Central Excise duty changes in Indian Budget 2006-2007
CENTRAL EXCISE15. Relief Measures:
15.1 Excise duty has been reduced from 24% to 16% on aerated waters.
15.2 Excise duty has been reduced from 24% to 16% on:
(a) Petrol cars with length not exceeding 4 metres and engine capacity not exceeding 1200 cc; and
(b) Diesel cars with length not exceeding 4 metres and engine capacity not exceeding 1500 cc.
15.3 Excise duty has been reduced from 16% to 12% on specified printing, writing and packing paper and paperboard.
15.4 Excise duty on all man made fibres and filament yarns has been reduced from 16% to 8%.
15.5 Excise duty has been reduced from 16% to Nil on Condensed milk; Ice cream; Pectic substances, pectinates and pectates, pectin esterase; Yeast; Pasta, whether or not cooked or stuffed or otherwise prepared.
15.6 Excise duty has been reduced from 16% to 8% on Ready to eat packaged food; Texturised vegetable protein (Soya bari); and Instant food mixes, namely, pongal mix, vadai mix, pakora mix, payasam mix, gulab jamun mix, rava dosa mix, idli mix, dosai mix, murruku mix and kesari mix.
15.7 Excise duty has been reduced from 8% to Nil on processed meat, fish and poultry products.
15.8 Concessional rate of 8% of excise duty applicable on scented supari with retail sale price (RSP) of 50 paise or less per pouch has been extended to scented supari with RSP of Re.1 or less per pouch.
15.9 Excise duty has been reduced from 16% to 8% on:
(a) Heat resistant latex rubber thread.
(b) LPG gas stoves (without any grill or oven) of value exceeding Rs.2000 per unit.
(c) Compact Fluorescent Lamps.
(d) Footwear of retail sale price between Rs.250 and Rs.750 per pair. For this concessional rate, the RSP has to be indelibly marked or embossed on the footwear.
15.10 Excise duty has been fully exempted on:
(a) Paddy de-husking rice rubber rolls.
(b) Nuclear grade sodium produced by Heavy Water Board for supply to Kalpakkam Nuclear Power Plant.
(c) Drawing inks.
(d) Quebracho and Chestnut extract.
(e) Gold concentrate for refining.
16. Imposition and increase in Duty:16.1 Excise duty of 8% with CENVAT credit has been imposed on:
1) Goggles;
2) Articles of wood;
3) Registers, accounts books, order books, receipt books, letter pads, memorandum pads, dairies, binders, folders, file covers, etc. (excluding note books and exercise books);
4) Paper labels;
5) Paper pulp moulded trays;
6) Articles of mica;
7) Goods containing at least 25% by weight of fly ash/phospho gypsum;
8) Roofing tiles;
9) Raw, tanned or dressed fur skins;
10) Portable receivers for calling, alerting or paging;
11) Henna powder, not mixed with any other ingredient;
12) 100% wood free plain or pre- laminated particle or fiberboard, made from sugarcane bagasse or other agro-waste;
13) Parts of walking-sticks, seat-sticks, whips, riding-crops and the like;
14) Parts of drawing and mathematical instruments;
15) Frames and mountings for spectacles, goggles or the like, of value below Rs. 500 per piece.
16.2 Excise duty of 16% has been imposed on:
1) Umbrellas and sun umbrellas, and their parts;
2) Food preparations intended for free distribution subject to end use certification (Food products, in general, are exempted unconditionally from excise duty);
3) Soap manufactured under a scheme for sale of Janata soap;
4) Strips and tapes of polypropylene used in the factory of its production in the manufacture of polypropylene ropes;
5) Parts and components of motor vehicles transferred to a sister unit for manufacture of goods falling under chapter 87;
6) Goods (other than electrical stampings and laminations, bearings, and winding wires) supplied for manufacture of PD pumps for handling water;
7) Specified goods meant for display in any fair or exhibition in India;
8) Parts of table ware, kitchenware and other household articles of iron and steel, copper, aluminium;
9) Railways track machines;
10) Mixture of graphite and clay for manufacture of pencils or pencil leads;
11) Aluminium ferrules for manufacture of pencils;
12) Tobacco used for smoking through ‘hookah’ or ‘chilam’, commonly known as ‘hookah’ tobacco or ‘gudaku’;
13) Sulphur (2503 00 10), but sulphur falling under this tariff item for fertilizers will be exempt.
[Note: In all above cases (16.1 & 16.2), exemption upto Rs.1 crore would be available under the general SSI exemption scheme]
16.3 Excise duty has been raised from 8% to 16% on:
1) Mosaic tiles,
2) Glassware,
3) lay flat tubing; and
4) Cigarette filter rods.
16.4 The rate of compounded levy on stainless steel patti/pattas has been increased from Rs. 15000/- per machine to Rs. 30000/- per machine.
17. Small Scale Industry : SSI exemption available to power driven pumps designed for handling water has been restricted only to those pumps, which conform to prescribed BIS Standards. This will be effective from 1.4.2006. The annexure to SSI exemption scheme under notification No.8/2003-CE has been redrafted without changing the coverage of the items.
18. Petroleum: Cess leviable on domestic petroleum crude oil under the Oil Industry (Development) Act, 1974 has been increased from Rs.1800 per tonne to Rs.2500 per tonne.
19. Retail Sale Price (RSP) based assessment :19.1 Abatement from RSP for levy of excise duty on aerated waters has been reduced from 45% to 42.5% consequent to reduction in excise duty from 24% to 16%.
19.2 Abatement from RSP for levy of excise duty on Compact Fluorescent Lamp has been reduced from 40% to 37% consequent to reduction in excise duty from 16% to 8%.
19.3 Abatement from RSP for levy of excise duty on footwear of RSP exceeding Rs.250 and upto Rs.750 per pair has been reduced from 40% to 37% consequent to reduction in excise duty from 16% to 8%.
19.4 Abatement from RSP for levy of excise duty for ready to eat packaged food, texturised vegetable protein (soya bari) and instant mixes has been reduced from 40% to 37% consequent to reduction in excise duty from 16% to 8%.
19.5 Existing rate of abatement of 50% will apply to all varieties of pan masala, which are subject to RSP based assessment.
20. Tobacco product including Pan Masala :20.1 Pan masala (containing tobacco), pan masala (not containing tobacco) and pan masala (containing not more than 15% betel nut by weight) attract aggregate excise duty at 66%, 60.5% and 21.5% respectively. Excise duty rates have been unified at 66% for all types of pan masala.
20.2 Tariff values have been fixed for all types of pan masala as under:
| Sl.No | Contents | Proposed tariff value (Rs.) |
|---|
| 1 | 1. If MRP is not printed on packs containing- |
| (a) Not more than 2 grams per pack | 1.50 |
| (b) More than 2 grams but less than 4 grams | 3.00 |
| (c) More than 4 grams but less than 10 grams | Rs.3 + Rs.1.25 per gram or part thereof beyond 4 grams |
| 2 | If MRP is printed on the pack containing less than 10 grams | 50% of MRP |
20.3 Specific rates of excise duty on cigarettes ha ve been revised as under:
| S. No. | Description | Present rate | Proposed rate |
|---|
| | Non-Filter Cigarettes | (Rs. per 1000) |
| | Not exceeding 60 mm in length 150 160 | 150 | 160 |
| | Exceeding 60 mm but not exceeding 70 mm 495 520 | 495 | 520 |
| | Filter Cigarettes | |
| | Not exceeding 70 mm in lengt h 740 780 | 740 | 780 |
| | Exceeding 70 mm but not exceeding 75 mm 1200 1260 | 1200 | 1260 |
| | Exceeding 75 mm but not exceeding 85 mm 1595 1675 | 1595 | 1675 |
| | Other cigarettes 1960 2060 | 1960 | 2060 |
21.3 Excise duty of 16% has been imposed on set top boxes not covered under the Information Technology Agreement.
21.4 Excise duty on storage devices, namely, DVD-Drives, Flash Drives and Combo Drives has been reduced from 16% to Nil.
21.5 Excise duty on MP3 Players and MPEG4 Players has been reduced from 16% to 8%.
22. Export Oriented Units: Duty on clearances of goods to Domestic Tariff Area from Export Oriented Units, Software Technology Parks, Electronic Hardware Technology Parks etc. has been changed from 50% of aggregate of customs duties to 25% of the basic customs duty plus excise duty payable on like goods. This is illustrated below:
If,
Assessable value = Rs.100
Basic customs duty = 15%; excise duty = 16%
Basic customs duty component on clearance from EOU = 25% of 15 = 3.75
Value for levy of CV duty = 103.75
CV duty component = 16.6%
Total duty payable = 16.60 + 3.75 = 20.35
23. Withdrawal of exemption on goods manufactured without the aid of power:Exemptions to following goods manufactured without the aid of power have been removed:
1) Essential oils, solutions of essential oils, other than sandalwood
2) Perfumes and toilet waters
3) Bricks, blocks, ceramic tiles and other ceramic goods
4) Ceramic building bricks, roofing tiles, chimney pots, chimney liners, Ceramic pipes and conduits etc.
5) Unglazed ceramic flags and paving, vitrified tiles
6) Padlocks, locks of base metal, clasps
7) Signaling flares, rain rockets, fog signals and other pyrotechnic articles (excluding fireworks).
8) Precious metals and metals clad with precious metals excluding silver of Chapter 71.
9) Other items of Chapter 71
10) Metal containers of iron, steel and aluminium
11) Lacs, gums resins, other vegetable saps and extracts
12) Soap
13) Turpentine oil, rosin oil
14) Veneer sheets, and sheets for plywood and other wood sawn lengthwise, sliced or peeled, of a thickness not exceeding 6 mm.
15) Wood (including strips and friezes for parquet flooring, not assembled) continuously shaped along any of its edges or faces.
16) Biscuits
17) Marble slabs and tiles
18) Sugar
24. Withdrawal of exemption from excise duty on unbranded goods : Exemption from excise duty has been withdrawn in the case of following unbranded goods:
1) Wadding, gauges.
2) Protein concentrates and textures protein substances.
3) Churan for paan.
4) Custard powder.
5) Food items of tariff line 2106 90 99.
6) Food flavouring matter.
7) Sugar syrups containing added flavouring or colouring matter (excluding preparations for lemonades or other beverages intended for use in aerated waters).
8) Mineral water.
9) Waters other than aerated and mineral waters, ice and snow, not containing sugar or other sweetening matter or flavour (2201 90 90).
10) Waters other than aerated and mineral waters, ice and snow containing sugar or other sweetening matter or flavour other than aerated waters or lemonade (2202 10 90).
11) Beverages containing milk (2202 90 30).
12) Other waters (2202 90 90).
13) Edible mixtures or preparations of animal vegetable or fats and oils (other than margarine and linoxyn).
25. Miscellaneous:1) Provision has been made to charge excise duty only on value addition in respect of Glued insulating rail joints, if no input tax credit is taken.
2) Excise duty exemption available on raw materials for manufacture of rotor blades of wind operated energy generators, has been extended to all glass items (7019) and resin binders (3824 90).
3) Generic exemption to products of coir industry, cashew industry, tanning industry, oil mill and solvent extraction industry, and rice milling industry has been withdrawn. Most of the products of these industries are exempt unconditionally. Unconditional exemption is being extended to all coir products, including rubberized coir products, of heading 9404 and cashew shell oil.
4) Exemption has been withdrawn in cases where cost of durable packing used for specified goods was not included in the value for assessment. This exemption has become redundant after the introduction of transaction value under Section 4 of Central Excise Act.
26. Pre -budget stocks:26.1 A number of goods will be charged to excise duty with effect from 1.3.2006 because of withdrawal of exemptions. All the budgetary changes, unless otherwise stated, will come into effect from midnight of 28.2.2006/1.3.2006 and clearances effected after this period will attract the new rates of duty. As regards the dutiability of the stocks manufactured prior to 28.2.2006/1.3.2006, pre-budget stocks will be leviable to excise duty at the rates prevailing on the date of their removal. In other words, the goods cleared after 28.2.2006 would be liable to pay duty at the new rates even if they were exempted on or prior to 28.2.2006. In this connection, your attention is invited to the decision of the Supreme Court in the case of CCE Hyderabad vs. Vazir Sultan Tobacco Ltd 1996(83)ELT3(SC) which has laid down the law regarding duty liability of pre- budget stock.
27. Removal of Second Schedule and AED(GSI):27.1 Excise duty on all goods falling under the Second Schedule to the Central Excise Tariff Act and those covered under the Additional Excise Duty (Goods of Special Importance) Act, 1957 has been exempted, and the duty incidence has been kept unchanged by suitably adjusting the basic excise duty rates, unless there is a separate proposal in the Budget to change the overall incidence of duty on these goods.
28. Revenue foregone statements:28.1 I would like to invite your attention to the document titled ‘Receipt Budget’ which is part of the Budget documents. If you go to the end of this document, there is a chapter on tax expenditure of Central Taxes. This is a statement on revenue foregone. So far as revenue foregone from customs and excise duties are concerned, these have been prepared with the help of data made available by Directorate of Systems. But the data quality leaves much to be desired particularly in respect of excise duties. The Board desires that Commissioners should ensure that data on excise duties being furnished to Directorate of Systems are sent in time, and are correct, comprehensive and complete in all respects. I would request you to kindly ensure this as we propose to make the revenue-foregone statement more comprehensive and meaningful in the coming years.
29. Manufacture29.1 Amendments have been made in the Central Excise Tariff Act to provide that certain processes carried out in respect of certain goods will amount to manufacture. These changes are indicated below. It may be noted that these changes come into force immediately.
1) A Note has been inserted in Chapter 25 to provide that in relation to products of heading 2515 and 2516, the processes of cutting or sawing or sizing or polishing of blocks or any other process of converting stone blocks into slabs or tiles, shall amount to ‘manufacture’.
2) Note 7 to Chapter 32 in the First Schedule to the Central Excise Tariff Act, 1985 has been amended so as to provide that in relation to products of heading 3206 and products of tariff items 3204 19 81 to 3204 19 90, labelling or relabelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to ‘manufacture’.”
3) A note has been inserted in Chapter 39 so as to provide that in respect of goods falling under heading 3920 and 3921, the process of metallization shall amount to ‘manufacture’.
4) A note has been inserted in Chapter 72 so as to provide that in relation to the products of this Chapter, the process of drawing or redrawing a bar, rod, wire rod, round bar or any other similar article, into bright bar, shall amount to ‘manufacture’.
5) Note 5 in Chapter 73 provides that the process of coating with cement or polyethylene or other plastic materials of pipes and tubes of heading 7304 and 7305 amounts to ‘manufacture’. This provision is being extended to goods of heading 7306.
30. 8 Digit CodeIn 2005, the excise tariff was revised so as to align it with the 8 digit Customs Tariff. But the notifications continued to have the earlier tariff heads, sub- heading No. and the then existing rates were protected by virtue of certain deeming notifications. This year, we have attempted to incorporate the tariff lines as per the 8 digit tariff. I would be grateful if you would go through the notifications and bring to our notice any anomalies or errors that might have crept in while replacing the old tariff lines.
31. Other Amendments in Customs and Central Excise Act and Rules:1) Section 12C of the Central Excise Act is being amended so as to enable credit of any excess amount collected as service tax by any person to the Consumer Welfare Fund.
2) Section 23C of the Central Excise Act is being amended to explicitly confer the powers to decide the excisability of any product on the Advance Ruling Authority.
3) Capital goods imported under EPCG Scheme are assessed to duty on the basis of transaction value as per the Customs Valuation Law. However, in respect of certain licences, while fixing the export obligation, which is a multiple of CIF value of imports, instead of taking into account the actual Customs assessed value, the corresponding value of new capital goods was taken. Notification No.160/92-Customs dated 20.4.1992 is being amended retrospectively to provide that in respect of these licenses, the export obligation would be refixed based on actual CIF value assessed by Customs instead of the notional value of corresponding new capital goods.
4) Notification No.96/2004-Customs dated 17.9.2004 issued under DEPB Scheme expired on 30.9.2005 and subsequently, a new notification (No.89/2005-Customs date 4.10.2005) was issued to allow imports under DEPB Scheme without payment of customs duty upto 31.12.2005. There was a gap of three days between the expiry of the earlier notification and issue of the new one. Notification No.96/2004 -Customs, issued under DEPB Scheme, is being amended so as to retrospectively permit benefit of DEPB Scheme to goods imported during the period 1.10.2005 to 3.10.2005 (both days inclusive).
5) First Schedule to the Customs Tariff Act, 1975, is being amended so as to incorporate the amendments approved by the Customs Cooperation Council (World Customs Organization) in the legal text of the International Convention on the Harmonized Commodity Description and Coding System (Harmonized System). These changes would align the First Schedule of the Customs Tariff Act with the Harmonized System. This amendment will come into force with effect from 1.1.2007.
6) Section 9 of the Customs Tariff Act, 1975 deals with levy of countervailing duty on import of goods in respect of which any subsidy has been paid. In terms of Section 9(1), the subsidy is deemed to exist if there is financial contribution by a Government or any public body within the territory of the exporting or producing country. Section 9(1) is being amended so as to substitute the words ‘territory of the exporting or producing country’ by ‘exporting or producing country or territory’. This will clarify that this section will cover cases where subsidy is bestowed by a country or by a Customs Union of more than one country.
7) A new sub-section (7A) in section 9 is being inserted in the Customs Tariff Act, 1975. This is an enabling provision for application of certain provisions of the Customs Act, 1962, in respect of date of determination of the rate of duty, non levy, short levy, refunds, interest, appeals, offences and penalties to the duty chargeable under Section 9.
8) In Section 9 A (1) of the Customs Tariff Act, 1975, the words ‘meant for consumption’ are being substituted by ‘destined for consumption’.
9) Section 23 and 68 of the Customs Act, 1962 are being amended to ensure that the provisions relating to relinquishment of title to imported goods is not available to the importer in case such goods are involved in any offence.
10) First Schedule to the Central Excise Tariff Act, 1985 is being amended so as to align it with the Customs Tariff Act, 1975 (CTA), in line with the amendments proposed in CTA with effect from 1.1.2007.
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