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DEPARTMENTAL CLARIFICATIONS

Export Cess on Gherkins and other processed foods – Clarification. – Board has received various reports from field formations that divergent practices are being followed by different Customs Houses with regard to collection of Export Cess on export of Gherkins, processed in Brine/ Acetic Acid/ Vinegar. The same practice is also being followed in respect of other processed food products. It has been reported that whereas, at some places, Export Cess at the rate of 0.5% is being collected only under the Agricultural and Processed Food Products Export Cess Act, 1985 whereas at some other places, cess is collected twice; first at the rate of 0.5% under the Agricultural Produce Cess Act, 1940 and again at the rate of 0.5% under the Agricultural and Processed Food Products Export Cess Act, 1985.

2. In this connection, it is stated that Ministry of Food Processing Industries has clarified that the cess cannot be charged twice on the same item by treating it as a primary product and also as a processed product. Ministry of Agriculture has also confirmed that cess cannot be collected twice on the processed fruits and processed vegetables, both under Agricultural Produce Cess Act, 1940 and Agricultural Produce Cess (Amendment) Act, 1966.

3. In view of the clarification given by the concerned Administrative Ministries, i.e., Ministry of Food Processing Industries and the Ministry of Agriculture, it is amply clear that cess on such products is to be collected only once, i.e., if the item is a primary product, the cess should be collected under the Agricultural Produce Cess Act, 1940 and if the item is processed product, the cess should be collected under the Agricultural and Processed Food Products Export Cess Act, 1985. – Based on C.B.E. & C. Circular No. 3/2000-Cus., dated 7-1-2000 – 2000(115) E.L.T. (T68).

Sugar – Cess on imported sugar. – The issue as to whether Cess is leviable on imported sugar, came to be examined by the Board in the context of references received from some Commissioners of Customs as also some trade interests.

2. It is seen that the Additional Customs duty on the import of sugar is exempt by virtue of Notification No. 11/97-Cus. The Additional Customs duty is equivalent to total amount of Central Excise duty which includes Cess leviable under the Cess Act. As the Additional Customs Duty stands exempted, one opinion is that the amount of cess required to be collected as additional duty should also stand exempt. The other opinion is that an exemption notification issued under the Central Excise Act does not ipso facto become a notification for collection of Cess but it needs a separate exemption from the Cess also. After considering both the opinions the Board has taken the view that though an exemption from Central Excise duty does not ipso facto grant an exemption from Cess, in the case of imported sugar, the exemption being accorded is from Additional Customs duty and not from Central Excise duty. An exemption from the Additional Customs duty would have the effect of making the goods exempt not only from the collection of duty equated to Central Excise duty but also Cess. All Additional Customs duties are required to be collected under Section 3 of the Customs Tariff Act and once an exemption is issued under the said Section it would have the effect of exempting the goods both from Central Excise duty as well as Cess. Thus, no separate exemption from Cess need to be issued under the Sugar Cess Act. – Based on M.F.(D.R.) Circular No. 17/99-Cus., dated 19-4-1999 – 1999 (108) E.L.T. (T9).

Cess – Micanite – cess @ 3.5% is leviable on Micanite and products of Micanite. – Madras Customs House Public Notice No. 77/91, dated March, 1991