excise in exports

[Former Member]

Hi,

             I have a doubt in exports

1. Do we pay excise duty to the vendor who is supplying the rawmaterials which is used in manufacturing of the finished good, and further it is Exported

- As i know there is no excise duty charged for exports, even if charged will be returned after confirmation

here my doubt is whether excise paid to the vendor + difference amount paid to excise department will be retured completly or any one

just clarify,  Text Removed

Message was edited by: G Lakshmipathi

Please avoid adding such texts

[Former Member · Accepted solution]

Hi

for your reference, please go through the excise rule:

Rule 5.  Refund of CENVAT credit. -Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,   

	duty of excise on any final product cleared for home consumption or for export on payment of duty; or
(ii)	service tax on output service,

and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:

        Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.
Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilised for payment of service tax on any output service.

        Explanation: For the purposes of this rule, the words 'output service which is exported' means the output service exported in accordance with the Export of Services Rules, 2005.

Hope this helps.

Regards,

Vishnu Kumar S

[Former Member · Accepted solution]

Hi,

  Thanks for your reply, Let me clarify you what I have understood

-  In exports (bond, Lou) we can do cenvat utilization, what ever we pay to vendor can be utilized and pay the balance to the excise department and after exports confirmation we can claim the total excise paid

- what is the difference between Bond,Lou and nobond/rebate?

difference I understood is accounting doc is not generated for (bond,Lou),accounting doc is generated for nobond can you brief me the difference and reason.

- How do exports process happens in no bond/rebate

[Former Member · Accepted solution]

HI,

The exports can be done in three ways.

1:export under rebate.

2:export under bond.

3:export under LUT.

In all types of exports, you have to create ARE1. The ARE1 created with reference to an outgoing excise invoice.

Export under rebate:

In this type of export, you have to pay duty first .Once you create excise invoice & ARE1 you have to pay the excise duty and the duty will be given back by the department once the proof of export which is the copy of sealed ARE1 is received. In this type of export, accounting documents are generated.

Export under bond:

In this type of export, you are not paying any excise duty. In this type of export, you will maintain a bond(normally B1 bond)  with the department. Once you create excise invoice & ARE1, the duty values will get debited from bond. The bond will get credited once you will get proof of export. For a track, you have to maintain Bond register.Here, there is no accounting document generated.Only when the export doesn't happen properly, then only scope of accounting comes.

Exports through letter of undertaking:

In this type of export, you are not paying any excise duty. Since the LUT is maintained with the excise department you don't have to pay any duty. Here, there is no accounting document generated.Only when the export doesn't happen properly, then only scope of accounting comes.

In this case, you have to maintain a LUT register to track the same.

Regards,

Vishnu Kumar S

[Former Member]

Hi mudunuri,

The same scenario varies from different status of plant. In the case of EOU, there you have to pay no excise duty which can be achieved through CT1. If you are a normal plant, then it depends on your sales process. If you have sales only in the form of exports, you can export as normal and you can claim back the duty paid on components which has been paid to the vendor from the excise department only if the exports are successful. If you have both DTA sales and export sales and you buy RM for both type of sales, you can use the cenvat credit accumulated against your Liabilities. Dear all, please revert me if i am wrong.  Text Removed

Regards,

Vishnu  Kumar S

Message was edited by: G Lakshmipathi

Please avoid adding such texts