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

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