Changes proposed in Central Excise Law by Union Budget 2016-17

Changes proposed Central Excise Law by Union Budget 2016-17

1.The Clean Energy Cess is being renamed as Clean Environment Cess. The effective rate of Clean Energy Cess is being increased from Rs.200 per tonne to Rs.400 per.

2.The Oil Industry (Development) Act, 1974 is being amended so as to reduce the rate of Oil Industries Development Cess, on domestically produced crude oil, from Rs. 4500 PMT to 20% ad valorem OIDB Cess.

3.Infrastructure Cess is being levied on motor vehicles, of heading 8703, as under:

1% on Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc
5% on Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc.
4% on other higher engine capacity motor vehicles and SUVs and bigger sedans.

Three wheeled vehicles, Electrically operated vehicles, Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars for physically handicapped persons and Motor vehicles cleared as ambulances or registered for use solely as ambulance will be EXEMPT from this Cess. No credit of this Cess will be available, and credit of no other duty can be utilized for payment of this Infrastructure Cess.

AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944:

4.Section 11A is being amended so as to increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, willful mis-statement, etc.

AMENDMENTS IN THE CENTRAL EXCISE RULES, 2002

5.The Central Excise Rules, 2002 are being amended so as to:

reduce the number of returns to be filed by a central excise assessee above a certain threshold from 27 to 13, that is, one annual and 12 monthly returns. Monthly returns are already being e-filed. CBEC will provide for e-filing of annual return also. This annual return will have to be filed by service tax assessees also, above a certain threshold, taking total number of returns to three in a year for them,
extend the facility for revision of return, hitherto available to a service tax assessees only, to manufacturers
provide that in cases where invoices are digitally signed, the manual attestation of copy of invoice, meant for transporter, is done away
provide that in case of finalization of provisional assessment, the interest will be chargeable from the original date of payment of
Instructions are being issued to Chief Commissioners of Central Excise to file application to Courts to withdraw prosecution in cases involving duty of less than Rs.25 lakh and pending for more than fifteen.
The existing Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2001 are being substituted with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016, so as to simplify the rules, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise

6.Amendments involving change in the rate of Excise Duty

S. No.	Particulars	From	To
	Aerated Beverages
1	Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured	18%	21%
	Tobacco and Tobacco Products
2	Cigar and cheroots	12.5% or Rs.3375 per thousand, whichever is higher	12.5% or Rs.3755 per thousand, whichever is higher
3	Cigarillos	12.5% or Rs.3375 per thousand, whichever is higher	12.5% or Rs.3755 per thousand, whichever is higher
4	Cigarettes of tobacco substitutes	Rs.3375 per thousand	Rs.3755 per thousand
5	Cigarillos of tobacco substitutes	12.5% or Rs.3375 per thousand, whichever is higher	12.5% or Rs.3755 per thousand, whichever is higher
6	Others of tobacco substitutes	12.5% or Rs.3375 per thousand, whichever is higher	12.5% or Rs.3755 per thousand, whichever is higher
7	Gutkha, chewing tobacco (including filter khaini) and jarda scented tobacco	70%	81%
8	Unmanufactured tobacco	55%	64%
9	Paper rolled biris [whether handmade or machine made] and other biris [other than handmade biris] However, the effective rate of basic excise duty of Rs.21 per thousand shall remain unchanged.	Rs.30 per thousand	Rs.80 per thousand

The amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

7. OTHER PROPOSALS INVOLVING CHANGES IN DUTY RATES:

S. No.	Particulars		From	To
	Food processing
1	Refrigerated containers		12.5%	6%
	Fertilizers
2	Micronutrients which are covered under Sr. No. 1(f) of Schedule 1 Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under FCO, 1985		12.5%	6%
3	Physical mixture of fertilizers manufactured by Co-operative Societies, holding certificate of manufacture for mixture of fertilizers under the Fertiliser Control Order 1985, made out of chemical fertilizers on which duty of excise has been paid and no credit of duty paid on such chemical fertilizers has been taken under rule 3 of the CENVAT Credit Rules, 2004 and which are intended for supply to the members of such Co-operative Societies		1% [without CENVAT credit] or 6% [with CENVAT credit]	Nil
	Textiles
4	To increase Tariff Value of readymade garments and made up articles of textiles		30% of retail sale price	60% of retail sale price
5	Branded readymade garments and made up articles of textiles of retail sale price of Rs.1000 or more		Nil [without CENVAT credit] or 6%/12.5% [with CENVAT credit]	2% [without CENVAT credit] or 12.5% [with CENVAT credit]
6	PSF / PFY, manufactured from plastic scrap or plastic waste including waste PET bottles		2% [without CENVAT credit] or 6% [with CENVAT credit]	2% [without CENVAT credit] or 12.5% [with CENVAT credit]
	Footwear
7	Rubber sheets & resin rubber sheets for soles and heels		12.5%	6%
8	Increase the abatement from retail sale price (RSP) for the purposes of excise duty assessment for all categories of footwear		25%	30%
	Metals
9	To change excise duty structure on disposable containers made of aluminium foils.		2% [without CENVAT credit] or 6% [with CENVAT credit]	2% [without CENVAT credit] or 12.5% [with CENVAT credit]
	Precious metals & Jewellery
10	Refined gold bars manufactured from gold dore bar, silver dore bar, gold ore or concentrate, silver ore or concentrate, copper ore or concentrate. Prospectively, the excise duty exemption under the existing area based exemptions on refined gold is being withdrawn.	9%		9.5%
11	Refined silver manufactured from silver ore or concentrate, silver dore bar, or gold dore bar. Prospectively, the excise duty exemption under the existing area based exemptions on refined silver is being withdrawn.	8%		8.5%
12	Articles of Jewellery [excluding silver jewellery, other than studded with diamonds or other precious stones namely, ruby, emerald and sapphire] with a higher threshold exemption upto Rs. 6 crore in a year and eligibility limit of Rs.12 crore, along with simplified compliance procedure.	Nil		1% [without CENVAT credit] or 12.5% [with CENVAT credit]
	Renewable Energy
13	Unsaturated Polyester Resin (polyester based infusion resin and hand layup resin), Hardeners/Hardener for adhesive resin, Vinyl Easter Adhesive (VEA) and Epoxy Resin used for manufacture of rotor blades and intermediates, parts and sub parts of rotor blades for wind operated electricity generators	Nil		6%
14	Carbon pultrusion used for manufacture of rotor blades and intermediates, parts and sub-parts of rotor blades for wind operated electricity generators	12.5%		6%
15	Solar lamp	12.5%		Nil
16	To prescribe “valid agreement between importer / producer of power with urban local body for processing of municipal solid waste for not less than ten years from the date of commissioning of project” as an alternative to the condition of “production of valid power purchase agreement between the importer/producer of power and the purchaser, for the sale and purchase of electricity generated using non-conventional materials” for availing concessional customs/excise duty benefits in case of power generation project based on municipal and urban waste	–		–
	Civil Aviation
17	Aviation Turbine Fuel [ATF] other than for supply to Scheduled Commuter Airlines (SCA) from the Regional Connectivity Scheme airports	8%		14%
	Maintenance, repair and overhaul [MRO] of aircrafts
18	Tools and tool kits when procured by MROs for maintenance, repair, and overhauling [MRO] of aircraft subject to a certification by the Directorate General of Civil Aviation	Applicable excise duty		Nil
19	To simplify the procedure for availment of exemption from excise duty on parts, testing equipment, tools and tool-kits for maintenance, repair and overhaul of aircraft based on records	–		–
20	To remove the restriction of one year for utilization of duty free parts for maintenance, repair and overhaul of aircraft	–		–
	Electronics & IT hardware
21	Charger / adapter, battery and wired headsets / speakers for supply to mobile phone manufacturers as original equipment manufacturer		Nil		2% [without CENVAT credit] or 12.5% [with CENVAT credit]




22	Inputs, parts and components, subparts for manufacture of charger / adapter, battery and wired headsets / speakers of mobile phone, subject to actual user condition.		12.5% / Nil		Nil
23	Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]		12.5%		4% [without CENVAT credit] or 12.5% [with CENVAT credit]
24	Parts and components, subparts for manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]		12.5%		Nil
	Machinery
25	Electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of centrifugal pump		12.5%		6%
	Automobiles
26	Specified parts of Electric Vehicles and Hybrid Vehicles		6% Upto 31.03.2016		6% Without time limit


27	Engine for xEV (hybrid electric vehicle)		12.5%		6%
	Miscellaneous
28	Excise duty on sacks and bags of all plastics is being rationalized at 15%.		12.5%/15%		15%
29	Unconditionally exempt improved cook stoves including smokeless chulhas for burning wood, agrowaste, cowdung, briquettes, and coal		Nil		Nil
30	Disposable sterilized dialyzer and micro barrier of artificial kidney		12.5%		Nil
31	Ready Mix Concrete manufactured at the site of construction for use in		2% [without input tax credit] / 6% [with input tax credit]		Nil
	construction work at such site




32	Parts of railway or tramway locomotives or rolling stock and railway or tramway track fixtures and fittings, railway safety or traffic control equipment, etc.		12.5%		6%
33	Remnant kerosene, presently available for manufacture of Linear alkyl Benzene [LAB] and heavy alkylate [HA] to N-paraffin. At present, exemption is restricted to manufacturers of LAB and HA.		14%		Nil
34	Clean Energy Cess / Clean Environment Cess on coal, lignite or peat produced or extracted as per traditional and customary rights enjoyed by local tribals without any license or lease in the State of Nagaland		Rs.200 per tonne		Nil
35	To extend Retail Sale Price [RSP] based assessment of excise duty to: a) all goods falling under heading 3401 and 3402 [with abatement rate of 30%], b) aluminium foils of a thickness not exceeding 0.2 mm [with abatement rate of 25%], c) wrist wearable devices (commonly known as ‘smart watches’) [with abatement rate of 35%], and d) accessories of motor vehicle and certain other specified goods [with abatement rate of 30%].

8. MISCELLANEOUS

The Seventh Schedule to the Finance Act, 2005 is being amended so as to increase the excise duty across all lengths of non-filter and filter cigarettes as under:

S. No.	Cigarettes	From Rs. Per thousand	To Rs. Per thousand
1.	Non filter not exceeding 65 mm	70	215
2.	Non-filter exceeding 65 mm but not exceeding 70 mm	110	370
3.	Filter not exceeding 65 mm	70	215
4.	Filter exceeding 65 mm but not exceeding 70 mm	70	260
5.	Filter exceeding 70 mm but not exceeding 75 mm	110	370
6.	Other	180	560