F.No.202/05/97-CX.6

Subject : Central Excise - Special procedure for dealing with Excess/Shortages of Iron & Steel Products at the Stockyard / Depots of Integrated Steel Plants/their Consignment Agents - Regarding 

     I am directed to say that the practical difficulties in the accounting system on the question of Excess/shortages noticed at the stockyards/depots of Integrated Steel Plants have been brought to the notice of the Board. The issue also came up for discussion in a meeting of the Committee on Disputes (CoD) in the Cabinet Secretariat, when the CoD desired that an enduring solution to the problems arising from such issues should be provided by the Board keeping in view the valid factors leading to such "Excesses/shortages" of Iron and Steel Products.

2.    The matter has been examined by the Board in consultation with the Directorate General of Inspection (Customs & Central Excise). The variations in the weight of the materials as despatched from the plants and as finally sold from the stockyards/depots are considered inevitable considering the mill-scale tolerances, Mix-up of Wagon lots etc. The following procedure is specified for accountal and determining of duty liability/credit, if any, on the Excess/Shortages at the stockyards/depots on the variations in quantity noticed between quantity as despatched from the plants and quantity as finally sold from the stockyards/depots:-

2.1 Presently the stockyards/depots are required to maintain the records of receipts of duty paid goods and issue thereof in Form RG 23D in terms of Rule 57GG(2). This record will continue to be maintained by the stockyards/depots. However for the purposes of determining the variations as at Para 2 above, the format specified in Annexure-I. This Special Registers form the basis for determination of such excesses/shortages. These Special Registers are to be maintained for each of the manufacturing plants product (Tariff Head-wise). Net Excess/Shortages would be determined on an annual basis for each of the product (Tariff head-wise).

2.2 The person in charge of each stockyard/depot or the head of the Branch having control over such stockyard/depot, duly authorized by each of the Integrated Steel Plant so to do, will give a letter of undertaking in the format given in Annexure-II to the jurisdictional Deputy/Assistant Commissioner in order to avail this special procedure.

2.3 The "Special Register" referred to above containing plant-wise and tariff head-wise account would be maintained by the stockyards/depots and postings therein made from the invoice wise entries of RG23D register. This will be a running account and closed at the end of the accounting year viz. March 31st of every year. Taking into account the opening stock, receipts and issues the unadjusted closing stock will be arrived for each account. Net Excess/shortage in respect of each account would then be derived from the "Wagon Close Indicator" or similar indicator, i.e. an extract would be made of all receipts and issues pertaining to the closed wagons/vehicles so that the net differential weight and duty can be determined for that product on annual basis. For sake of clarity it is reiterated that if part wagon/vehicle quantity is remaining unsold, the concerned wagon/vehicle will not be reckoned both in receipts and issues for the year and as and when the wagon/vehicle quantity is fully sold out, the receipts and issues of the whole wagon/vehicle would get accounted in that year when the last quantity of the wagon/vehicle was sold. The net Excess (Excess-shortage)/Shortage (Shortage-Excess) for the Tariff-Head will be added/deducted to the unadjusted stock so as to arrive at the current book stock at the end of the year.

2.4 A copy of the Plant-wise/Tariff Head-wise account as well as the statement of Excess/Shortages based on Wagon close Indicator or similar indicator, relating to a financial year, will be submitted by the stockyards/depots to their Jurisdictional Deputy/Assistant Commissioner of Central Excise by 31st May of the subsequent year. A summary of the position  for all the stockyards/Depots would be made plant-wise and sent to the respective plants for submission to the plants' jurisdictional Range office within 45 days (i.e. by 15th July). In case there is any net excess quantity, the plants will make the excise duty payment at the rate of duty existing on the last day of that financial year or at the highest rate prevalent during the year under consideration, indicating inter-alia the payment pertaining to each stockyard/depot, to their Jurisdictional Excise authorities by 30th July through TR-6/PLA. However, in respect of products where there is a net shortage, no refund claim would be made by the plants. The net shortages, including the duty receipt balance, will be carried forward by the stockyards/depots for adjustment against the excess of subsequent years of the same Tariff Head.

2.5 As the differential duty, if any, is being paid at the end of the year as above, the Modvat availment by the customers who buy from the stockyards/depots will be as per the invoice of the stockyards/depots only. In other words, no further modvat credit to the buyers will be allowed on account of payment of such differential duty.

3. Any difficulties noticed while following the above procedure should be brought to the notice of the Board along with specific suggestions, if any.

Annexure - I

Format of the Special Register

(Circular No. ---------------------/----/99-CX dated ------------------- September 1999)

Note :

1. Quantities should be specified in Metric terms.
2. An abstract of reconciliation of stocks in respect of the closed wagons/vehicles/other conveyance should be prepared as on the last day of each financial year clearly indicating the net excess or shortage in the quantity or duty receipt.

Annexure - II

Format for the letter of undertaking
Undertaking under Circular No.

From :
(Full Name &  Address of the Branch/Stockyard/Depot)

To
The Deputy / Assistant Commissioner of Central Excise
(Address)

    I / We _______________________________ hereby state that my / our stockyard/depot _____________ is entitled to avail the special procedure stipulated in the above mentioned Circular and agree to the determination of excess/shortage on an yearly basis, plant-wise and product-wise as provided in the said Circular.

   We hereby undertake :-

1. That the stockyard/depot will maintain the "special register" plant-wise and Tariff head-wise, in addition to RG 23D Register.
2. That the excess/shortage in respect of each product will be determined within 2 months of the close of the accounting year (i.e. by 31st May) and the detailed statement furnished to the Deputy / Assistant Commissioner indicating product-wise opening balance, receipts, issues, excess, shortages & closing balance.
3. That on the quantum of 'Net Excess' (Excess-shortages) of each product, applicable excise duty will be paid by the respective plant suo-motto, through TR-6 challan by 30th July by calculating the duty payable in the manner specified in this Circular.
4. That on the quantum of 'Net Shortage' (Shortage-Excess) refund will not be claimed by the Stockyard/Depot. The quantum of net shortage will be carried over for any adjustment in the next financial year.
5. That any of the records/documents of the stockyard/depot as may be desired by the Deputy/Assistant Commissioner will be produced by the branch office/depot/stockyard, as and when required to do so.

Date :

Place :                                                                                    (Signature of the Authorised Signatory with Stamp)