Budget 2012 - Excise

[Swati Dodhi]

Union Budget 2012- 13

Central Excise –

Proposals relating to Customs and Central excise are estimated to result in a net revenue gain of Rs. 27,280 crore for a full year.

The Finance Minister Mr Pranab Mukherjee pronounced that various alignments has been made so as to bring harmonization between Central Excise and Service Tax. These include a common simplified registration form and a common return for Central Excise and Service Tax, to be named EST-1. This common return will comprise only one page, which will be a significant reduction from the 15 pages of the two returns at present.

A Study Team will be set up to examine the possibility of a common tax code for service tax and central excise which could be adopted to harmonize the two legislations as much as possible at the right time.

Non-petroleum goods – In lieu of wake of the global financial crisis in 2008-09 the standard rate of excise duty for non-petroleum goods is also being raised from 10 per cent to 12 per cent. The merit rate from 5 per cent to 6 per cent, and the lower merit rate from 1 per cent to 2 per cent. However, the lower merit rate for coal, fertilisers, mobile phones and precious metal jewelery is being retained at 1 per cent.

As proposed such hike will give the imperative for fiscal correction in lieu of wake of the global financial crisis in 2008-09.

Handmade and semi-mechanised matches - Excise duty on handmade and semi-mechanised matches reduced from 10 to 6 per cent

Additional resource mobilization to increase excise duty on ‘demerit’ goods Categories of cigarettes and bidis, pan masala - Increase basic excise duty on cigarettes of more than 65mm length by adding an ad valorem component of 10 per cent to the existing specific rates. The ad valorem duty would be chargeable on 50 per cent of the Retail Sale Price declared on the pack.

Nominal increase in basic excise duty on hand-rolled bidis from `8 to `10 per thousand and on machine-rolled bidis from `19 to `21 per thousand.

Pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco in pouches are leviable to excise duty under the compounded levy scheme.

Health and Nutrition - Full exemption from excise duty/CVD to six specified life-saving drugs/ vaccines. These are used for the treatment or prevention of ailments such as HIV-AIDS, renal cancer, etc . Such reduction will help to get the specified drugs at affordable rate and people can manage to buy it leading to eradication of monster like HIV-AIDS from our Economy .

Soya food products - Excie duty on all processed soya food products is being reduced to the merit rate of 6 per cent. This will welcomed by the women as Protein deficiency among women and children is one of the most common sources of malnutrition in India and with this move to reduce the Custom and Excise Duty will strengthen the Health Upliftment

Iodine - Reduced excise duty of 6 per cent on iodine. As the consumption of iodised salt prevents iodine deficiency and related diseases such reduction in excise will help to provide the Iodine in cheaper prices which will help to avail it by poor people also. This will give a more and healthy children to our Economy.

LED lamps- Excise duty on LED lamps is also being reduced to 6 per cent . A positive step to for encouraging the consumption of energy-saving devices

Specified additional items and lithium ion batteries imported for the manufacture of battery packs for supply to electric or hybrid vehicle manufacturers -  Concessional excise duty/ CVD of 6 per cent. A concessional rate of excise duty of 5 per cent is being prescribed to incentivise their domestic production.

Reduce the excise duty on kits used for the conversion of fossil fuel vehicles into Hybrid vehicles through the fitments from 10 per cent to 5 per cent . This reduction was initiated looking into the enhance demand for green products, which will ultimately lead to clean country.

Refined gold - Increased from 1.5 per cent to 3 per cent. This step is initiate to enhance the current account deficit as import of Gold contributes a major proportion in economic growth

Processed food - Excise duty on all processed food brought down to merit rate of 6 per cent.

Cars to cost more - Excise tax on cars raised, small cars at 12% from 10%; large cars at 24% from 22%. In the case of cars that attract a mixed rate of duty of 22 per cent + `15000 per vehicle, proposal is to increase the duty and switch over to an ad valorem rate of 27 per cent.

Airline industry – As a measure of support to the industry it is also proposed to fully exempt both new and retreaded aircraft tyres from basic customs duty and excise duty.

Branded ready-made garments -. Increase in duty to 12 per cent and enhance the abatement to 70 per cent from the Retail Sale Price as compared to 10 per cent with abatement of 55 per cent as earlier. As a result, the incidence of duty as a percentage of the Retail Sale Price would come down from 4.5 per cent to 3.6 per cent.

Packaged cement manufactured by mini-cement plants or other - Unified rate of 12 per cent + `120 PMT for non-mini cement plants and 6 per cent + `120 PMT for mini-cement plants as compared to differential excise duty depending on the Retail Sale Price per bag . It is proposed to charge this duty on the Retail Sale Price less abatement of 30 per cent.

Branded precious metal jewellery - Propose to include jewellery, not bearing a brand name, under its ambit. However, to simplify its operation and minimise its impact on small artisans and goldsmiths, I propose:

• to charge this duty on tariff value equal to 30 per cent of the transaction value;

• to extend small-scale exemption up to annual turnover not exceeding `1.5 crore for units having a turnover below ` 4 crore in the previous year;

• to compute turnover on the basis of tariff value; and

• to place the onus of registration and payment on the person who gets jewellery manufactured on job-work

Silver jewellery- It will now be fully exempt from excise duty.

Building of commercial vehicle bodies – It is currently exempt from excise duty. In lieu of this duty, a specific rate of `10,000 is being charged on chassis in addition to the applicable ad valorem duty. This duty structure is regressive. It is proposed to convert the specific component of duty to an ad valorem rate of 3 per cent.

Excise duty exemption on ships and vessels including dredgers - It was withdrawn in the last budget. Accordingly, CVD of 5 per cent became leviable on their imports. As the intention was not to levy this duty on the import of foreign-going vessels, it is proposed to exempt such vessels from CVD retrospectively

Air-conditioning equipment and refrigeration panels for cold chain infrastructure - Extendingfull exemption from excise duty including on conveyor belts to equipment used in cold storages, mandis and warehouses

Ink-jet and laser-jet printers - reduce excise duty (and hence CVD) on parts of from 10 per cent to 5 per cent.

Batteries imported by manufacturers specified parts of electrical vehicles - Full exemption from basic customs duty and a concessional rate of Central Excise duty of 4 per cent was provided to specified parts of electrical vehicles in the last Budget on actual-user basis. I propose to extend the concession to batteries imported by such manufacturers for the replacement market.

Fuel cell or Hydrogen cell technology - Extend the concessional excise duty of 10 per cent to vehicles based on this technology . This reduction will be a route to a promising green technology for the automobile sector.

Pre-tanning or tanning processes in the leather industry - Full exemption from basic excise duty is being granted to enzyme based preparations for pre-tanning instead of use of chemicals which are pollutants for tanning to encourage use of green processes.

Expansion of existing mega or ultra mega power projects - Capital goods imported such expansion enjoy a concessional basic customs duty of 2.5 per cent and full exemption from CVD. This creates a disability for the domestic suppliers who are required to pay Central Excise duty on supplies to such projects. I propose to correct this anomaly by providing a parallel excise duty exemption.

Jumbo rolls of cinematographic film - Exempt jumbo rolls of 400 feet and 1000 feet from CVD by providing full exemption from excise duty as Indian film industry has to get it imported as they are not manufactured domestically

Factory-built ambulances -Provide outright concession in place of the existing refund-based concession

A refund-based concession is available to taxis having a seating capacity not exceeding 7 persons including the driver. I propose to extend this to vehicles upto a seating capacity not exceeding 13 persons including the driver.