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We are an Export Oriented Unit (EOU). When we supply our manufactured goods to advance authorisation holders in a Domestic Tariff Area (DTA), we do not charge duty as per S.No. 22 of Notification No. 23/2003-C.E., dated March 31, 2003. Our excise authorities permitted this but now the audit team says that we have to surrender the exemption availed on the inputs used in the manufacture of the goods supplied at "nil" duty, in accordance with the second proviso to para 6 of Notification No. 22/2003-C.E., dated March 31, 2003, and proviso under para 3 of Notification 52/2003-Cus., dated March 31, 2003. Is there any argument we can put before them to avoid this unexpected liability?
In fact, the recent CBEC Circular no. 1046/34/2016-CX., dated September 16, 2016 covers this issue specifically and says that the said provisos (mentioned above) will not apply in case of supply of manufactured goods by EOU to Advance Authorisation holder in DTA, without payment of Central Excise duty. You can show the circular to the audit party and avoid any arguments.
In your Q&A of October 4, 2016, you have said that as per Para 5.04 (d) of FTP, "Shipments under Advance Authorisation, DFIA, Drawback scheme or reward schemes under Chapter 3 of FTP would also count for fulfilment of EO under EPCG Scheme". Now we are using imported raw materials supplied free of charge by the buyer, cleared under notification 32/97-Cus dated April 1, 1997. Can we count the export of job-worked goods also towards discharge of export obligation against EPCG authorisation?
Conceptually, I see no problem for that, as the advance authorisation and imports for jobbing are covered under the same duty exemption scheme. However, as Para 5.04 (d) of the FTP does not specifically mention imports for jobbing under the said notification 32/97-Cus, I suggest that you write to DGFT for suitable clarification or amendment to the FTP.
We are an EOU. We have procured some inputs from DTA. After carrying out some processes on these inputs in our EOU, we want to send the semi-finished goods to a SEZ unit for carrying out a special process and then bring them back to our unit for further processing for completion of the finished product. Can we sell such finished product in DTA on payment of normal excise duty under S.No. 3 of the notification 23/22003-CE dated March 31, 2003?
No. As per Rule 43 of the SEZ Rules, 2006, SEZ can carry out job-work for EOU or DTA units, but the goods have to be exported from a SEZ. In case of EOUs, there is an option to bring back the goods to the EOU and export from there.
Is threshold exemption under notification No. 33/2012-S.T. available to Resident Welfare Associations?
Yes. Under this notification, taxable services of aggregate value not exceeding Rs10 lakh in any financial year is exempted from service tax. The definition of "aggregate value" at Explanation B of the notification does not include the value of services that are exempt from service tax.