclude the benefit of area based exemption in the State of Himachal Pradesh and Uttarakhand to those units which undertake only peripheral activities.

In order to ensure genuine industrial activities in these zones, the Government has been decided that benefits of duty exemption should not be admissible to goods in respect of which only peripheral activities like preservation during storage, cleaning operations, packing, re-packing, labeling or re-labeling, sorting, alteration of retail sale price etc. take place.

Further, in respect of special category states in the North-east (States of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh and Sikkim), the benefit of excise duty exemption has also been disallowed to units carrying out only such peripheral activities.

Thus the benefit of the Notification Nos. 49/2003-C.E. and 50/2003-Central Excise will not be available to goods which have been subjected to only one or more of the processes such as packing or re-packing of such goods in a unit container or labelling or re-labelling of containers, declaration or alteration of retail sale price, etc. Therefore, the units carrying out only such processes would not be eligible for exemption benefit and would be required to pay duty as per normal procedure.

The Government has also prescribed a quarterly return for assesses availing exemptions under the said notifications in order to create a database about the actual impact of exemptions on the industrial activities in these regions. Rule 12 of Central Excise Rules, 2002 has been amended vide Central Excise Non-Tariff Notification No. 3/2008 dated the 18th January, 2008 to prescribe for a Quarterly Return, to be filed by the assesses with the jurisdictional Central Excise Commissionerate by the 20th of the subsequent month of the quarter to which the return relates. However, for the quarter ending 31st day of December, 2007, the units have been allowed to file the return by the 20th February, 2008.

The abovesaid provisions have come into force with effect from 18th January, 2008 and are applicable to all the existing units availing the benefits of these notifications as also to new industrial units that may be set up in future.

Click here for CBEC Circular No. 863/2008

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