SIGN IN SUBSCRIBE

News Update

Musk defers India’s trip citing heavy Tesla obligationsIndia needs to design legislative pills to euthanise tax-induced expatriation!I-T- Exercise of jurisdiction u/s 263 is invalid if AO has taken particular view, which though, may not be only view, but certainly can be possible view : ITATTorrential rains cause havoc in Pakistan; 87 killedI-T- Additions framed on account of unexplained money upheld as assessee was unable to prove source of cash deposited in assessee's bank account : ITATUS imposes sanctions on 3 Chinese firms and one from Belarus for transfering missile tech to PakistanCX - Appellant has regularly filed statutory returns on monthly basis and the fact of clearance of goods and availment of credit was duly reflected in returns but same has not been examined by authorities below, impugned order is not sustainable: CESTATDubai terribly water-logged as it has no storm drainsST - When services are received from separate source & accounted separately in separate ledgers, there cannot be any question of clubbing them under one category: CESTATEU online content rules tightened against adult content firmsCus - The continuous suspension of license of Customs Broker without either conducting an inquiry or issuing a notice for revocation of license or imposition of penalty is bad in law and needs to be set aside: CESTATEV market cools off in US; Ford, GM eyeing gas-powered trucksApple China tosses out WhatsApp & Threads from App store after being orderedChina announces launch of new military cyber corpsRailways operates record number of additional Trains in Summer Season 2024GST - Assessing officer took into account the evidence placed on record and drew conclusions - Bench is, therefore, of the view that petitioner should present a statutory appeal: HC1st phase polling - Close to 60% voter turnout recordedMinistry of Law to organise Conference on Criminal Justice System tomorrowGST - To effectively contest the demand and provide an opportunity to petitioner to place all relevant documents, matter remanded but by protecting revenue interest: HCGovt appoints New Directors for 6 IITsNexus between Election Manifesto and Budget 2024 in July!Israel launches missile attack on IranEC holds Video-Conference with over 250 Observers of Phase 2 polls
 
Duty on DTA clearances by EoUs : Level-playing field?

By TIOL News Service

NEW DELHI, Feb 28, 2006 : CREATION or elimination? Hon'ble FM in his Budget Speech has made a specific mention about the level-playing filed for the EOUs and rationalization of the duty structure Export Oriented Units. He declared that the duty has been reduced to 25% of the basic customs duty with the CVD payable at normal rate. Notification 22/2006 has been issued to this effect amending the Notification No 23/2003 CE dated 31.3.2003. But has the net duty payable after this amendment has been increased or decreased?

Let us see:

As per the illustration given in the JS TRU letter, if the assessable value is Rs 100, the duty payable on DTA clearances is

Assessable value = Rs.100

Basic customs duty = 15%; excise duty = 16%

Basic customs duty component on clearance from EOU = 25% of 15 = 3.75

Value for levy of CV duty = 103.75

CV duty component = 16.6%

Total duty payable = 16.60 + 3.75 = 20.35

Now let us calculate for the same assessable value under the earlier Notification 23/2003:

Assessable value = Rs.100

Basic customs duty at 15% = Rs 15

Excise duty = 16%

CVD payable 115*16/100= 18.4

Aggregate duties of Customs payable = 33.4

50% of the Aggregate duties of customs = 16.7

Now after this amendment, the duty payable by the EOUs has gone up by Rs 3.65. But is that what the FM wanted? Isn’t it contrary to what he said in the Budget Speech?


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Duty on DTA clearances by EoUs

Sir,

Eventhough the payment of duty is more in the first instance, if the buyer is under cenvat chain, they will be benefited :

1) Cenvat that can be availed as per present calculation is Rs. 16.60
2) Cenvat that could have been availed as per previous calculation is Rs. 9.20 (50% of Rs. 18.40)
3) The difference is Rs. 7.40
4) The extra duty that is to be paid due to change in calculation is Rs. 3.65 (20.35-16.70)
5) So the net positive increase by way of Cenvat will be Rs. 3.75 (7.40-3.65).

However, this may not be advantageous to those who are buying from EOU's and not availing Cenvat.

Regards

K. Krishna Murthy
kk_murthy@yahoomail.com

Posted by Krisna Murthy K
 
Sub: Duty on DTA clearances by EoUs

No doubt, duty paid for clearance of goods from EOU to DTA is EXCISE duty.
For computation of EXCISE duty, formula adopted, as per S.No. 2 of Column 4 of N/No. 23/2003 CE Dt.31/03/03. (i.e., ……“In excess of the amount equal to the aggregate duty of customs leviable on like goods….”. )

Which means, customs duty payable on like goods imported, is….

Assessable value = Rs.100
Basic customs duty @ 12.5Percent = Rs.12.5
Excise duty (CVD) @ 16Percent = Rs.18.00
Ed. Cess on CVD @ 2Percent = Rs.0.36 (1)
Total Customs Duty = Rs.30.86
Ed. Cess on total duty @ 2Percent = Rs.0.62(2)
Special Addl. Duty (Rs.100+ Rs.30.86=Rs. 130.86 x 4Percent) = Rs.05.23
Total customs duty is = 36.71 Percent

After the computation of aggregate duty of CUSTOMS, for arriving EXCISE duty payable on DTA sale, it is 36.71Percent.

If 36.71Percent is the EXCISE duty, why should the Dept. not demand Education Cess once again on total EXCISE duty leviable, as per Appendix IIA of of Sec. 93(1) of Finance(No.2) Act,2004, after availing the given exemptions, on N/No. 22/2003 C.E. 01/03/06, using following formula.

Assessable value = Rs.100
Basic customs duty 12.5Percent
25Percent of BCD (@ 3.125Percent) = Rs.3.125
Excise duty (CVD) @ 16Percent = Rs.16.50
Ed. Cess on CVD @ 2Percent = Rs.0.33(1)
Total Customs Duty = Rs.19.955
Ed. Cess on total customs duty @ 2Percent = Rs.0.39(2)
Special Addl. Duty (@ 4Percent) = N.A (exempted)
Total/aggregate CUSTOMS Duty (Rs.19.955+ Rs.0.39) =Rs.20.34

EXCISE duty arrived for DTA sale is = Rs.20.34
Ed. Cess payable on EXCISE duty is @2Percent = Rs.0.40 (3)

Therefore, duty payable on removal of goods to DTA is=20.75 Percent


(i) Is this a common practice all over India or is any other practice prevailing,
(ii) Is the assessee paying excess of Ed. Cess,
(iii) What is the amount should go to Education Cess A/c.
(iv) How can the DTA units avail full CENVAT credit of the CVD paid,

May I request dear netizens to put your opinion on it. Thanking you in advance.


Posted by vijay shettigar
 

TIOL Tube Latest

TIOL Tube
Shri N K Singh, recipient of TIOL FISCAL HERITAGE AWARD 2023, delivering his acceptance speech at Fiscal Awards event held on April 6, 2024 at Taj Mahal Hotel, New Delhi.

TOP NEWS

AR not Afar by SK Rahman

VISION 360





Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.

TII LATEST

TIOLCORPLAWS LATEST