Director General

SUB : (1)  Notification No. 52/2004-Central Excise dated 20-9-04 regarding applicability of duty on sale of fabrics from EOU to DTA

(2) Notification No. 18/2004-Eentral Excise (NT) dated 6-9-04 regardingextending the benefit of CENVAT Credit to EOUs.

(3)  Notification No. 46/2004-Central Excise dated 6-9-04 regarding implementation of changes brought about in the Foreign Trade Policy

(4) Notification No. 87/2004-Customs dated 6-9-04 regarding implementation of changes in the Foreign Trade Policy

Foreign Trade Policy was released on 31-8-04. I had issued EPCES Circular No. 1 dated 31-8-04 wherein changes brought about in the Foreign Trade Policy had been explained. After issuance of Foreign Trade Policy, Department of Revenue has issued 2 notification notifying some changes in the relevant Department of Revenue notifications for implementation of the changes brought about in the Foreign Trade Policy. For implementing some other provisions, Department of Revenue’s circular is also expected shortly. Department of Revenue has also issued notification extending the CENVAT Credit facility to EOUs for which EPCES has been representing to Department of Revenue for quite some time. In addition, Department of Revenue has also issued a notification permitting EOUs to sell fabrics in the domestic market on payment of duty @4% and 8%. This issue had also been taken up immediately after the announcement of the Budget. These changes are explained as follows:-

(1)          Notification No. 52/2004-CX In the Union Budget announced on 8-7-04, Ministry of Finance had provided the facility of NIL excise duty to the DTA manufacturers in the case of Textile items. DTA manufacturers were also given another alternative of Cenvat Credit route. This had affected the Textile units in the EOU Sector and accordingly EPCES had made a detailed representation to the Ministry of Textiles, Ministry of Finance and Ministry of Commerce. Now Department of Revenue has issued notification No. 52/2004-CX dated 20-9-04 wherein EOUs will be able to sell fabric in the DTA on payment of duty @4% or @8% depending upon the category of fabrics. A copy of the notification is enclosed alongwith. This will help EOUs operating in the Fabric Sector immensely. However, Department of Revenue has rejected the request of EPCES in bringing out similar changes for Cotton Yarn.

(2)          Notification No. 18/2004-CX (NT) EOUs have been representing to EPCES that if they purchases goods from DTA on payment of duty then they are not getting benefit of Cenvat Credit. We had represented this issue to the Department of Revenue as some of the suppliers were not willing to operate under CT3. We had requested to Department of Revenue that EOUs should be extended the benefit of Cenvat Credit. Accordingly Department of Revenue has issued notification No. 18/2004-CX(NT) dated 6-9-04 wherein EOUs have been extended the benefit of Cenvat Credit. This is a major benefit. A copy of this notification is enclosed along with. This Cenvat Credit can be utilized for payment of duty when affecting sale in DTA.

(3)          Notification No. 46/2004-CX :   Notification No. 46/2004-CX dated 6-9-04 has been issued for implementation of the following provisions. Accordingly, notification No. 22/2003-CX dated 31-3-03 has been amended.

(i)   Implementation of Paragraph 6.8(j) of the Foreign Trade Policy which provides that in case of DTA sale of goods manufactured by EOU/EHTP/STP/ EHTP/BTP where basic customs duty and CVD is NIL, such goods may be considered as non-excisable goods for the purpose of payment of duties.

(ii)Depreciation rates have been notified as indicated in Paragraph 6.36.2 of the Foreign Trade Policy. This notification has categorically stated in serial No. 1, explanation 2, that there shall be no upper limit for such depreciation and depreciation upto 100% could be allowed.

(iii)        Implementation of Paragraph 6.30 of Foreign Trade Policy which provides donation of computers and computer peripherals to specified agencies.

(iv)        Implementation of changes in Paragraph 6.2(h) of the Foreign Trade Policy which had permitted procurement and supplies of spares and consumables upto 1.5% of FOB value of exports.

(v)  Implementation of Paragraph 6.15(c ) of the Foreign Trade Policy which has permitted Textile Sector to dispose off leftover material/fabrics upto 2% of CIF Value or quantity of material whichever is lower.

(vi)        Storage system and parts thereof, special racks for storage, modular furniture and parts thereof, computer furniture and parts thereof permitted to be imported by 100% EOUs without payment of duty.

(4)          Notification No. 87/2004-Customs dated 6-9-04 has been issued. This notification has amended Notification No. 52/2003-Cus dated 31-3-03 relating to import of goods by EOUs. This notification has carried out the above stated changes as given in Paragraph (3) above of this EPCES Circular.

This is for your information please.

_________________________

            TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY,    DATED THE 20^th   September, 2004

                                              29,Bhadrapada, 1926 (SAKA).     

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

New Delhi, the 20^th September, 2004

29,Bhadrapada, 1926(Saka)

NOTIFICATION

No. 52 /2004-CENTRAL EXCISE

G.S.R. 624 (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944),  the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification  of the Government of India in the Ministry of Finance (Department of Revenue),  vide No 23/2003-Central Excise, dated the 31^st March,2003,  namely:-

In the said notification,-

(a) in the  Table,-

(i)   against Sl. No. 3, in column (3), for the  letters, figures and words “ Sr. Nos. 5, 6 and 7  of ”, the letters, figures and words “5, 5A, 6,7 and 7A of” shall be substituted ;

(ii)  against Sl. No.4, in column (3), for the  letters, figures and words “ Sr. Nos. 5, 6 and 7  of this  table ”, the letters, figures and words “5, 5A, 6,7 and 7A of this Table” shall be substituted ;

  (iii)  for   Sr. Nos.  5, 6 and 7 and  the entries relating thereto , the following Sr.Nos. and entries shall   be substituted, namely:-

(b) in the  Explanation I,  clause (i) shall be omitted.

                                                                         [F.No 305/113/2004-FTT]

                                                                               (V.KEZO)

Under Secretary to the Government of India

Note: Notification No. 23/2003-Central Excise dated the 31^st March, 2003 was published vide G.S.R 266 (E),dated the 31^st March, 2003. and was last amended by notification No.46/2004-Central Excise, dated the 6^th  September, 2004 [ G.S.R.567 (E), dated the 6^th September,  2004]. 

6th September, 2004

                     Notification No.18/2004-Central Excise( N.T)

         In exercise of the powers conferred by section 37 of the Central  Excise Act, 1944  (1 of 1944), the Central Government hereby makes the following rules further to amend the Central Excise Rules, 2002, namely:-

1. ( i ) These rules may be called the Central Excise ( Third Amendment ) Rules, 2004.

    (ii) They shall come into force on the date of their publication in the Official Gazette.

2.   In the Central Excise Rules 2002, in rule 17,-

(a) for the marginal heading, the following marginal heading shall be substituted, namely:-

     “Removal of goods by a hundred per cent. export-oriented undertaking for domestic tariff area -”;

(b)   for sub-rule (1), the following sub-rule shall be substituted, namely:-

“ ( 1) Where any goods are removed from a hundred per cent. export-oriented undertaking to domestic tariff area, such removal shall be made under an invoice by following the procedure specified in rule 11, and on payment of appropriate duty before removal of goods by debiting the account current required to be maintained for this purpose or by utilizing the CENVAT credit.”.

 F . No. 305/70/2004-FTT (Pt. II)

                                                                  V. KEZO
Under Secretary to the Government of India

 Note:    The principal rules were published in the Gazette of India vide notification No. 4/2002-CE ( NT), dated 1^st March, 2002 [GSR 143(E), dated the 1^st March, 2002 ]and was last amended by notification No. 11/2004-Central Excise (N.T), dated the 9^th July, 2004 [GSR 428( E), dated the 9^th July, 2004].