CBEC Clarification on Excisability of Odoriferous Compound (Agarbathis)
[CBEC Circular No. 989 dated 7th November 2014]
Sub:
Excisability of Odoriferous compound/agarbathi mix arising during the course of manufacture of agarbathi.
Attention is invited to Board’s
circular no. 495/61/99-CX.3 dated 22.11.1999 (issued from F.No.
103/6/98-CX.3) regarding the above subject. It was clarified therein that ‘Odoriferous Compound’ is normally used in the manufacture
of Agarbathis in a continuous manner. The formula of
preparation of such compounds is kept a secret. Such odoriferous substances
which are not capable of being bought and sold in the market in normal course
of trade are not excisable products.
2. It has been reported that some manufacturers
of such odoriferous compounds have claimed non-excisability
on the ground that such compounds are a trade secret, not sold in the market
and hence not excisable. This is despite the fact that such compounds have
shelf life and are capable of being marketed as a distinct identifiable
commodity.
3. It may be noted that Section
2(d) of the Central Excise Act, 1944 has been amended in 2008 to insert a
deeming fiction regarding marketability. Specific cases have been detected,
where intermediate masala mix has been found to be
actually bought and sold. It is therefore clarified that Board’s Circular No.
495/61/1999-CX.3 dated 22.11.1999 is applicable only to such intermediate
compound or odoriferous compounds as are not capable of being bought and sold.
In cases where on the basis of evidence it is established that such
intermediate compounds are capable of being marketed, the same will be
excisable, irrespective of whether the compound is actually marketed or not.
4. Trade and field formations may be suitably
informed.
F. No. 103/02/2012-CX.3