Finance ministry removes excise sop blocks

NEW DELHI: The companies in hill states that suffered because of the restrictions introduced on excise sops to check its abuse can be happy now.

The finance ministry has modified the scheme of giving excise duty exemption to units located in Jammu & Kashmir, north-east, Sikkim and Kutch district in Gujarat with immediate effect. The companies had complained to the government that the restrictions had taken a heavy toll on them.

As per the modified scheme, in respect of iron and steel, cement, starch and coco-butter, a uniform rate of 75% of the total duty payable has been specified for computing the refund amount, when these are manufactured starting from specified inputs in the same factory.

Some relaxation has also been made in the provisions relating to determination of special rate. Before the amendment, a manufacturer was permitted to file an application for fixation of special rate not later than 60 days from the beginning of a financial year. The limit has now been relaxed and manufacturers have been permitted to file such applications by September 30 of the financial year. This would enable them to make a claim on the basis of the finalised accounts for the previous financial year.

New units commencing production on or after April 1, 2008, have also been permitted to apply for special rate. They will be entitled to claim refund at a special rate from the date of commencement of production. Finally, the condition that a manufacturer would be entitled to apply for a special rate only if the actual value addition is over 25% of the prescribed rate has been relaxed. Under the revised provision, he would be entitled to apply if the actual value addition exceeds the prescribed rate by 15%.

One of the conditions was the refund paid to a manufacturer will be restricted to the total duty paid by him in cash during a month. Companies submitted that producers purchasing raw material in bulk are at a disadvantage because of the provision. The ministry considered the grievance and, accordingly, the comparison of the refund payable as per value addition with duty paid in cash has now been permitted on an annual basis.