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           GOVERNMENT OF INDIA

          MINISTRY OF FINANCE

OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE: CHENNAI III

26/1, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034.

Subject: Excise duty exemption for pipes used in water                

              treatment/supply plants – clarification regarding.

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Copy of Board’s letter F.No. 354/129/2005-TRU dated 28^th October 2005 on the above subject is communicated herewith for information and necessary action.

The contents of the Trade Notice may be brought to the notice of all concerned.

        (Issued from file C.No. IV/16/1/2006-Tech)                             

                                                           Sd/-

                                                               (S.KANNAN)

                                                                                     JOINT COMMISSIONER (TECH)

To

As per Mailing List (Both Department & Trade)

 COPY OF BOARD’S LETTER F. NO. 354/129/2005-TRU DATED 28^TH OCTOBER 2005. 

        Pipes needed for delivery of drinking water or water for agricultural or industrial use from its source to the water treatment/supply plant and from there to the storage facility are exempted from central excise duty vide Notification No. 6/2002 – Central Excise dated 1.3.2002, S.No. 196A.

2.                Board’s Circular No. 659/50/2002-CX.6 clarified, inter alia, that the exemption from excise duty is available for pipes required for obtaining untreated water from its source to the water treatment plant and from the plant to the storage place.  It was also clarified that the duty concession would not be available for pipes required to supply the treated water from its storage place to the place of consumption. 

3.                It has been brought to the notice of the board that exemption from central excise duty allowed in respect of pipes for delivery of water from its source to the water treatment/supply plant and from there to the storage facility is being misused by some manufacturers by obtaining exemption for pipes used for delivery of water from one storage point to another storage point.

 4.                The notification provides exemption from excise duty only for pipes for delivery of water from its source to the water treatment/supply plant and from there to the storage facility.  Once the treated water is stored, there is no exemption beyond the first storage point.  Thus pipes which are sued for distribution of water beyond the first storage facility, that is from one storage point to another storage point,  would not be eligible for the exemption.  The same rationale will apply to notification No. 3/2004-Central Excise dated 8.1.2004.

           Sd/-

                                                                                      (R. Saroop)

                                                                                   Director (TRU)