News Update

Apex Court says NO to plea for deferment of Budget presentation on account of state elections40 Officers of CBEC bag Presidential AwardMeasures for reducing litigation - Clarification on Circulars 21/2015 and 8/2016Complexity of the Multilateral Convention for combating BEPS (See 'TII EDIT' in Taxindiainternational.com)Cooperative Banks not authorised to accept application for deposit in ‘Bond Ledger Account' of PMGK Deposit SchemeCX – Mixed questions of fact and law are capable of being properly resolved in appellate remedies available under CEA - Petitions disposed of: HCCapital market loses over Rs 5000 cr vide outflow of funds by FPIsWhether notice for reopening issued after six years of completition of assessment, against an original assessee which is not in existence due to compulsory amalgamation, is void ab initio - YES: HCWhether the proceedings initiated before expiry of limitation period, can be rendered invalid merely for the reason that the same was not concluded within a reasonable time period - NO: HCCompetition Act - Quoting unusually high prices in tender and committing lower quantity as part of sharing arrangement amounts to bid rigging, no requirement of law that colluding bidders must submit bids containing identical or similar conditions: CCI (See 'Legal Desk' in TIOLCorplaws)Service Tax - Valuation - Re-treading of tyres - Maintenance and Repair Services - Service Tax is payable only on service part - Value of goods sold excluded: Supreme CourtCus - Assumption by CESTAT that pending Writ petitions of others can provide adequate redress to petitioner is an entirely erroneous assumption: HCSupply of product dossier to overseas customer, whether export of service?GST-There is nothing new, but for clatter going on all over - Part-III-T - Whether AO can make disallowances in remand proceedings on issues which were not approved by ITAT, in absence of new evidences found during remand - NO: HCCX - Mentioning part number on Air shaft/Air chucks and brand 'TIDLAND' on letterhead, invoices and catalogues does not amount to use of 'brand name' so as to be held ineligible for benefit of SSI exemption notification: CESTATCongress Party joins hands with SP for UP polls; bags 105 seats out of 403 seatsGST - Division of assessee-base below Rs 1.5 Cr threshold - IRS officers upset; may hold EGM tomorrow; CBEC Chairman likely to pacify ruffled feathersIf Trump goes for Border Adjustment Tax, Indian pharma Cos would be in soupPHD Chamber urges FM to limit Corporate tax rate to 25%Trump thinks journalists in USA are most dishonest human beingsIndia teams up with largest warship INS Vikramaditya; ATM onboard inauguratedHirakhand Express derails; 35 pax killed; over 60 injuredRespect must be shown to National Anthem & National Flag; Govt asks all offices to comply with SC interim directions
 
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