EXCISE DUTY—REFUND/EXEMPTION

Refund of central excise is an important finanancial incentive for export promotion. Universally, exporters do not bear the burden of indirect taxes. In India, indirect taxes are levied at the Central, State and Local level. Export goods are either exempted or such taxes are refunded. Exemption from payment of excise duty is made on execution of Bond by exporter. Where exemption is not made available, exporter has to make payment, initially, which is refunded later. While this procedure is adopted in respect of excise duty on finished product (export products), a different approach is adopted in respect of excise duty paid on inputs and packing used for manufacturing export products. Cenvat Credit is made available in respect of excise duty paid on inputs and packing used. Alternatively, under Duty Drawback, refund of excise duty and customs duty is made on inputs paid. By this, exporter is freed from the burden of excise duty and customs duty both on inputs and output to make their products globally competitive.

Necessary excise clearance is obtained in either of the two ways:

Export under Rebate: Initially, excise duty is paid and later refunded, after shipment is made.

Export under Bond: Under this system, exporter is required to execute a bond for the equivalent amount of excise duty and there is no need to make the payment of excise duty. Whom to apply: The Assistant Commissioner or Deputy Commissioner of Central Excise or Maritime Commissioner of Central Excise is the authority.

How Operated: Manufacturers, producing export products, are required to register their factories with the local Central Excise authorities, by opening a Personal Ledger Account (PLA) with them. The amount paid to the excise authorities is shown as a credit balance in the account. As and when goods are cleared, the account is debited with the amount of excise duty. When documentary evidence as proof of export is shown, the account is credited with the refund of excise duty. When the exporter clears the goods under bond, no PLA is opened as no duty is paid.

Declaration of Consumption Ratios for Manufacturing: The manufacturer of finished goods is required to make a declaration, in quintuplicate, to the Collector of Central Excise having jurisdiction over his factory. The declaration shall contain details of the goods to be exported, details of inputs required and consumption ratios. The Collector of Central Excise may nominate suitable officer for verifying the declaration. The officer shall examine and verify the information furnished by the manufacturer. If the information is found satisfactory, permission for manufacture is granted to the exporter and claiming rebate of central excise duty paid on the inputs / materials used in the manufacture of finished goods. When to Apply: Rebate on goods exported can be claimed within six months from the date of exports.

Documents to be submitted:

(a) Application in prescribed form- Form C (in triplicate)

(b) Original copy of ARE-1, duly endorsed by the Customs Officer

(c) Duplicate copy of ARE-1 in a sealed cover, received from Customs Officer (d) Duly attested copy of Bill of Lading

(e) Duly attested copy of shipping bill (export promotion copy)

(f) Disclaimer certificate in case where the claimant is other than the exporter. Procedure for Central Excise Clearance: There are two methods.

(a) Procedure for excise clearance (with examination) (b) Procedure for excise clearance (without examination)

They have been discussed, in detail, in the chapter—Excise clearance of export cargo. Refund of Duty: Under rebate on excise duty, the Chief Accounts Officer issues a cheque. If the refundable amount is not paid within three months from the date of filing the claim, interest @ 20% is to be paid for the period from the date of expiry of three months till date of refund. Where export is under bond, confrimation letter is issued in respect of cancellation of bond.

Duty Free Replenishment Certificate: Once export is completed, merchant-Exporter or Manufacturer-Exporter can approach Regional Licensing Authority for replenishing the inputs used. This certificate is issued to a merchant-Exporter or Manufacturer-Exporter for the import of inputs used in manufacture of goods, without payment of basic customs duty,

surcharge and special additional duty. However, such inputs shall be subject to payment of additional customs duty equal to excise duty at the time of import.

The exporter who wants to avail the facility has to submit a declaration along with shipping bill, while seeking customs clearance for shipment, about technical characterstics and specifications of the inputs used along with input-output norms. The exporter can file the application with in a period of 90 days from the date of realisation of export proceeds. The following documents are required to be submitted along with the application.

(a) Bank draft towards application fee. (b) Export Promotion copy of Shipping Bill.

(c) Bank certificate for realsiation of export proceeds in the prescribed form appendix 22.

(d) Statement of exports made showing separately shipping bill number, FOB value of realisation proceeds in Indian rupees and description of the resultant product. The value of the replenishment certificate is calculated keeping in view that there should be a minimum value addition of 33%. If the export made is Rs. 133 lakhs, the replenishment certificate would be given for 100 lakhs for import inputs used.