A.   Background

In the Indian scenario there are importers who import goods from outside India for the purpose of sale to Indian customers. On account of imports, the importers pay customs duty at specified rates. Out of the total customs duty, Countervailing Duty (CVD) and Special Additional Duty (SAD) paid at the time of imports are passed on to the Indian customers through an invoice so that customers can claim the credit of such duties as the importer cannot utilise the said duties.

Under Central Excise, a person who is registered as a ‘First Stage Dealer’ and satisfies specified conditions can pass on the credit of CVD and SAD on the basis of an invoice.

In this regard, there was an air of ambiguity in provisions (particularly in the definition of First Stage Dealer as defied under Rule 2 (ij) of CENVAT Credit Rules, 2004) as to whether an importer who directly imports from outside India and is engaged in selling to Indian customers does not seem to be covered, as the definition specifies only a dealer who purchases from a manufacturer or importer.

Since the above is not covered in the definition, it was possible to contend that an importer who imports and sells should not be regarded as a first stage dealer and accordingly, duties paid on imports cannot be passed on.

However, for practical purposes and based on the industry practice, a view was taken that an importer would be deemed to be a first stage dealer and can pass on the credit of CVD and SAD through an invoice.

Recently, the Central Board of Excise and Customs (CBEC) issued certain Notifications No. 08/2014-CE (NT), 09/2014-CE (NT) and 10/2014-CE (NT) to include the term ‘importer’ under the registration category for a excise dealer.   Prior to the introduction of aforesaid notifications, an assessee could obtain registration with Excise Authorities as a ‘Dealer’ irrespective of the fact whether he is dealing in local or imported goods.

B.   Clarification from Excise Authorities

With respect to the aforesaid amendments, the office of Chief Commissioner of Central Excise, Mumbai vide its letterF.No.IV/16-24/CCO-II/MCX/2014 dated 7 April 2014 has clarified as under:

1. All importers who also deal in indigenous excisable goods should get fresh registration under the category of ‘Importer’ in addition to their earlier registration as ‘Dealer’.
2. An existing dealer cannot dispose off the stock of imported excisable goods where CENVAT credit is to be passed on, without obtaining registration under the category of ‘importer’.
3. An assessee, working both as importer and dealer, should maintain separate registration for each category of business. Since importer and dealer have different registration number, separate accounts and sets of invoice book are required to be maintained for each category of business. 
4. Separate returns are to be filed by the dealer and importer in respect of their business.

C.   Remarks

From the aforesaid clarification it appears that two different registration numbers will be provided to the assessees as an ‘importer’ (suffix in registration no. would be ‘XI’) and as a ‘dealer’ (suffix in registration no. would be ‘XD’).

Thus, the existing assessees (who are registered as a ‘dealer’) may have to obtain separate registration number as an ‘importer’ (if dealing in imported goods). Also, the Assessees could have to file two different returns and maintain records as required in the statute separately as ‘importer’ and ‘Dealer’ registration.

This would substantially increase the compliances for an assessee.

It is pertinent to note that a sizable section of trade and industry is of the view that the amendment is only clarificatory in nature and there is no requirement to separately obtain registration as a ‘importer’ and ‘dealer’ as ‘importers’ across India are registered as ‘first stage dealer’ since ages.

Also, there is no rational  to require an assessee to obtain separate registrations (as ‘importer’ and ‘dealer’) as, even without separate registrations too, in their Excise Returns the assessee can provide details of both imported goods and domestic goods to the Excise Authorities.

Also, requiring an assessee to obtain separate registrations as ‘importer’ and ‘dealer’ seems like asking a manufacturer to obtain separate excise registration for domestic and export removals.

Given the above, it would be prudent for the CBEC to clarify its intent of issuing aforesaid notifications as soon as possible.