excise clearance for exports

EXCISE CLEARANCE FOR EXPORTS

Introduction

An indirect tax levied on goods manufactured or produced in India for home consumption.

Goods subject to excise duty can leave the factory only after the duty on them has been paid.

Excise duty exemption is available on inputs as well as finished goods manufactured in India and exported.

The exporter may pay the duty initially and seek refund later or seek exemption from payment of duty ab initio.

Chargeability of Excise Duty

Excise duty is payable on movable goods manufactured or produced in India and meant for home consumption.

Further, the goods should be included in the schedules to the Central Excise Tariff Act and should be marketable.

Valuation for Excise Duty

The duty is normally levied on the transaction value of the goods, that is, the invoice value plus any amount the buyer has to pay on behalf of the seller, in a purely business transaction where price is the sole consideration.

Where transaction value cannot be so ascertained, the valuation has to be done as per the Central Excise Valuation Rules.

Valuation for Excise Duty

In case the goods are subject to MRP (maximum retain price) regulation duty is based on MRP less rebatement.

For certain goods valuation is done on the basis of the tariff value fixed under the Act.

Types of Duty

On all goods subject to excise, Cenvat (Central Value Added Tax) is levied. It may be ad valorem duty or specific rate duty.

Additionally special excise duty is levied on few items included in second schedule to Central Excise Tariff Act.

Further, additional excise duty is levied on certain goods either to curb their consumption or to raise revenue.

Cess is a tax imposed on specific class of goods for a special purpose.

Cenvat Credit

Cenvat allows the excise duty paid at the previous stage to be deduced when the duty at the next stage is paid.

This is done by getting a credit for excise paid on inputs.

Generally Cenvat credit is not permitted when the final product is exempt from duty.

Normal Excise Procedures

Producers, dealers and exporters of excisable goods, with annual clearance of at least Rs. 100 lakhs should register with central excise authorities.

The certificate or copy of the certificate of registration should be exhibited in the business premises.

The excisable goods can be removed from the factory or warehouse only after excise duty is paid.

Normal Excise Procedures contd

The goods can be removed by the manufacturer under invoice system on self removal basis.

The assessee maintains full record of the goods manufactured and removed.

Special serially numbered invoices are used for removal.

For the goods removed in a month, the duty is paid by 5th of next month.

Monthly report is submitted to Superintendent of Excise.

Excise Clearance for Exports

Export goods are exempt from excise duty. The exporter can opt for either: export without payment of duty; or export under claim of rebate, after payment of the

duty. Excise duty on inputs used in the manufacture

of finished goods for exports is also exempted. Here too, the exporter can opt for: procuring the inputs without paying excise; or paying duty on inputs and claiming rebate on export

of finished goods.

Export Without Payment of Duty on Finished Goods

If the exporter is a manufacturer exporter, he furnishes annual letter of undertaking in form UT-1 to the excise authorities to export the removed goods within six months and provide proof of export.

If the exporter is merchant exporter, in addition, he furnishes a bond and surety. He obtains from excise authorities a book of CT-1 certificates.


For removing the goods from the factory without payment of duty, the exporter prepares the application in Form ARE1 in quintuplicate, and in invoice in triplicate with the legend “For Export without Payment of Duty”.

The amount of duty forgone should be entered in the Daily Stock Account.

The merchant exporter, in addition, furnishes one of the CT-1 certificate with Part II completed.


The goods may be removed under the supervision of Central Excise Officer.

The exporter requests the authorities 24 hours in advance.

After inspection the central excise officer will seal each package or container with tamper proof seals.

He endorses the copies of ARE1 and returns the original, duplicate and quintuplicate copies to the exporter.


At the port, the goods are presented to the customs authorities along with three copies of ARE1.

If the seal is found to be intact, the goods are cleared without opening.

ARE1 original and quintuplicate duly certified are returned to the exporter.


The goods may be removed from factory without excise inspection under self sealing by the manufacturer.

He prepares ARE1 in quintuplicate, sends the triplicate and quadruplicate copies to central excise officer within 24 hours.


Original, duplicate and quintuplicate copies are submitted along with the goods to the customs at port.

The goods may be subjected to inspection by customs, who may draw samples to verify.

If satisfied, the ARE1 form is certified and dealt with as stated earlier.


After exports, as proof, the exporter should submit a monthly statement along with the originals of ARE1 and self attested copies of bill of lading and shipping bill.

If export cannot take place within 6 months, the exporter should deposit duty along with interest within 15 days.

Export under Claim of Rebate

The exporter, whether manufacturer exporter or merchant exporter, can pay the excise duty on export goods initially and claim later rebate of the duty.

The procedure for removal of goods at the factory or warehouse and clearance at the port of export are the same as described under removal without payment of duty.

However, no execution of letter of undertaking or bond or surety is required.

Export under Claim of Rebate

Within one year of export, application for rebate in the letter head of the export, should be made to the excise authority declared in form ARE1, along with (a) original copy of ARE1, (b) invoice, (c) self attested copy of shipping bill and (d) self attested copy of bill of lading.

After verification, the rebate will be sanctioned within 2 months.

For this facility, the market price of goods should not be less than the amount of rebate claimed, and the rebate claimed should not be less than Rs. 500.

Export with Duty Unpaid on Inputs

The exporter can acquire as inputs excisable goods without paying duty on them, and also export the finished goods without excise duty.

The manufacturer who wants to acquire inputs free of excise duty should apply to the excise authorities in the prescribed form, one application submitted for each supplier, and execute a general bond.

A copy of the application approved by the excise authorities should be forwarded to the supplier.


On the basis of the application, the supplier can avail the benefit of exemption notification and supply goods to the manufacturer.

The manufacturer should file a declaration about the ratio of inputs in the finished goods that were obtained duty free to the output.

Where satisfied, the excise authorities will grant permission for manufacture and export of finished goods.


For removal of finished goods from the factory, the manufacturer should file Form ARE2.

Procedure prescribed for form ARE1 is applicable here also.

The facility is not available if (a) duty drawback is availed, (b) export is made under obligation under advance authorisation, (c) Cenvat credit is availed for inputs, and (d) export is made by merchant exporter.

Export under Rebate of Duty in Inputs

The exporter can acquire inputs paying duty and claim rebate of duty on the inputs as well as finished goods on export.

Normal procedure for procurement of input is followed.

The procedure for manufacture is similar to the one prescribed for procuring inputs without payment of duty.

Export under Rebate of Duty in Inputs

The goods are removed under ARE2. Claim application for rebate should be

accompanied by original of ARE2 and copies of shipping bill, bill of lading and central excises invoices.

Minimum eligible rebate is Rs. 500.

excise clearance for exports

Documents