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Cenvat, valuations rules -- CBEC response `positive' to industry's concern

Our Bureau

NEW DELHI, Aug. 13

THE Central Board of Excise and Customs (CBEC) has constituted a group under the chairmanship of the Member (Excise) to constantly examine issues relating to excise producers, the Confederation of Indian Industry (CII) has said.

In a statement, the chamber said that this emerged after a recent meeting that the CII had with the Member (Excise) of CBEC during which the chamber urged the Government to resolve several issues pertaining to Cenvat and the new valuation rules which are affecting the industry.

An issue which has been adversely affecting industry was Modvat credit on capital goods installed before March 31, 2000. The industries which had not availed Modvat credit for some particular reason were facing problems after the change over to Cenvat.

CII has pointed out that the CBEC has agreed to amend the Cenvat rules suitably for enabling industry to avail Modvat credit on capital goods installed before March 31, 2000.

The statement adds that there was also a positive response from the CBEC on extending Cenvat credit on direct delivery of inputs from the supplier to the job worker which was being allowed up to March 31, 2000.

Another issue on which industry had sought clarification since the new valuation rules were announced was with respect to inclusion of the cost of durable storage containers/packaging materials like gas cylinders for the purpose of excise valuation.

The new valuation rules has stipulated that any charges recovered for packing, whether ordinary or special, would be included in the assessable value for excise purposes.

The CII has pointed out that such packaging were of durable nature and was returnable by the buyer to the assessees and, in some cases, it actually exceeded the cost of the product. This, the confederation states, led to an undue increase in the excise d uty and sales tax. The CBEC has clarified that only the hiring charges or amortised cost of such packaging would be included.

The issue of excise duty on plant and machinery embedded to earth, CII pointed out, has also been a bone of contention with the industry. A peculiar problem of interpretation had arisen regarding excise duty on plant and machinery assembled at the site a nd embedded to earth as a permanent fixture.

Until recently, there had been consistent rulings by judicial as well as appellate bodies that plant and machinery were structures that were assembled and erected at the site and, hence, not excisable.

The CBEC pointed out that the Government has requested the Supreme Court to give broader guidelines on a case filed by it, according to the confederation.

On the issue of disputes and litigation, the Government representatives felt that these would reduce considerably as a result of the recent amendment in excise procedures that show-cause notices could be issued only after obtaining approval from the comm issioner or chief commissioner.