Circular No. 62/2001-Cus
12th November, 2001
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Sub: Valuation of Plastic Waste & Scrap by EOU/EPZ/SEZ Units Sold / Cleared to other EOU/EPZ/SEZ Units or to the DTA Units- Reg.
I am directed to invite your attention to Board”s instructions (Issued from F. No. 268/35/92-Cx8) dated 17.8.1994 and 28.8.1997 (issued from F. No. 268/45/97-Cx 8) regarding valuation of goods manufactured and cleared into DTA by 100% EOU. It was clarified that in case of DTA sales the invoice price can be accepted for purposes of assessment if the same is in the nature of transaction value under the Customs Valuation Rules, 1988. It was also clarified that the above instructions would be applicable to assessment of waste & scrap generated (in the unit) and cleared into DTA by EOUs/EPZ units. In this connection, a doubt has been raised regarding valuation of certain variety of plastic waste & scrap, which is not generated out of the manufacturing operations but emerges during segregation of such plastic waste & scrap after import.
2. The matter has been examined by the Board. It is seen that plastic waste & scrap reprocessors operating under EOU/EPZ/SEZ Scheme, who are producing plastic agglomerates out of imported plastic waste & scrap, use only a portion of such plastic waste & scrap for manufacture of plastic agglomerates. The balance quantity is sought to be cleared in DTA or to other EOU/EPZ/SEZ units. Paragraph 9.18 of the Exim Policy provides that in case an EOU/EPZ/ETHP/STP unit is unable, for valid reasons, to utilise the goods, imported or procured from DTA, it may dispose of them in DTA on payment of applicable duties. As per the notifications issued by the Government in these cases the value taken for Customs purposes is the CIF value of materials at the time of import. It is seen that waste and scrap sought to be sold/cleared to other DTA units or to other EOU/EPZ/SEZ units arises due to segregation of imported materials at a stage prior to their being used in the production process and therefore, the same cannot be treated as plastic waste and scrap generated out of the production process. Therefore, for the purpose of charging duty, such plastic waste and scrap will have to be treated as un-utilised material and valuation of such waste & scrap will have to be done on the basis of their CIF value at the time of import. Even for inter-unit or inter-zone transfer of such segregated un-utilised plastic waste & scrap, the goods will have to be assessed on the basis of CIF value of imported scrap.
3. These instructions may kindly be brought to the notice all concerned by way of issuance of a suitable Standing Order/ Public Notice.
4. Difficulties, if any, faced in the implementation of the above instructions, may also be brought to notice of the Board at an early date.
Kindly acknowledge receipt.