Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 [issued vide Notification No.34/2001-C.E. (N.T.) dated 21.6.2001 as amended]:
If a buyer is entitled to obtain the excisable goods at nil/concessional rate of duty under an exemption notification issued under section 5A, he has to follow the procedure prescribed in the said rules. The procedure for availing the benefit can be underlined as below:-
(a) Application by the manufacturer to obtain the benefit [Rule 3]
(i) Application to jurisdictional Assistant Commissioner/Deputy Commissioner of Central Excise: A manufacturer who intends to receive the specified goods for specified use at concessional rate of duty, is required to make an application in quadruplicate in the specified form to the jurisdictional Assistant/Deputy Commissioner of Central Excise.
However, he is required to make separate application in respect of each supplier of subject goods.
(ii) Execution of bond: Further, the manufacturer is required to execute a general bond with surety or security to cover the recovery of duty liability estimated to be involved at any given point of time.
However, it would be sufficient if a manufacturer furnishes a letter of undertaking provided no show cause notice has been issued under section 11A(4) or 11A(5) of Central Excise Act, 1944 or no action is proposed under any notification issued in pursuance of rule 12CCC of Central Excise Rules, 2002 or rule 12AAA of CENVAT Credit Rules, 2004 against said manufacturer.
(iii) Application countersigned by jurisdictional authorities: The application shall be countersigned by the jurisdictional authorities (i.e. jurisdictional Assistant/Deputy Commissioner of Central Excise) certifying that the manufacturer has executed the required bond.
(iv) Subsequent procedure: Of the four copies of application, one copy shall be forwarded to the jurisdictional range Superintendent of the manufacturer of the subject goods and two copies shall be handed over to the applicant manufacturer and one copy shall be retained by the Assistant/Deputy Commissioner of Central Excise.
(b) Procedure to be followed by the manufacturer of subject goods [Rule 4]: The manufacturer of the goods can avail the exemption from duty based on the above referred application. The manufacturer receiving a copy of application shall avail the benefit of exemption notification issued under section 5A of the Central Excise Act and shall record the removal particulars like:-
(i) Date and number of invoice;
(ii) Description of goods;
(iii) Quantity of goods;
(iv) Value of goods;
(v) Amount of duty paid at concessional rate.
The said details shall be recorded on the application.
(c) Manufacturer to give information regarding receipt of the subject goods and maintain records [Rule 5]: The manufacturer receiving the above goods is required to maintain the simple account indicating the quantity and value of subject goods received, consumed and quantity remaining in stock. Further, he is also required to submit a quarterly return in the specified form.
(d) Goods received at concessional rate of duty not used for intended purpose [Rule 6]
(i) Consequence of goods not being used for intended purpose: If the material received at concessional rate of duty is not used for intended purpose, manufacturer is liable to pay differential duty along with interest.
(ii) Responsibility cast on the jurisdictional Assistant/Deputy Commissioner: The responsibility to ensure, that the material received at concessional rate of duty is used for intended purpose, is cast on the jurisdictional Assistant/Deputy Commissioner of Central Excise.
(iii) Recovery of duties: Provisions of section 11A and section 11AA shall apply mutatis mutandis for effecting such recoveries.
(iv) Defective/ damaged/ unsuitable/ surplus goods returned to manufacturer: If the manufacturer on receiving the subject goods finds them to be defective or damaged or unsuitable or surplus to his needs, he may return the subject goods to the original manufacturer of the goods. Such returned goods shall be added to the non duty paid stock of the manufacturer of the subject goods and dealt with accordingly.
(v) Goods lost or destroyed by natural causes or by unavoidable accident deemed to be not used for intended purpose: If the goods are lost or destroyed by natural causes or by unavoidable accident during transport from place of procurement to the manufacturer’s premises or from place of manufacturer to the place of procurer (if goods are returned) during handling or storage in the manufacturer’s premises, it will not be treated as used for intended purpose. Consequently, differential duty and interest will become payable.