-
Central Excise
Rate Changes at a Glance:
-
Polyester Filament Yarn- 24% to 16%
-
Tyres- 24% to 16%
-
Air Conditioners- 24% to 16% (MRP abatement reduced to
30% from 35%)
-
Branded Jewellery - Introduction of 2% duty
-
Road Tractors and Semi Trailers with engine capacity
greater than 1800cc - Nil to 16%
-
Mosaic Tiles- Nil to 8%
-
Steel and Steel Products- 12% to 16%
-
Re 1 per kg surcharge on Tea and Tea Waste abolished.
-
Cement Clinker- 250 per MT to 500 per MT
-
A dditional Duty of Excise of 10% imposed on Cigarettes
and other Tobacco products (in case of Other Tobacco Products to be
charged on an ad valorem rate)
-
Duty reduced to Nil on LPG for domestic use and
Kerosene distributed under the PDS scheme.
-
Basic Excise Duty reduced from 16% to 8% ad valorem and
a Specific Duty introduced on Motor Spirit (Petrol) and Special Excise
Duty removed.
-
Additional Duty of Excise on Petrol & Diesel Increased
from Rs. 1.5 to Rs. 2 Per litre to be used exclusively for National
Highway Development Programme.
Policy Statement:
Advisory Committee to be set up to review manner of grant
of abatement under the MRP regime.
Analysis of Amendments under Central Excise
Amendments under Central Excise Act, 1944:
Resident Applicant for Advance Ruling Application
The definition of "Applicant" under clause (c) of section
23A of the Central Excise Act has been substituted to include:
-
a joint venture in India; and
-
a resident falling within any such class or category of
persons, as the Central Government may, specify in this behalf.
This takes a step towards meeting the long standing
demand of Indian industry and createsa level playing field with foreign
entities, who could avail of the advance rulingmechanism.
Cases referred back to Appellate Tribunal
In case of an application filed under Section 32 E, on
withdrawal of an appeal from the Appellate Tribunal under Section 32 PA, if
the applicant does not cooperate in the settlement proceedings, the
Commission has now been given the powers to remit such application back to
the Appellate Tribunal.
Small Section Exemption
Notification No. 8/2003-CE, has been amended to enhance
the eligibility limit for general SSI exemption from Rs. 3 Crore to Rs. 4
Crore, (Notification No.10/2005-CE). It is noteworthy that the actual
exemption is only 1 crore of turnover, over which duties are payable.
Notification No.9/2003-CE, providing concessional rate of
duty of 60% of the normal rate with Cenvat credit, has been rescinded.
(Notification No.11/2005-CE). Now SSI units with a turnover of between 1
crore to 3 crores will pay full duties.
SSI units having annual turnover exceeding Rs. 40 lakh
will now have to file a simple annual declaration. (Notification
No.14/2005-CE refers).
Committee of Chief Commissioners of Central Excise
The Central Board of Excise and Customs (Board) has been
empowered to constitute a committee consisting of two Chief Commissioners of
Central Excise to be known as "Committee of Chief Commissioners of Central
Excise". The Committee shall substitute the Commissioner of Customs for
power given under Section 35B(2) to direct the proper Officer to appeal to
the Appellate Tribunal. Similarly all the powers given under sub section 35E
(1) and (3) to the Board shall be transferred to the Committee. This should
streamline the procedure for review of cases to be appealed by the
department.
Legislative Prerogative:
Amendments made for retrospective recovery Recovery of
Dues under Rule 57CC, Rule 57 D and Rule 57 AD of Central Excise Rules, 1944
or Rule 6 of the Cenvat Credit Rules, 2001. A new Explanation has been added
to recover the amounts along with interest in the same manner as provided in
Rule 57 I, 57 AH or Rule 12 respectively, which is for recovery of Modvat /
Cenvat credit wrongly availed for the period 1.08.1996 to 28.02.2002.
The retrospective amendments to abovementioned Rules has
been made to overcome certain judgments of the Hon’ble Tribunal starting
with Pushpaman Forgings vs. Cce, Mumbai 2002 (149) Elt 490 (Trib.),
wherein it was held that the said amounts sought to be received under the
abovementioned rules did not amount to a duty of Excise or Modvat Credit and
consequently there was no mechanism in place to recover such amounts. This
position has been affirmed by the Hon’ble Supreme Court in Commissioner
vs. Pushpaman Forgings 2003 (153) Elt A89 (SC).
The ramifications of the said amendments are significant
inasmuch as:
-
The retrospective amendment takes the period for actualising recovery by the Excise Authorities beyond the ordinarily
extended period of limitation available under the statute, which is 5 years.
It is noteworthy that the 5 year limitation has a very limited and specific
mandate i.e. it is to be invoked when there is an element of suppression,
mis-statement with an intention to evade the payment of duty, which is not
present in this case.
-
To sustain and bolster this position of recovery,
which is highly nebulous in law, the provision further attempts to preclude
the jurisdiction of courts by providing that no challenge to these
provisions will be entertained in a court of law. This is for obvious
reasons as the Apex Court has already held against the Department in their
earlier attempts for recovery.
Refining of edible oil amounts to manufacture
Insertion of Note 5 in Chapter 15 which defines the
process of refining of edible vegetable oils as amounting to manufacture, is
to get over the decision of the Hon’ble Supreme Court rendered in case of
Shyam Oil Cake Ltd. vs. Collector of Central Excise, Jaipur 2004 (174) ELT
145 (SC)
There has been a growing trend of overcoming adverse
decisions was previously seen in the various amendment of "Manufacture" and
ITC’s case qua
recoveries. This present examples only emphasizes this.
Amendment to the Central Excise Rules:
W. E. F. 01.04.2005 Rule 12AA to be introduced in the
Central Excise Rules, 2002, which provides as under:
-
Any ‘person’ who gets articles of jewellery
falling under heading 7113 of CETA, 1985, produced or manufactured on his
behalf on job work basis shall have to get himself registered, maintain
accounts and pay duty. It will be optional for the job worker to get himself
registered and follow the Central Excise Rules.
-
The said person will be liable to pay duty when
he clears goods for home consumption or for exports from the job workers
factory.
-
This Rule will not apply to EOU and units located
in SEZ.
-
This Rule will apply only on articles of jewellery
on which brand name or trade name is indelibly affixed or embossed.
Amendment to the CENVAT Credit Rules:
-
A domestic manufacturer will be allowed to take
credit of additional duty of customs levied under sub-section (5) of section
3 of the Customs Tariff Act. This credit can be utilized for the payment of
excise duty on final products (including Special Excise Duty and Additional
Excise Duty)
-
A provider of taxable service shall not be
eligible to take credit of the additional duty paid under sub-section (5) of
Section 3;
-
The credit of duty paid on inputs may be taken
immediately on the receipt of the inputs; Credit of the entire amount of
Additional duty paid on capital goods shall also be allowed immediately on
receipt of capital goods as against two installments.
-
Customs
Rates at a Glance:
-
Peak Rates reduced to 15%
Selected capital goods and parts thereof to be reduced to
below 15% used in/for:
-
Textiles -20% to 10%
-
Refrigerated Vans for Food Processing - 20% to 10%
-
Leather and Footwear goods- 20% to 5%
-
Pharmaceutical and Biotech Industry - 9 specified goods
listed in List 27A of
Notification No. 21/2002 as amended by Notification No.
11/2005)- 5%
Battery operated Vehicles & Printing Presses and parts
thereof - 20% to 10%
Specific Goods for the Information Technology/Electronic
Items – Nil (subject to end use conditions)
Specified Telecom Network Equipment & parts- existing
exemption extended beyond 31.03.2005 without a cap on tenure
-
Crude and Crude products reduced to 5% and in some cases
Nil
-
Crude Petroleum Oil-10% to 5%
-
Petrol & Diesel- 15% to10%
-
Kerosene (PDS)- 5% to Nil
-
LPG (Domestic Use) - 5% to Nil
-
Other Petroleum Products- 20% to 10%
Raw Materials:
-
Primary and Secondary Metals such as Ferrous Metals and
Non-Ferrous metals such as Copper, Aluminum, Zinc etc.- 15% to 10%
-
Industrial raw Materials such as Molasses, catalysts,
industrial ethyl Alcohol- 15% to 10%
-
EVA used in Footwear Manufacture - 20% to 5%
-
Coking coal (high Ash content) - 15% -5%
-
Lead - 5%
Textiles:
-
Polyester and Nylon chips, textile Fibres, yarns and
intermediates, fabrics, garments etc.- 20% to 15%
Information Technology Items
-
All 217 items under Information Technology Agreement -
Nil (subject to a countervailingduty of 4%)
-
Software- Nil
-
Optical Fibre cables (8544.70) enlisted in ITA - 15% to
Nil (subject to CVD of 4%);
Optical Fibre cable/bundles (9001.10) -20% to 10%
Ad valorem rate of Customs Duty on goods brought in as
passenger baggage reduced to 35%.
