Circular No. 85/2001-Cus
21st December, 2001
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise and Customs)
Sub: Applicability of notification No.8/97-CE, dated 1-3-97 – Clarification Reg.
I am directed to invite your attention to the Board’s Circular No.442/8/99-CE dated the 4th March, 1999 on the above subject. The Circular clarifies that the benefit of notification No. 8/97-CE dated 1-3-97 will be allowed to the units using imported as well as indigenously procured raw materials provided the unit is able to satisfy the jurisdictional officer beyond doubt that the goods to be sold in DTA are manufactured out of indigenous raw materials only by way of maintenance of records, physical scrutiny/verification and the manufacturing process etc. The Circular also provides that in cases where the inputs/final products are common, and manufacturing lines are not separate or if the inputs/final products are difficult to identify, benefit of the notification may be denied to avoid misuse of exemption notification. The stipulation of separate manufacturing lines is reported to have been interpreted by the field officers to mean that to avail of the benefit of this Circular, the unit must have a separate machinery, separate godowns and separate branches of manufacturing process.
2.The matter has been examined. It is reiterated that the benefit of notification No.8/97-CE dated 1-3-97 may be allowed to the units using imported as well as indigenously procured raw materials provided the unit is able to satisfy the jurisdictional authorities beyond doubt that the goods to be sold in DTA are manufactured out of wholly indigenous raw materials by way of maintenance of records etc. as provided in the said Board’s Circular. Maintenance of separate records would include, inter alia, separate raw material registers for indigenously procured goods and imported ones, separate finished goods registers – one for final products manufactured out of indigenously procured raw materials and the other for final products manufactured out of imported materials, batch-wise production and dispatch registers in respect of the quantity manufactured and sold in DTA etc. The jurisdictional officers would thus need to satisfy themselves that the goods under DTA sale have been manufactured wholly out of indigenous raw materials. The Circular referred to above even enjoins the jurisdictional officers to get the input-output norm fixed by the Cost Account so as to ensure that imported inputs, if common, are not used in the manufacture of the final products to be cleared in DTA. But the intention is certainly not to insist upon separate machinery, separate godowns and separate branches of manufacturing process (which would amount to establishing a separate factory within the factory) before extending the benefit of the above-said Circular.
3. Pending cases/disputes may be decided on the basis of above instructions. Wide publicity may be given by issue of a Public Notice in this regard.
4.Difficulties, if any, faced in the implementation of the above instructions, may be brought to the notice of the Board at an early date.
Kindly acknowledge receipt of this Circular.