Scope of word site as per Central Excise Notification No.12/2012 particularly for projects as road construction, laying pipelines/railway tracks etc

Circular  No.1036/24/2016-CX

F. No. 68/1/2016- CX.II
Government of India
Ministry of Finance
Department  of Revenue
Central Baord of Excise and Custom

New Delhi, dated the 6th July, 2016

To,
Principal Chief Commissioner of Central Excise/ Service Tax (All),
Chief Commissioners of Central Excise/ Service Tax (All),
Principal Commissioner of Central Excise/ Service Tax (All).

Madam/Sir ,

Subject:- Scope of  word  ‘site’ appearing in Notification No.12/2012 Central Excise, dated 17.03.2012-reg

Representations have been received  from the trade regarding difficulties being faced in availing of benefit of exemption applicable to goods manufactured at the site of construction for use in construction work at such site vide S. No. 186 of Notification No. 12/2012-Central Excise, dated 17.03.2012, as amended. The issue is, how should the expression  “site” used  and defined in the aforesaid notification  be interpreted , particularly for projects which run long distances, such as construction of road, laying of pipelines or laying of railway tracks etc.

2.1 The  issue  has  been  examined  in  the  Board.  The  expression  site  has  been defined in the notification (ibid) as “any premises made available for the manufacture of  goods  by  way  of  a  specific  mention   in  the  contract  or  agreement for such construction work , provided that the goods manufactured  at such premises are solely used in the said construction work only”.

2.2 It is clear from the definition  that the expression “site” cannot be given a restrictive  meaning  while  interpreting the  same  so  long  as  the  premises  under consideration for availing benefit of exemption under S.No. 186 of Notification No. 12/2012-Central Excise, dated 17.03.2012 fulfils following conditions:-

i The said premises are made available to the manufacturer of goods by way of a specific mention in the contract/agreement for such construction work

ii The goods under Chapter 68 (except 6804,6805,6811, 6812 and 6813), for which exemption is claimed are manufactured at the said premises; and

iii Such goods manufactured at the said premises are exclusively used for the construction work, as per the relevant contract or agreement.

3. It appears that in some field formations, the distance at which goods manufactured at site is used in the project, has been considered as criteria for examining the eligibility of goods for This is an extraneous criteria not flowing from the language used in the notification , particularly when the expression “site” stands explained in the notification . As explained in para 2.2 above, the eligibility criteria must flow from the plain reading of the explanation of the expression “site” in the notification .

4. In view of the above, it is hereby directed that each case may be decided taking into consideration the facts of the individual case, examined in light of the clarification given Circular No. 456/22/99-CX, dated 18.05.1999 is hereby rescinded.

5. Field formations and trade may be suitably informed . Difficulty experienced , if any, in implementing the circular should be brought to the notice of the Board . Hindi version would follow.

(Santosb Kumar Mishra)
Under Secretary to the Government of India