Subject: Export Cess – processed & primary fruits & vegetables clarification reg.

            Board has received various reports from field formations that divergent practices are being followied by different Customs Houses with regard to collection of Export Cess on export of Gherkins, processed in Brine/Acetic Acid/Vinegar. The same practice is also being followed in respect of other processed food products. It has been reported that whereas, at some places, Export Cess at the rate of 0.5% is being collected only under the Agricultural and Processed Food Products Export Cess Act, 1985 whereas at some other places, cess is collected twice; first at the rate of 0.5% under the Agricultural Produce Cess Act, 1940 and again at the rate of 0.5% under the Agricultural and Processed Food Products Export Cess Act, 1985.

2.        In this connection, it is stated that Ministry of Food Processing Industries has clarified that the cess cannot be charged twice on the same item by treating it as a primary product and also as a processed product. Ministry of Agriculture has also confirmed that Cess cannot be collected twice on the processed fruits and processed vegetables, both under Agricultural Produce Cess Act, 1940 and Agricultural Produce Cess (Amendment) Act, 1966.

3.        In view of the clarification given by the concerned administrative Ministries, i.e. Ministry of Food Processing Industries and the Ministry of Agriculture, it is amply clear that cess on such products is to be collected only once i.e. if the item is a primary product, the cess should be collected under the Agricultural Produce Cess Act, 1940 and if the item is a processed product, the cess should be collected under the Agricultural and Processed Food Products Export Cess Act, 1989.

4.        You are requested to issue suitable instructions to field formations so that the correct practice of levying cess is uniformally followed.