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(See 'ST se GST tak') Pre-Budget Proposal - Cement Industry cries for attention (See 'Budget Run-up') I-T - Whether for purpose of computing deduction u/s 80IC, sale of scrap is to be held as eligible item for deduction u/s 80IC - YES: ITAT (See 'Breaking News') In spite of repeated instructions from Board, a large number of grievances have not been disposed of within prescribed timeline - CBDT Chief (See 'DDT' Column) ST -It is a common knowledge that any Insurance company is required to have chairs and tables to render services to their clients - CENVAT Credit admissible of CE duty paid on chairs & tables: CESTAT (See 'Breaking News') Looking through Section 32AC of Income Tax Act (See 'Budget Run-up') CX - Notf. 64/95-CE - D.G sets & parts supplied to Mazagon Dock for construction of warship of Indian Navy - it is nowhere mentioned in condition to notification that goods have to be supplied to Indian Navy - Exemption available: CESTAT (See 'Breaking News') Rebate and Advance Authorization Scheme (See 'Guest' Column) Whether when there is no dispute that assessee was entitled to full tax rebate by virtue of a High Court decision, would it be just and fair to direct revenue to consider prayer of petitioner for rectification - YES: HC (See '2016-TIOL-231') India comes with a big bang- startup India standup India! (See 'Budget Run-up') Whether an application for anticipatory bail deserves acceptance in cases of embezzlement of huge public money - NO: HC (See '2016-TIOL-228') Fall in Collection of Income Tax - Concerned Chairman (See 'DDT') IGI Airport Customs seizes USD 1.9 lakh worth Rs 1.28 Crore from pax heading for Kabul Per Capita net national Income likely to be Rs 93231; Construction industry likely to record 3.7% growth in current fiscal: CSO JNPT extends rebate on containers wheeled by rail to Navi Mumbai CFS President transfers Justice Hiralal Waghela from Orissa to Bombay HC + Justice Hemant Gupta from P & H to Patna High Court Union Health Secretary assesses India's preparedness to deal with Zika Virus India asks Nepal to wrap up plan to make use of USD 1 bn aid (See 'Mixed Buzz') To attract tourists 24x7 toll free Infoline in 12 foreign languages launched (See 'Mixed Buzz') TRAI fiat against discriminatory pricings of data services (See 'Mixed Buzz') Income Tax Collections reach only 65.40% of Budget Estimates; CBDT Chairman asks CITs to step up efforts TRAI to levy Rs.50K a day as penalty for discriminatory tariffs charged by service providers People's participation important to bring about a change: PM President to address two-day Meet of Governors starting tomorrow Coast Guard proposes to induct more than 22 planes and helicopters in its fleet in next few years Tax benefits for leather & jewellery industry likely in Budget Cus - No admission that goods imported were invoiced on lower side - no evidence recording any extra payment to supplier - no investigations made at suppliers' end, therefore, no cause for enhancement of AV: CESTAT by Majority (See 'Breaking News') Reduction of Government litigation supply copy of withdrawal application to Chief Commissioner (AR) (See 'DDT' Column) Are original documents required to be filed for claiming refund? (See 'ST se GST tak') Pre-Budget Proposal - Cement Industry cries for attention (See 'Budget Run-up')
 
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Duty computation for DTA sale by EoU with effect from March 1, 2008

MARCH 2, 2008

By Joseph Prabakar, Advocate

EoUs are allowed to clear / sell goods in the Domestic Tariff Area ( DTA ) up to a limit of 50% of the value of exports made during the previous year. Excise Duty to be paid by EOU for DTA sale would be equivalent to applicable customs duty payable on similar goods if the said goods were to be imported. Central Excise Notification No 23/2003 dated March 31, 2003, provided for exemption for EOU's on DTA sale whereby the rate of duty prescribed was equivalent to 25% of the applicable Basic Customs Duty (BCD) plus the applicable CVD. Notification 23/2003 also provides for exemption of Special CVD of 4%.

An amendment has been carried out in Central Excise Notification No 23/2003 whereby the rate of Excise Duty prescribed for DTA clearance by EOU has been changed as equivalent to 50% of the applicable Basic Customs Duty (BCD) plus the applicable CVD.

If a machinery is cleared by an EOU, the Excise Duty rate would be equivalent to 50% of the applicable Basic Customs Duty (BCD) for the machinery plus the applicable rate of CVD for the machinery. With effect from March 1, 2008 , Excise duty calculation by an EOU for DTA clearance, after taking into account the reduced rate of excise duty of 14% and the amendment made to Notification 23/2003 dated March 31, 2003, is as shown below.

Illustration for DTA sale of machinery by an EOU (Rate of Basic Customs Duty for Machinery is 7.5%)

Assessable value     = Rs.100
Basic Customs Duty = 50 % of 7.5 = Rs 3.75
Value for levy of CVD  = Rs 14.96 (available as Cenvat)
Total duty payable = 3.75 +14.96  = Rs 18.71
Primary Education Cess @ 2% on 18.71  = Rs 0.374
S & H E Cess @ 1% on 18.71  = Rs 0.187
Total Excise Duty payable  

Rs 19.27 or 19. 27%

So, the effective rate of duty from March 1, 2008, for DTA sale by an EOU, would be 19.27% as against 19.22% earlier (till today).

It may be noted that the Special CVD of 4% is not to be included in the computation as the same continues to be exempt.


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: useful calculation

Sir,

Author has explained the duty calculation on DTA clearances considering changes effected in the budhet with example.Very good and useful example indeed.Example given under Notification 22/2006 that amended 23/2003 did not consider 2percent education cess while calculating 20percent CVD.However author has calculated taking CVD as 14.42 percent which includes 14 percent equivalent to CE duty and 0.42 equivalent to Ed cesses.I agree with his method of calculation.

Posted by rrkothapally rrkothapally
 
Sub: Customs Education Cess component missing

Duties levied on imported goods are -

i) basic customs duty
ii) CVD
iii) Primary ed. cess on CVD (2% of ii)
iv) Higher Ed. Cess on CVD (1% of ii)
v) Primary Ed. Cess on customs duties (2% on (i+ii+iii+iv)
vi) Higher Ed. Cess on customs duties (1% on (i+ii+iii+iv)

Duty payable on DTA clearances of EOU, which is leviable under Section 3 of the C.E. Act, 1944, the cess calculation given at v and vi above, have not been considered.

The exemption under Notification 23/2003 is only in respect of (partial exemption) basic customs duty and 4 pc CVD, but it does not exempt the customs education cess

For example given in the article

Value = Rs.100
i) BCD = Rs.3.75
ii) CVD = Rs.14.53
iii) PEC on CVD (2% of ii) = Rs.0.29
iv) HEC on CVD (1% of ii) = Rs.0.15
v) PEC on Customs duty = Rs.0.37
(2% of (i + ii + iii + iv)
vi) HEC on Customs duty = Rs.0.19
(1% of (i + ii + iii + iv)
=========
vii) Excise duty Rs.19.27 on DTA clearances
(sum of i to vi)

viii) PEC on Excise duty(vii) Rs.0.39
ix) HEC on excise duty (vii) Rs.0.19

x) Excise duty + Cess payable
on DTA clearances
(vii + viii + ix) =Rs.19.85


Posted by PradeepDShah PradeepDShah
 
 
 
 
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