The Hindu Business Line : Area-based excise duty exemption scheme modified

New Delhi, June 11 The Finance Ministry has made further modifications to the area-based excise duty exemptions applicable to units located in Jammu & Kashmir, the North-East, Sikkim and Kutch district of Gujarat.

From April 1 this year, in the wake of alleged misuse of duty exemptions, the Government had capped the refunds under the ‘refund of duty’ scheme besides prescribing certain value-addition norms.

Based on representation received from industry, the Finance Ministry has now specified a uniform rate of 75 per cent of the total duty payable as the cap for computing the refund amount in case of four products – iron and steel, cement, cocoa-butter and starch.

Some relief

Some relaxations have also been made on the provisions relating to special rate. Manufacturers had been given an option to apply for a special rate to remove the hardship caused by the imposition of cap on refund of duty.

Prior to the latest changes, there was a condition that a manufacturer would be entitled to apply for a special rate only if his actual value addition was more than 25 per cent of the prescribed rate. Under the revised norms, a manufacturer would be entitled to apply if the actual value addition exceeds the prescribed rate by 15 per cent.

Moreover, units that commenced their commercial production on or after April 1, 2008 have been allowed to make an application for special rate. The time limit to file an application for a special rate has also been relaxed and manufacturers have been permitted to file applications by September 30 of a financial year.

The Finance Ministry had earlier this year come up with a condition that the refund paid to a manufacturer would be restricted to the total duty paid by him in cash during a month.

It was represented that manufacturers purchasing raw materials in bulk were at a disadvantage because of this norm. “This grievance has been considered and the comparison of the refund payable as per value addition with duty paid in cash has now been permitted on annual basis,” an official release said.

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