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.
Export Without Payment of Duty
on Finished Goods
 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.
Export Without Payment of Duty
on Finished Goods
 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.
Export Without Payment of Duty
on Finished Goods
 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.
Export Without Payment of Duty
on Finished Goods
 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.
Export Without Payment of Duty
on Finished Goods
 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.
Export Without Payment of Duty
on Finished Goods
 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.
Export with Duty Unpaid on
Inputs
 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.
Export with Duty Unpaid on
Inputs
 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.