Under the regulations of the Central Excise Act, a Small Scale Industry is one whose aggregate value of Turnover does not go beyond Rs.150 Lakhs made on or after the 1st day of April in any financial year. During 1st March 2003, the government had given an exemption notification for the small scale industry (SSI) under the central excise law. It intends to provide few relaxations towards small scale industries. As per this notification, an incentive is offered to SSI for the development of the economy, even though exemptions to small scale industries cannot be applied to every one of the products and the benefits are restricted.
Eligibility for SSI exemption
For a business towards availing the exemptions, it must be registered with the State Directorate of industry and it should produce the certificate at the time of obtaining the exemptions. If the turnover of the prior year is to 400 lakhs, and it manufactures the goods specified in the notification issued then it is qualified for the exemption.
Rate of duty
The Indian Government gives an exemption from duty if the turnover is Rs. 150 lakhs in the financial year. It implies the excise duty shall be payable if the turnover is above 150 lakhs, likewise if the SSI entity had started up the commerce in a current fiscal year, then it is allowed to the benefit of the exemption for the present year as its previous financial year clearances are NIL, even with the fact that the business has not started the operations.
The rate of duty shall be NIL if the first clearance aggregate value is less than Rs. 150 lakhs made on or after the 1st of April in any financial year.
The rate of duty shall be NIL if the clearance of the stated products is utilized as inputs for further manufacture of any specified products within the factory for the production of the specified products in the notification issued for exemption.
Applicability of SSI Exemption
SSI Exemption Under Central Excise is available in:
• products manufactured in Rural areas.
• Raw materials utilized by manufacturers.
• Packing Material, Account books, Registers as well as Writing pads.
• Production of components, parts of any machinery or equipment for usage as original equipment in the factory.
• Merchandises having the brand name of NSIC, KVIC, SSIDC.
• House Mark in respect of medicinal preparations.
Non-applicability of SSI Exemption.
Small Scale Industry Exemption under Central Excise is not applicable to the manufacturers of the following goods:
• Products manufactured by an SSI under the Brand Name of others are not eligible for SSI Concession.
• Tea/Coffee.
• Stainless Steel and Aluminum Circles.
• Pan Masala, Unbranded Chewing Tobacco.
• Tractors, Motor Vehicles, Cars, Chassis, Motorcycles & Mopeds.
• Sandalwood Oil.
• Ice-Cream.
• Matches.
• Watches.
• Goods covered under the compounded levy scheme.
• Ceramic tile excluding those subjected to the procedure of decorating and printing.
• Photographic Plates and Films.
• Refined Copper and Copper alloys.
• Revolvers, Pistols, and Firearms.
• Travel Sets for personal toilets.
• Power Driver Pumps for water not conforming to Bureau of Indian Standards (BIS).
Clubbing of Clearances
The main idea behind this is to avoid the creation of dummy units for obtaining the benefits under central excise for every such unit. This limit would be deliberated by considering the clearances of one manufacturer from a factory or more factories or a factory through more manufacturers.
Availability of Cenvat Credit
Cenvat Credit
A cenvat credit is a credit regarding central excise on inputs acquired for the manufacture or duty paid for the manufacture of the final good. The service provider would not avail the cenvat credit of the tax paid on any input or input services utilized for providing the service for which the exemption was availed. The service provider would not avail the cenvat credit on capital goods received in the course of the period in which the exemption was availed.
The aggregate value of turnover
The aggregate value not more than Rs. 10 lakhs means that the total of first following payments received during a financial year towards the gross amount asset under Section. 67. This doesn’t include payments received which are exempted from whole of the service tax under any other service tax exemption notification.
Likewise, if the service provider offers one or more services from one or more premises, the exemption would apply to the aggregate value of every of such services and from every of such premises and not separately for each premise or service.
Items Excluded from Calculation of Limit for Exemption.
The items that are excluded while calculating the aggregate value of Rs. 150 Lakhs are:
• Clearances are bearing the brand name or trade name of another individual is ineligible for this benefit.
• Clearance exempts from the whole of the excise duty under any additional notification.
• Clearance of intermediate merchandises or products captivity consumed in case the final product is eligible for SSI Exemption.
• Export clearances.
The items that are excluded when calculating the aggregate value of Rs.400 Lakhs:
• Clearances are bearing the brand name or trade name of another individual is ineligible for this benefit.
• Clearances to FTZ, SEZ, 100% EOU, HTP, STP, UNO or International organization.
• Clearance of intermediate merchandises or products captivity consumed in case the final product is eligible for SSI Exemption.
• Export Clearances.
Registration Details
• SSI whose turnover is below Rs. 150 lakhs are exempted from registration. When the turnover limits go beyond, the unit must be registered with Central Excise Authorities.
• SSI whose turnover is above the specified limit (presently Rs. 90 Lakhs), but below exemption limit (that is, Rs. 150 lakhs) have to file a declaration in a set form.
Filling of Returns
The assessee must file quarterly return in ER3 format on or before 10th of the below-mentioned month from the end of the relevant quarters.
The due date for Payment
• When the turnover goes beyond the exemption limit, Small Scale Industry (SSI) are responsible to pay ED.
• The due date for payment of duty is 5th of the following month from the end of relevant quarters for clearances during April-February and 31st March for clearances during March.
• SSI units are legally responsible to pay ED on a quarterly basis. This relaxation is obtainable for the entire year even if the SSI unit crosses the limit of Rs. 400 Lakhs during the present year.
eStartIndia is the professional tech-based online business and legal services platform which help the clients to simplify the procedures of all kinds of registration, implementation, tax concerns and any additional legal compliances and services related to the business in India.
Author:
Leave a Comment
Previous Comments