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Note: Changes come into effect immediately unless otherwise specified.
Major proposals about Central Excise duty are the following:
A. General:
The First Schedule to the Central Excise Tariff Act, 1985 is being amended vide clause 70 of the Finance Bill to give effect to Tariff changes relating to Union Excise duties.
B Proposals involving changes in rates of duty whether by amendment of tariff rates or by notification
1) The concessional rate of excise duty of 4% is being increased to 5%. Accordingly, items such as prepared foodstuff like sugar confectionery, pastry and cakes; starches; paper and articles of paper; textile intermediates & textile goods; drugs; medical equipments etc would now be subject to the enhanced rate of duty of 5%.
2) An excise duty of 1% without Cenvat credit facility is being imposed on about 130 specified items, which were hitherto either fully exempt from excise duty or chargeable to nil rate of excise duty. General SSI exemption would be available to all products covered under this new levy.
3) A mandatory excise duty of 10% is being imposed on ready made garments and textile made ups bearing a brand name or sold under a brand name. General SSI scheme is also being extended to ready made garments and other textile made up articles. Duty shall be charged on the tariff value @ 60% of their retail sale price.
4) An excise duty of 5% is being imposed on automatic looms and projectile looms.
5) Exemption from excise duty available to clearances upto 3500 metric tonne of paper manufactured from non-conventional material is being withdrawn.
6) Full exemption from excise duty is being withdrawn on microprocessors for computer, other than motherboards; floppy disc drive; hard disc drive; CD-ROM drive; DVD drives/DVD writers; flash memory and combo drives meant for fitment inside the CPU or laptop. These goods will attract a concessional rate of excise duty of 5%.
C. SECTOR SPECIFIC RELIEF MEASURES:
I. FOOD/AGRO PROCESSING:
Full exemption from excise duty is being extended to,
(a) Air-conditioning equipment, panels and refrigeration panels for installation of cold chain infrastructure for the preservation, storage, transport or processing of agricultural, horticultural, dairy, poultry, apiaries, aquatic and marine produce.
(b) Conveyor belt systems for use in cold storage for the preservation, storage, transport or processing of agricultural, horticultural, dairy, poultry, apiary, aquatic and marine produce and in mandis & warehouses for storage of food grains and sugar.
II. CAPITAL GOODS:
1) Excise duty exemption is being extended to goods required for expansion of an existing mega/ultra mega power project under specified conditions at par with exemption from CVD on the import of goods for expansion of such projects.
2) Excise duty is being reduced from 10% to 5% on parts of specified textile machinery.
3) Full exemption from excise duty is being extended to specified part of sewing machines (other than those with in-built motors).
III. ENVIRONMENT FRIENDLY AND ENERGY SAVING GOODS:
1) A concessional rate of excise duty of 10% is being prescribed for hydrogen vehicles based on fuel cell technology.
2) Excise duty is being reduced from 10% to 5% on hybrid kits for conversion of fossil fuel vehicles to hybrid vehicles. Parts of such kits would also attract 5% duty.
IV. Cement:
The rates of duty on cement and cement clinker are being revised as follows:
| S.No. | Description of goods | Earlier rate | Revised rate |
| 1 | Packaged cement manufactured in a mini-cement plant - | ||
| (i) | Of retail sale price not exceeding Rs.190 per 50 kg bag or of per tonne RSP not exceeding Rs.3800 | Rs.185 PMT | 10% ad valorem |
| (ii) | Of retail sale price not exceeding Rs.190 per 50 kg bag or of per tonne RSP not exceeding Rs.3800 | Rs.315 PMT | 10% ad valorem + Rs.30 PMT |
| 2 | Packaged cement manufactured in a plant other than a mini-cement plant - | ||
| (i) | Of retail sale price not exceeding Rs.190 per 50 kg bag or of per tonne RSP not exceeding Rs.3800 | Rs.290 PMT | 10% ad valorem + Rs.80 PMT |
| (ii) | Of retail sale price not exceeding Rs.190 per 50 kg bag or of per tonne RSP not exceeding Rs.3800 | 10% of retail sale price | 10% ad valorem +Rs.160 PMT |
Excise duty on cement clinker has been revised from Rs.375 per metric tonne to “10%+ Rs.200 per metric tonne”.
V. HEALTH:
Excise duty on sanitary napkins, baby & clinical diapers and adult diapers is being reduced from 10% to 1% with no Cenvat credit. Similar articles of textile wadding shall also get this concessional duty treatment.
VI. WATER SUPPLY:
1) Full exemption from excise duty currently available to pipes required for delivery of drinking water from its source to the plant and from there to the first storage point is being extended to pipe fittings such as joints, elbows, couplings etc.
2) Concessional rate of excise duty of 1% is being extended to water filters using pressurized tap water but without use of electricity and their replaceable kits.
VII. AUTOMOBILE SECTOR:
1) Concessional rate of excise duty @10% is being extended to factory built ambulances. Other vehicles retrofitted as ambulances subsequent to their removal from the factory shall continue to be eligible for refund based concession.
2) The scope of the Taxi Refund Scheme is being extended to include vehicles carrying 13 persons including the driver.
3) Concessional excise duty structure for taxis is being rationalized to provide refund of 20% of the excise duty paid on vehicles if they are registered as a taxi subsequent to removal.
4) Full exemption from excise duty is being extended to parts of power tillers when cleared to another factory of the same manufacturer for manufacturing power tillers.
VIII. PAPER & PAPER BOARD:
1) Cotton Stalk Particle boards are being fully exempted from excise duty.
2) Concessional rate of 5% excise duty is being extended to corrugated boxes whether or not pasted with Duplex sheet on their outer surface.
3) Excise duty is being reduced from 10% to 5% on greaseproof paper and glassine paper.
D. PRECIOUS METALS:
1) Excise duty is being reduced on serially numbered gold bars, other than tola bars, made starting from the ore/concentrate stage in the same factory from `Rs.280 per 10 grams’ to `Rs.200 per 10 grams’.
2) Concessional excise duty rate of Rs.200 per 10 grams is being extended to serially numbered gold bars manufactured by refining of gold dore bar also.
3) Excise duty of `Rs.300 per 10 gram’ is being imposed on serially numbered gold bars, other than tola bars, manufactured during the process of copper smelting.
4) Excise duty of `Rs.1500 per Kg.’ is being imposed on silver manufactured during gold refining starting from ore/concentrate stage or from gold dore bar or during the process of copper smelting.
5) Excise duty of 1% is being imposed on branded jewelery and branded articles of precious metals.
E TEXTILES:
1) A tariff rate of excise duty of 10% is being prescribed for jute yarn while it is being simultaneously exempted from excise duty.
F. MISCELLANEOUS:
1) Enzymatic preparations used in leather industry are being fully exempted from excise duty.
2) Full exemption from excise duty (and hence from CVD on imports) is being provided to colour, unexposed cinematographic film in jumbo rolls of 400 feet and 1000 feet.
G AMENDMENTS IN CENTRAL EXCISE ACT, 1944:
1) Section 4A is being amended to substitute the reference to Standards of Weight & Measures Act, 1976 with Legal Metrology Act, 2009 with effect from 01.03.2011.
2) Provisions of Section 11A, 11AA, 11AB and 11AC are being redrafted so as to make them more lucid and coherent. A new category of cases is being carved out in respect of which the period of limitation would be five years but which would attract general penalty of 50% of the duty. Waiver of show cause notice and conclusion of proceedings would be available if the duty along with interest and specified penalty is paid before the issue of show cause notice in such cases.
3) A new section 11E is being inserted so as to create first charge on the property of the defaulter for recovery of central excise dues from such defaulter subject to provisions of section 529A of the Companies Act, the Recovery of Debt due to Bank and Financial Institution Act, 1993 and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
4) Section 12 is being amended to insert reference to section 3A with effect from the date of introduction of section 3A i.e. 10.05.2008.
5) Section 12F is being inserted to empower the Joint Commissioner or the Additional Commissioner of the Central Excise to himself search or authorize a central excise officer to carry out the search of any premises.
6) A new section 35R is being inserted retrospectively with effect from 20.10.2010 so as to empower the Board to issue instructions relating to non-filing of appeal in certain cases in line with National Litigation Policy.
7) Section 38(2) is being amended to make its provisions applicable to notifications issued under section 5B also. [These legislative changes will come into effect on enactment of the Finance Bill]
H. AMENDMENTS IN THE SCHEDULES TO CENTRAL EXCISE TARIFF ACT, 1985
1) A tariff rate of 5% is being prescribed for specified items, which are being subjected to an effective rate of 1% excise duty without Cenvat credit facility.
2) Chapter Note 5 of Chapter 15 is being amended to insert heading 1501, 1502, 1503, 1504, 1505 and tariff item 1516 1000 therein.
3) A chapter note is being inserted in Chapter 22 so as to provide that in relation to products of this chapter, labeling or re¬labeling of containers or packing or repacking from bulk packs to retail packs or the adoption of any treatment to render the product marketable to the consumer, shall amount to manufacture.
4) A chapter note is being inserted in Chapter 26 so as to provide that in relation to products of this chapter, the process of converting ores into concentrates shall amount to manufacture.
5) Two chapter notes are being inserted in Chapter 63 so as to define the expression ‘brand name’ and to provide that affixing a brand name on the product, labelling or re-labelling of containers or packing or repacking from bulk packs to retail packs or the adoption of any treatment to render the product marketable to the consumer, shall amount to manufacture.
6) A chapter note is being inserted in Chapter 71 so as to provide that the process of refining of dore bar shall amount to manufacture.
7) Tariff rate of excise duty is being increased from Nil to 10% on silver powder, silver unwrought and semi-manufactured silver in specified forms.
8) A chapter note is being inserted in Chapter 72 so as to provide that in relation to products of this chapter, the process of galvanisation shall amount to manufacture.
9) The First Schedule is also being amended to include editorial changes in the Harmonized System of Nomenclature (HSN) in certain chapters, which would be effective from 01.01.2012.
10) The Third Schedule is being amended retrospectively to include certain specified goods, which were notified under section 4A. This change will come into effect on enactment of the Finance Bill.
I. AMENDMENTS IN CENVATCREDIT RULES, 2004:
1) Rule 2 is being amended to substitute the definitions of inputs, input services, capital goods, exempted goods and exempted services with a view to bringing greater clarity.
2) Rule 3 and 4 are being amended to disallow utilization of credit for paying duty on concessional goods (in respect of which an exemption, other than full exemption, is availed subject to the condition that no Cenvat credit of inputs and input services is taken).
3) Rule 3 is being amended retrospectively with effect from 18.04.2006 to provide that the credit of service tax paid under section 66A of the Finance Act, 1994 shall also be permissible. This change will come into effect on enactment of the Finance Bill.
4) The availment of Cenvat credit by ship breaking units is being restricted to 85% of the additional duty of customs (CVD) paid at the time of importation of ships for breaking.
5) Rule 4 (7) is being amended to provide for reversal of Cenvat credit in case any payment made towards an invoice of input service is received back.
6) Rule 6 is being amended to,
(a) reduce the requirement of payment of 6% of the value of exempted services to 5%;
(b) provide an option to maintain separate accounts for inputs alone and reverse the amount of input services credit as per the allocation formula in rule 6 (3A).
(c) provide that a payment made under this rule shall be treated as credit not availed for the purpose of an applicable exemption;
(d) clarify the value of services in cases where the same is not clearly defined and tax is collected on a compounding or specific principle;
(e) Rule 6(5) is being omitted.
7) Rule 6(3B) is being introduced to provide that only 50% of the Cenvat credit availed will be available for utilization towards payment of service tax under ‘Banking and other financial services’ by a banking company and financial institution.
8) Rule 6(3C) is being introduced to provide that only 80% of the Cenvat credit availed will be available for utilization towards payment of service tax by the providers of life insurance service and management of investment under ULIP.
9) A new rule 6(6A) is being inserted to provide that the provisions of sub-rule (1), (2), (3) and (4) of the said Rule shall not apply to taxable services provided to SEZ Unit or Developer without payment of service tax.
J. AMENDMENT IN MEDICINAL AND TOILET PREPARATIONS (EXCISE DUTIES) ACT, 1955:
Explanation III of the Schedule is being amended to substitute the reference to Standards of Weight & Measures Act, 1976 with Legal Metrology Act, 2009 with effect from 01.03.2011.
[The above mentioned legislative change will come into effect on enactment of the Finance Bill]
K ADDITIONAL DUTIES OF EXCISE (GOODS OF SPECIAL IMPORTANCE) ACT, 1957:
Sugar and textile items are being omitted from the schedule of the Additional Duties of Excise (Goods of Special Importance) Act, 1957
[The above mentioned legislative change will come into effect on enactment of the Finance Bill]
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