Circular No. 522/2000- Central Excise
F.NO. B.4/5/2000-TRU
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, the 31, March, 2000
Subject: Compounded levy — Re-rolling mills and induction furnaces – withdrawal of scheme – CENVAT on ad-valorem basis
It is directed to say that, as you are aware, the scheme of levy of excise duty based on capacity of production under section 3A of the Central Excise Act, 1944, in respect of hot steel re-rolling mills and induction furnace units is being, discountinued w.e.f., 1st April, 2000. Accordingly, Notification No.24/97(NT), dated 25th July, 1997, 30/97(NT), 31/97(NT), 32/97(NT), 47/97, 48/97, 58/97, all dated 1 August, 1997, are being rescinded w.e.f. 1st April, 2000.
2. From 1st April, 2000, onwards re-rolling mills and induction furnace units would be required to pay excise duty (CENVAT) on ad-valorem basis. In this context the following decisions that have been taken by the Government are being brought to your notice for necessary action.
3. As per the existing scheme under section 3A, there-rolling mills are required to discharge the duty liability for the period upto 31stMarch, 2000 by paying the specified amount of the installment by the 10th of March, 2000. In the case of induction furnace units, the duty for the period upto 31st March, 2000 is to be paid under section 3A by payment of the installment by the 31st March, 2000. Accordingly, the stocks of finished goods lying with the re-rolling mills and induction furnace units as on 1.4.2000 may be treated as duty paid and such stocks shall not be required to suffer any further ad-valorem duty when they are cleared from the re-rolling mill or induction furnace units on or after the 1st day of April, 2000. The re-rolling mills and the induction furnace units may also be advised to indicate on the invoices, when such stock is cleared, that the duty thereon was paid under section 3A of the Central Excise Act, 1944. The units may also be asked to maintain necessary records evidencing the fact that the clearances made without payment of ad valorem duty on or after 1st April, 2000, were from the stocks lying on the midnight of 31st march, 2000 and 1st April, 2000.
4. It has also been decided that CENVAT credit may be allowed in respect of stocks of input materials which are lying with there-rolling mills and induction furnace units as on 1st April, 2000. However, the credit shall be allowed only on such quantity of stocks which is supported by duty paying documents. The re-rolling mills and induction furnace units may be advised that unless the duty paying documents are available with them, the CEMVAT credit would not be admissible. Any credit wrongly taken would meet with the consequences prescribed under the CENVAT rules.
5. A question has been raised as to whether the re-rolling mills and induction furnace units would be eligible to take credit of the duty paid on capital goods received in the factories during the period 1.9.1997 till 31.3.2000. In this context it is clarified that no such credit is admissible in respect of such capital goods.
6. The re-rolling mills and induction furnace units may have waste and scrap lying in their factories as on 1st April, 2000. The clearances of such waste and scrap would be eligible to exemption from excise duty under notification no. 49/97-Central Excise, dated 1 August, 1997. It may, however, be mentioned this notification furnace units should clear the waste and scrap lying with them as on 1st April, 2000.
7. Necessary action may be taken by the field officers to ascertain the quantity of the stock of finished goods, inputs and waste and scrap lying with there-rolling mills and induction furnace units as on 1st April, 2000. Reliance may also be placed on the records maintained by such units in respect of the quantity of finished goods, inputs and waste and scrap lying in their stocks on 1st April, 2000.
8. As mentioned earlier, the stocks of finished goods as on 1st April, 2000 have been allowed to be cleared without payment of duty. It has been decided to allow deemed credit to the users of such stock. For this purpose notification no. 29/2000-Central Excise, dated 31 March, 2000 has been issued, and may kindly be referred to.
9. The above changes and decisions may kindly be brought to the notice of the field formations and of the trade by issue of suitable Trade Notice. It is also requested that the re-rolling mills and induction furnace units may be given advice and clarification promptly by the officials on any point of doubt raised by them.
