SSI Exemption

Small Scale Industry (SSI) Exemption under Central Excise

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Small Scale Industry (SSI) Exemption under Central Excise

The Small Scale Industry (SSI) is given certain relief under the Central Excise law by passing exemption notification. The Government of India has come out with an SSI exemption notification(Notification no. 8/2003-CE) Dated 01-March-2003 to provide an exemption to small-scale industries (SSI).Under this Government offers an incentive for SSI to grow in the economy. The exemptions given to Small Scale Industry is not applicable for all the goods, the benefits are restricted to the products listed in the SSI exemption notification. In this article, we will look at the Small Scale Industry Exemption under Central Excise in detail.

Know more about Central Excise Registration & Regulations

Eligibility for SSI Exemption

  • Small Scale Industry (SSI) should be registered with the State Directorate of Industries or DC (SSI). At-the-time of obtaining the exemptions and concessions, the SSI unit is required to produce the certificate
  • Units have turnover up to Rs. 400 lakhs in the previous fiscal year and manufacturing the goods specified in the SSI exemption notification are eligible

Rate of Duty

The Government provides an exemption from duty up to a turnover of Rs.150 lakhs in the current financial year. It means that excise duty would be payable on the turnover over and above Rs.150 Lakhs. Further, if the SSI entity had started up the business

in a current financial year, then it is entitled to the benefit of the exemption for the current year as its previous financial year clearances are Nil even with the fact that the industry has not started the operations. For better understanding refer the table below:

Sl.No

Value of ClearanceRate of Duty

1

First clearance up to an aggregate value below Rs.150 lakhs made on or after the first day of April in any fiscal year   

Nil

2

All clearance of the specified products/goods are used as inputs for further manufacture of any specified goods within the factory for the production of the specified goods   

Nil

Applicability of SSI Exemption

SSI exemption under Central Excise is available for the following cases:

  • Goods manufactured in Rural areas
  • Raw materials used by manufacturers
  • Packing Material, Account books, Registers and Writing pads
  • Manufacture of components, parts of any machinery or equipment for use as original equipment in the factory
  • Goods bearing the brand name of NSIC, KVIC, SSIDC
  • House Mark in respect of medicinal preparations

Non-applicability of SSI Exemption

Small Scale Industry Exemption under Central Excise is not applicable to the manufacturers of the following products:

  • Goods manufactured by an SSI under the Brand Name of others are not eligible for SSI Concession
  • Tea/Coffee
  • Stainless Steel & Aluminum Circles
  • Pan Masala, Unbranded Chewing Tobacco
  • Tractors, Motor Vehicles, Cars, Chassis, Motorcycles & Mopeds
  • Sandalwood Oil
  • Ice-Cream
  • Matches
  • Watches
  • Products covered under the compounded levy scheme
  • Ceramic tile other than those subjected to the process of decorating and printing
  • Photographic Plates & Films
  • Refined Copper & Copper alloys
  • Revolvers, Pistols & Firearms
  • Travel Sets for personal toilets
  • Power Driver Pumps for water not conforming to Bureau of Indian Standards (BIS)

Clubbing of Clearances

The basic idea behind this is to avoid the creation of dummy units for availing the benefits under central excise for each such unit. This limit will be deliberated by considering the clearances of one manufacturer from a factory or more factories or a factory by more manufacturers.

Availability of Cenvat Credit

Cenvat Credit on Inputs

If the SSI unit is availing the benefits of the full exemption under Central Excise till 150 Lakhs, Cenvat Credit will not be available till the turnover exceeds Rs. 150 Lakhs. Once the turnover limit exceeds Credit on Inputs will be available.

Cenvat Credit on Capital Goods

Small Scale Industry (SSI) units can avail the Cenvat Credit on capital goods for the hundred per cent amount of duty paid in the year of receipt of such products unlike other than SSI units, which are allowed fifty per cent Credit during the year of receipt. However, this Credit can be utilised after clearances exceed Rs. 150 Lakhs.

Calculation of Limit for Exemption

Following items are excluded while calculating the aggregate value of Rs. 150 Lakhs

  • Clearances are bearing the brand name or trade name of another person is ineligible for this benefit
  • Clearance exempts from the whole of the excise duty under any other notification
  • Clearance of intermediate goods or goods captivity consumed in case the final product is eligible for SSI Exemption
  • Export clearances

Following items are excluded while calculating the aggregate value of Rs.400 Lakhs

  • Clearances are bearing the brand name or trade name of another person is ineligible for this benefit
  • Clearances to FTZ, SEZ, 100% EOU, HTP, STP, UNO or International organisation
  • Clearance of intermediate goods or goods captivity consumed in case the final product is eligible for SSI Exemption
  • Export Clearances

Registration Details

  • SSI whose turnover is less than Rs. One hundred fifty lakhs are exempted from registration. Once the turnover limit exceeds, the unit should be registered with Central Excise Authorities.
  • SSI whose turnover is more than the specified limit (at present Rs. 90 Lakhs), but less than exemption limit (i.e. Rs. 150 lakhs) have to file a declaration in a prescribed form.

Filling of Returns

The assessee is required to file quarterly return in ER3 format on or before 10th of the below-mentioned month from the end of the relevant quarters.

The due date for Payment

  • Once the turnover exceeds the exemption limit, Small Scale Industry (SSI) are liable to pay ED
  • The due date for payment of duty is fifth of the following month from the end of relevant quarters for clearances during April-February and 31st March for clearances during March.
  • SSI units are liable to pay ED on a quarterly basis. This relaxation is available for the entire year even if the SSI unit crosses the limit of Rs. 400 Lakhs during the current year

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