***** Copy
of Board's Circular No. 713/29/2003-CX (F.No.B3/5/2003-TRU) The
contents of the Trade
Notice may be brought to the notice of all concerned. (Issued
from file C.No. IV/16/2/2003 CX.. PoI. Vol. II)
To As
per Mailing List (Both Department & Trade) ------------------------------------------------------------------------------------------------------------ COPY
OF BOARD's CIRCULAR NO. 713/29/2003-CX
(F.No. B3/5/2003 - TRU) dated
May 7, 2003 The
undersigned
is directed to state that certain doubts have arisen relating to the
excise duty structure for textile and textile articles announced during
and after Budget 2003, announcements. The issues and clarification
thereon, are as under,- Vide
notification Nos. 34 and 35/2003-CE, both dated 30th April, 2003,
exemptions have been given to fabrics and readymade garments and
clothing accessories, upto specified clearance values. These exemptions
are applicable to manufacturers having aggregate value of clearances
below certain limits. For calculations of these limits, it has been,
inter alia, prescribed that where these goods are cleared by one or more
manufacturers from a factory, the exemption will apply to the aggregate
value of clearance from such factory and not separately for each
manufacturer. In this regard, doubts have arisen regarding the
application of this condition and scope of the term ‘factory’. It
has been reported that in certain cases a number of manufacturers of
these items put up their sewing machines or looms in the same premises.
In such cases, they share the manufacturing premises while having their
individual manufacture and clearances not linked to each other. The
manufacture is carried out by different legal entities. In this regard,
it is clarified that in such cases, the entire premises having several
manufacturers undertaking individual manufacturing activity should not
be treated as a single factory. There may not be any physical separation
between the different units but the fact that the machines/looms belong
to different individuals/legal entities who carry out manufacturing
activities unrelated to each other, gives them a distinct identity.
Therefore, it is clarified that in such cases, the machines/looms
belonging to a specific manufacturer should be treated as a factory for
the purposes of these notifications and the total production from the
premises should not be clubbed to calculate the eligibility limit for
the exemption limit. To illustrate, if in the same premises there are
three powerloom units, A, B and C having 5, 6 and 7 looms respectively.
In this case, the factory in respect of A, B and C will respectively
refer to 5, 6 and 7 looms, and for determining the clearances of ‘A’
from the factory, only the clearances of 5 looms should be taken into
account.
In
the aforesaid two notifications, an obligation has been placed on the
manufacturers to keep the documents relating to purchase of their inputs
i.e. yarns or fabrics. Under notification No.25/2003-CE (NT) dated
25.3.2003 as amended by notification No.28/2003-CE (NT) dated 1.4.2003,
it has been provided that textile manufacturers fully exempted can
endorse, in full, their input documents in favour of any other
manufacturer, producer, first or second stage dealer. This facility is
also available to the powerlooms or garment or accessories manufacturers
availing the said notification No.34 and 35/2003-CE. Such endorsement
has to be made by the manufacturer on the original copy of such input
invoices and same has to be handed over to the subsequent purchaser of
their products. In such cases, the said exempted manufacturer will not
have the original document relating to the purchases of his inputs. In
this regard, it is clarified that in such cases it would suffice if the
said manufacturer keeps a photocopy of the invoices. This copy should
suffice for satisfying condition No. (iv) of para 2 of the notification
Nos. 34 and 35/2003-CE relating to keeping of
purchase documents.
The
traders of textile and textile articles have been permitted (vide
notification No.28/2003-CE (NT) dated 1.4.2003) to endorse in full,
their purchase documents in favour of a manufacturer, producer or
another dealer without obtaining registration. However, in case the
quantity purchased under one invoice is to be sold in parts (to
different persons), such a trader has to obtain dealer’s registration.
It has been reported that in certain cases the field formations insist
upon bringing such purchased goods by the trader to his registered
premises first before such subsequent sale under endorsed invoice or
dealer’s invoice can be made. It is clarified that there is no
obligation provided under the Cenvat Credit rules, 2002 whereunder the
trader has to necessarily bring the goods to his registered premises
before selling the same. In many a cases, these goods are sold even
without unloading from transport or even during transit. Thus, it is
clarified that there is no requirement for the traders to necessarily
bring the goods to their premises before they are being sold. Such
resale can take place from the transporters premises or before such
goods are unloaded from the vehicle or even during the transit of the
goods. The registered dealer is, however, under obligation to maintain
account of all the goods purchased, sold or have under stock. He is also
required to maintain the accounts regarding the credit on the goods
received by him and the credit that has been passed on to the subsequent
buyer. F.No.B3/5/2003-TRU (Gautam
Ray)
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