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.