SSI EXEMPTION :

Under Notification No-8/2003 there is a relaxation from CED, subject to satisfaction of certain conditions, in respect of SSI.

(i ) The Exemption Notification is not applicable to the following products  manufactured by manufacturers( called non-specified goods ). This means that they cannot claim SSI Exemption, irrespective of their turnover.

• Iron & Steel
• Automobile
• Watches
• Matches
• Pan Masala Products
• Tobacco Products
• Power Driven Pumps for water not confirming to BIS
• Products covered under compounded levy scheme

 

• The Exemption Notification is applicable to all other  products  manufactured by manufacturers. This means that they can claim SSI Exemption ,subject to following-

—  If in the previous year the turnover (i.e. aggregate clearance ) of a manufacturer  does not exceed Rs.400 lakhs , then he can in the current year claim the exemption benefits available to a SSI but if , the previous year turnover is exceeding Rs.400 lakhs ,then the manufacturer shall be treated as Other than SSI unit in the current year.

–—  If the manufacturer based on the above turnover criteria is treated as SSI unit in the current year ,then the manufacturer has two options available to him i.e. (i) SSI Exemption availed or (ii) SSI Exemption not availed.

— If SSI Exemption is opted, then no excise duty up to Rs.150 lakhs of finished goods cleared from factory during the current year (but he can not avail CENVAT Credit up to exempted turnover of Rs 150 lakhs  )  AND  he shall be liable to pay excise duty on over and above Rs.150 lakhs of finished goods cleared from the factory during current year after claiming CENVAT Credit  on turnover exceeding Rs.150 lakhs.

NOTE- After exemption the SSI unit will be liable to pay duty for the following clearances for home consumption

• Clearances of non-specified goods as stated in point no (i)
• Clearances of specified goods which are not eligible for the benefit of such exemption notification like specified goods bearing brand/trade name of another person .

 

• Clearance of specified excisable goods which are eligible for benefit of such notification exceeding Rs.150 lakhs.

As regards CENVAT Credit the same   can be availed on inputs used in manufacturing of –

• Specified excisable goods after clearances of Rs.150 lakhs of such goods;
• Non Specified Excisable Goods
• Specified Excisable Goods which are not eligible for benefit of SSI Exemption under notification 8/2003.
• As regards capital goods , SSI Unit can avail100% credit of duty paid on capital goods in the year of acquisition/purchase of such capital goods.

 

 

—-  If SSI Exemption is not opted, then he shall pay excise duty on all finished goods cleared from the factory in the current year after claiming CENVAT Credit available to him.

Note – While prima facie it might appear that there would be no manufacturer who will not avail exemption option as stated above, but , in practice the following manufacturers may be interested-

• Manufacturers who clear the goods for export and whose rebate like duty drawback, cash assistance ,etc. is less than the CENVAT Credit.
• Manufacturers who have CENVAT Credit on both the capital goods and other than capital goods is more than the duty payable on exempted turnover.

 

For Example-

1. The turnover of a company was Rs.3 crores during the previous year 2013-2014 . IN the current year 2014-2015 ,its turnover is Rs. 6 crores. The excise duty paid on input goods is Rs.1 crores out of which Rs. 25 lakhs attributable for manufacture of finished goods up to Rs. 150 lakhs and the balance of Rs.75 lakhs is attributable for manufacture of finished goods which are subject of excise duty.

What are the options available to the company and how much excise duty will it have to pay in 2014-2015 as a manufacturer?

Ans : OPTION –I : Avail the Exemption :

 

Goods cleared from Factory                             = 600

Less turnover up to which no duty                 = 150

Balance (exclusive of ED )                                 = 450

Duty @ 14 %                                                      =   63

Less CENVAT Credit                                           =   75

( Note- The balance of Rs. 12 (75 -63 ) shall be c/f to next month/year )

 

OPTION –II :  Not to avail the Exemption :

 

Goods cleared from Factory                             = 600

Balance (exclusive of ED )                                 =  600

Duty @ 14 %                                                      =   84

Less CENVAT Credit                                           =   84

( Note- The balance of Rs. 16 (100 -84  ) shall be c/f to next month/year )

 

 

   (iii )  The determination of Rs.400 lakhs turnover i.e. aggregate clearance ,the following format is used  :

             Goods cleared with payment of duty                                                                         xxxx

             ADD: if not included in the above :

• Turnover exempted from other notification xxxx

(other than SSI exemption &job work Notification)

• Goods manufactured in rural area with other brand name xxxx
• Export to Nepal and Bhutan xxxx
• Captive consumption (if final product exempt in any notification) xxxx

xxxx

 

             Less : if not included in the above :

 

• Export turnover xxxx
• Clearance to EOU,SEZ,EHTP,STP,UN xxxx
• Non Excisable Goods                                                                     xxxx
• Goods manufactured with other Brand Names on payment of duty xxxx
• Job work under specific notification 214/86,83/94-E OR84/94 xxxx
• Export under bond through Merchant Exporter xxxx
• Clearance of specified goods ,which are used as inputs for further

Manufacture of any specified goods within the factory of their

Production i.e. captive consumption                                                          xxxx

                                                                                                                                Turnover    xxxx

(iv ) The determination of Rs.150  lakhs of  aggregate clearance ,the following clearances shall not be taken into account-

• Clearances which are exempt from the whole of the excise duty leviable thereon ( other than an exemption based on quantity or value of clearances ) under any other notification or on which no excise duty is payable for any other reason
• Clearances bearing the Brand Name or trade name of another person ,which are not eligible for grant of this exemption.
• Clearances of specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods i.e. captive consumption.
•  Exempted units i.e turnover of Rs.150 lakhs or less are exempted from Registration.

(v ) For the purpose of computing the turnover of Rs.400 lakh ,the turnover of all the units of the manufacturer shall be clubbed. Similarly, the exemption shall also apply to the aggregate value of clearances and not separately for each factory.

In the same way , where the specified goods are cleared by one or more manufacturers from a factory ,the turnover of all the manufacturers from a single factory shall be clubbed. Similarly , the exemption shall also apply to the aggregate value of clearances  and not separately for each manufacturer.

For Example :

1. The value of clearances from 4 units of a company during 2013-2014 are as follows –

Units situated at                                                          Value of clearance (Rs. Lakhs )

Kolkata                                                                                                90

Banaras                                                                                              110

Guwahati                                                                                           120

Meghalaya                                                                                          50

Bhopal                                                                                                  60

In this case since the total turnover of the company as a whole from its five units for the previous year 2013-2014 is Rs. 430 lakhs , the company is not eligible for SSI Exemption ( Notification No 8/2003 ) in current year 2014-2015.

(vi )  Where the specified goods are manufactured in a factory belonging to or maintained by the Central Government ,State Government ,State Industries Corporation ,KVIC ,State small industries corporation ,then the value of excisable goods cleared from such factory alone shall be taken in to account i.e. no clubbing in these cases.

(vii ) Clearance for home consumption shall include clearances for export to Bhutan and Nepal.

(vi ) Goods manufactured under the Brand Name of others

The SSI Exemption contained in Notification No 8/2003 shall not apply to specified goods bearing a brand /trade name ,whether registered or not ,of another person .Hence , in such cases SSI manufacturer is liable to pay full duty on the said goods. However , in the following exceptional situations ,SSI Exemption is available to the excisable goods bearing a brand name of another person –

( i )   If the goods are manufactured in the factory located in  rural area ;

(ii)     Goods bearing brand name/Trade name  of KVIC/NSIC/SSIDC/SSIC ETC.

(iii)  Where the specified goods ,being in the nature of components or parts of any machinery or equipment or   appliances, are cleared for   use as original equipment in the manufacture of the said machinery or equipment or appliances by following the procedures laid down in the Central Excise ( Removal of goods at concessional rate of duty for manufacture of excisable goods ) rules, 2001

(iv)    Where the specified goods are account books ,registers, writing pads and file folders falling under heading 4820 or 4821 of the First Schedule;

(v)     Where the specified goods are in the nature of packing materials and are meant for use as packing material by or on behalf of the person whose brand name they bear.