Pradeep Jain - Chartered Accountant

Query

(Sanjay Sharma) Posted On: 28 Jul, 2012

Dear Experts, As per the notification no. 30/2012-Central Excise Tariff, we understand that we can procure the excisable goods from the domestic market without payment of Excise duty by using the Focus Market scheme duty credit scrip but, there is a confusion about the utilization of the said FMS for the Excise duty payment on finish goods. In other words, can we adjust our Excise duty liability on final product against the said FMS rather tan paying the said excise duty by cash or by cenvat credit & if the case is like this then what would be the mechanism to utilize the FMS as there is no change in the form ER-1 yet to taking the effect of this notification?. pls. provide your experts advise in this. Regards Sanjay Sharma

Accordingly, to Para 3.17.5(C) of FTP, stated as under:- “Duty Credit Script can also be utilized for payment of Excise Duty on domestic procurement of such items as permitted to be imported under respective scheme.” The objective of duty credit is only to provide benefit on procurement of input and this duty credit scrip can’t be use for payment of excise duty on finished goods. Further the notification no. 30/2012-CE also provides the procedure for that duty credit scrip which is as follows: • The said scrip is registered with the Customs authority at the port of registration (hereinafter referred as the said Customs authority); • The holder of the scrip, who may either be the person to whom the scrip was originally issued or a transferee-holder, presents the said scrip to the said Customs authority along with a letter or performa invoice from the supplier or manufacturer indicating details of its jurisdictional Central Excise Officer (hereinafter referred as the said Officer) and the description, quantity, value of the goods to be cleared and the duties leviable thereon, but for this exemption; • The said Customs authority, taking into account the debits already made and shall debit the duties leviable in these licences, but for these exemptions in or on the reverse of the said scrips and also mentions the necessary details thereon, updates its own records and sends written advice of these actions to the said Officer; • At the time of clearance, the holder of the scrip presents the said scrip debited by the said Customs authority to the said Officer along with an undertaking addressed to the said Officer that in case of any amount short debited in the said scrip he shall pay on demand an amount equal to the short debit, along with applicable interest; • Based on the said written advice and undertaking, the said Officer endorses the clearance particulars and validates, on the reverse of the said scrip, the details of the duties leviable, but for this exemption, which were debited by the said Customs authority, and keeps a record of such clearances; • The manufacturer retains a copy of the said scrips, debited by the said Customs authority and endorsed by the said Officer and duly attested by the holder of the scrip, in support of the clearance under this notification; and • that the said holder of the scrip, to whom the goods were cleared, shall be entitled to avail the drawback or CENVAT credit of the duties of excise leviable under the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), against the amount debited in the said scrip and validated at the time of clearance. So the above procedure should be followed and duty credit scrip will not be shown in ER-1.

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