Key Takeaways:

- Flexibility in reporting machine details for old or second-hand packing machines

- Alternative methods for declaring electricity consumption ratings

- Clarification on reporting sale price for goods without MRP

- Specification of Chartered Engineer qualifications for certification

- Exclusion of SEZ units and manual packing processes from the special procedure

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Let's break down the key points of Circular No. 208/2/2024-GST and understand its implications:

Background:

The circular addresses issues related to the special procedure for manufacturers of specified commodities, which was introduced based on the recommendation of the 50th GST Council meeting. This procedure was initially notified via Notification No. 30/2023-Central Tax and later revised through Notification No. 04/2024-Central Tax.

Key Clarifications:

1. Machine Details Reporting:

For old or second-hand packing machines where make, model, or machine numbers are not readily available:

- Make and model numbers are optional in Table 6 of FORM GST SRM-I.

- If the make is unavailable, the year of purchase can be declared as the make number.

- Machine number is mandatory, but if unavailable, manufacturers can assign a numeric number.

2. Electricity Consumption Rating:

If the electricity consumption rating is not available in machine specifications or documents:

- Manufacturers can have it calculated by a Chartered Engineer.

- The calculation should be certified in FORM GST SRM-III.

- The certificate must be uploaded with FORM GST SRM-I.

3. Reporting Value for Goods Without MRP:

For goods without MRP (e.g., export goods):

- The sale price of the manufactured goods should be entered in Column 8 of Table 9 in FORM GST SRM-II.

4. Chartered Engineer Qualifications:

- A Practicing Chartered Engineer with a certificate of practice from the Institute of Engineers India (IEI) is qualified to provide the required certification.

5. Applicability to SEZ Units:

- The special procedure is not applicable to manufacturing units located in Special Economic Zones.

6. Manual Processes:

- The special procedure does not apply to manual seamers/sealers used for packing operations.

- It's also not applicable to manual packing operations like post-harvest packing of tobacco leaves .

7. Multiple Machine Processes:

- In cases where multiple machines are used for filling, capping, and packing, details of the machine used for final packing should be reported in Table 6 of FORM GST SRM-I.

8. Job Work and Contract Manufacturing:

- The special procedure applies to all persons involved in the manufacturing process, including job workers and contract manufacturers.

- If a job worker or contract manufacturer is unregistered, the principal manufacturer is responsible for compliance.

Implications for Businesses:

These clarifications provide much-needed guidance for manufacturers of specified commodities, especially those using older equipment or involved in complex manufacturing processes. The circular aims to simplify compliance while ensuring accurate reporting. Businesses should:

- Review their manufacturing processes and equipment to align with the reporting requirements.

- Engage Chartered Engineers if needed for electricity consumption calculations.

- Ensure proper documentation and reporting, particularly for job work and contract manufacturing scenarios.

FAQs:

Q1: How should manufacturers report details for old packing machines without clear make or model numbers?

A1: Manufacturers can use the year of purchase as the make number if unavailable. For machine numbers, they can assign a numeric number if it's not available on the machine or in records.

Q2: What should be done if the electricity consumption rating of a packing machine is not available?

A2: In such cases, manufacturers can have a Chartered Engineer calculate and certify the electricity consumption per hour. This certification should be uploaded with FORM GST SRM-I.

Q3: Is this special procedure applicable to manufacturing units in Special Economic Zones (SEZ)?

A3: No, the special procedure notified in Notification No. 04/2024-CT is not applicable to manufacturing units located in SEZs.

Q4: How does this procedure apply to job work or contract manufacturing situations?

A4: The procedure applies to all parties involved in manufacturing, including job workers and contract manufacturers. If these parties are unregistered, the principal manufacturer is responsible for compliance.

Q5: Does this special procedure apply to manual packing processes?

A5: No, the procedure does not apply to manual seamers/sealers or manual packing operations like post-harvest packing of tobacco leaves.

Key Precedents:

- Central Goods and Services Tax Act, 2017 (CGST Act)

- Notification No. 30/2023-Central Tax dated 31.07.2023 (Initial special procedure notification)

- Notification No. 03/2024-Central Tax dated 05.01.2024 (Rescinding previous notification)

- Notification No. 04/2024-Central Tax dated 05.01.2024 (Revised special procedure notification)

- Circular No. 208/2/2024-GST dated 26th June, 2024

- Section 168(1) of the CGST Act (Power of the Board to issue instructions)

Circular No.-208/2/2024-GST

F.No. CBIC-20001/4/2024-GST

Government of India

Ministry of Finance

(Department of Revenue)

Central Board of Indirect Taxes and Customs

GST Policy Wing

North Block, New Delhi

Dated the 26th June, 2024

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarifications on various issues pertaining to special procedure for the manufacturers of the specified commodities as per Notification No. 04/2024 - Central Tax dated 05.01.2024– reg.

Based on the recommendation of 50th GST Council meeting, a special procedure was notified vide Notification No. 30/2023-Central Tax dated 31.07.2023 to be followed by the registered persons engaged in manufacturing of goods mentioned in the schedule to the said notification. The said notification has been rescinded vide Notification No. 03/2024-Central Tax dated 05.01.2024 and a revised special procedure has been notified vide Notification No.04/2024- Central Tax dated 05.01.2024.

2. Representations have been received from various trade associations seeking clarity on some issues pertaining to the said special procedure. To ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods & Services Tax Act, 2017 (herein after referred to as the “CGST Act”), hereby clarifies various issues as under:

S.No. Issued Raised by Trade Clarification on the issue

1. Non availability of make, model number and machine number -

The trade bodies have raised the issue that some of the manufacturers of the said goods are using very old packing machines since decades including second hand machines. Therefore, the details of make, model number and machine number of these machines are not readily available.

It is clarified that in Table 6 of FORM GST SRM-I as notified vide Notification No. 04/2024-CT dated 05.01.2024, make and model number are optional. However, where make of the machine is not available, the year of purchase of the machine may be declared as the make number. It is also clarified that the machine number is a mandatory field in Table 6 of FORM GST SRM-I to be filled up by the manufacturer. If the machine number is not available either on the machine or as per the available documents/ records, then the manufacturer may assign any numeric number to the said machine and provide the details of the same in Table 6 of FORM GST SRM-I.

2. In cases where the electricity consumption rating of the packing machine is not available in the specifications of the said machine or in the documents/record of the same, then how to declare the electricity consumption rating of the said machine in Table 6 of FORM GST SRM-I?

It is clarified that electricity consumption rating of the packing machine is to be declared in Table 6 of FORM GST SRMI on the basis of details of the same as available either on the machine or in the documents/record of the said machine. However, if the same is not available either on the machine or in the documents/records, then the manufacturer may get such electricity consumption per hour of the said machine calculated through a Chartered Engineer and get the same certified by the said Chartered Engineer in the format prescribed in FORM GST SRM-III, as notified vide Notification No. 04/2024-CT dated 05.01.2024. The said electricity consumption rating can be declared in Table 6 of FORM GST SRM-I accordingly. The copy of such certificate of the Chartered Engineer needs to be uploaded along with FORM GST SRM-I.

The details of the documents so uploaded needs to be provided in Table 10 of the said form. It is also clarified that in cases where there are certificates of Chartered Engineer for more than one machine, then all such certificates may be uploaded in a single PDF file.

3. Which value has to be reported in Column 8 of Table 9 of FORM GST SRM-II in case of goods having no MRP, for example, goods manufactured for export market?

In cases where there is no MRP of the package, then the sale price of the goods so manufactured shall be entered in Column 8 of Table 9 of FORM GST SRM-II as notified vide Notification No. 04/2024-CT dated 05.01.2024.

4. What should be the qualification and eligibility of the Chartered Engineer for providing Chartered Engineer certificate under the special procedure notified vide Notification No. 04/2024-CT dated 05.01.2024?

It is clarified that a Practicing Chartered Engineer having a certificate of practice from the Institute of Engineers India (IEI) is qualified to provide Chartered Engineer certificate under the special procedure notified vide Notification No. 04/2024-CT dated 05.01.2024.

5. Whether the special procedure notified vide Notification No. 04/2024-CT dated 05.01.2024 is applicable to the manufacturing units located in Special Economic Zone (SEZ)?

It is clarified that the special procedure as notified vide Notification No. 04/2024-CT dated 05.01.2024 is not applicable to the manufacturing units located in Special Economic Zone.

6. Whether the special procedure notified vide Notification No. 04/2024-CT dated 05.01.2024 is applicable to the manual processes using electric operated heat sealer and seamer?

It is clarified that the said special procedure notified vide Notification No. 04/2024-CT dated 05.01.2024 is not applicable in respect of manual seamer/ sealer being used for packing operations. Further, it is also clarified that the said special procedure is not applicable in respect of manual packing operations such as those in cases of post-harvest packing of tobacco leaves.

7. In cases where multiple machines are required for filling, capping and packing of containers, the serial number of which machine is required to be declared in Table 6 of FORM GST SRM-I?

It is clarified that in a manufacturing process there may be different machines being used such as one for filling of packages, another for putting seal on the packages and another for final packing. The detail of that machine is required to be reported in Table 6 of FORM GST SRMI which is being used for final packing of the packages of the specified goods.

8. In case of job work or contract manufacturing, which person shall be

required to comply with the special procedure as notified vide Notification No. 04/2024-CT dated 05.01.2024?

It is clarified that the special procedure notified vide Notification No. 04/2024-CT dated 05.01.2024shall be applicable to all persons involved in manufacturing process including a job worker / contract manufacturer. However, if the job worker/ contract manufacturer is unregistered, then the liability to comply with the said special procedure will be of the concerned principal manufacturer.

3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

4. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.

(Sanjay Mangal)

Pr. Commissioner (GST)