Home »Budgets » SROs-Excise » Paint industry allowed input tax adjustment on solvent oil

  • News Desk
  • Apr 11th, 2004
  • Comments Off on Paint industry allowed input tax adjustment on solvent oil
To facilitate the paints and varnish industry, the Central Board of Revenue (CBR) has announced procedure for claiming 'input tax adjustment' on the solvent oil used in the production of thinner and paints etc.

In this connection, oil marketing companies have been declared as 'manufacturers' under excise law, so that the paint/varnish industry can easily avail input tax adjustment.

The CBR has notified the decision through a Central Excise General Order (CEGO) 1 of 2004 issued here on Saturday.

Sources said that solvent oil is one of the major raw materials used in the thinners by the paint and varnish industry. The excise duty on solvent oil is Rs 13 per litre and CED on thinner is 10 percent ad valorem.

The paint industry was facing problems in availing 'input tax adjustment' as the oil refineries manufacturing solvent oil were not permitted to directly sell the product to the paint and varnish companies.

The solvent oil was sold to the paint industry through oil marketing companies having valid licences issued by the concerned authority.

On the other hand, the paint industry was required to purchase the solvent oil directly from the oil refineries under the excise law.

Sources said that oil marketing companies will now be treated as 'manufacturer' instead of refineries for the purpose of availing input tax adjustment. Now, the paint manufacturers will purchase solvent oil from the oil marketing companies and pay excise duty at the rate of Rs 13 per litre on the solvent oil.

The Rs 13 per litre duty paid on the solvent oil would be adjusted at the final stage of payment of 10 percent duty payable on the sale of thinner, paints and varnish in the market.

This will simplify the procedure as they would pay the difference of duty paid on solvent oil and that payable on thinners.

According to the notification, in case the claimant of adjustment facility cannot purchase raw material directly from the manufacturer due to policy/regulation, the marketing companies from whom such raw material is purchased, shall be considered as 'manufacturer' of these raw material for the purpose of adjustment of central excise duty.

Following is the text of the CEGO issued here on Saturday:

In the central excise general order No.2/2003, following amendments shall be made, namely:

(i) After condition (i), under caption "Condition for adjustment", the following paragraph shall be inserted, namely:

Explanation-In case the claimant of adjustment facility cannot purchase raw material directly from the manufacturer due to policy/regulation, the marketing companies from whom such raw material is purchased, shall be considered as "manufacturer" of these raw material for the purpose of adjustment of central excise duty.

(ii) In condition (ii), under caption "Manner of adjustment", in sub-condition 9b), under caption "Local goods", after the words "and date" the words and comma "or Invoice No and date, as the case may be" shall be inserted.

Copyright Business Recorder, 2004


the author

Top
Close
Close