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TMI BlogChanges in excise and customs through Finance Bill, 2008 and NotificationsX X X X Extracts X X X X X X X X Extracts X X X X ..... to the SSI exemption) take effect from the midnight of 29 th February/ 1 st of March, 2008. The legislative changes, except those declared under the Provisional Collection of Taxes Act, 1931would come into effect only upon the enactment of the Finance Bill. I. CENTRAL EXCISE 2. General CENVAT Rate : (Notification No. 2/2008-CE) 2.1 The general rate of excise duty (CENVAT) has been reduced from 16% to 14%. This reduction applies to all goods that hitherto attracted this general rate of 16%. In some cases, a deeper reduction has been made, the details of which are indicated in the subsequent paragraphs. These changes have been carried out by notification. The other ad valorem rates of 24%, 12% and 8% have been retained. 2.2 Since the reduction in the general rate has been carried out by notification, the possibility of the same product/ item being covered by more than one notification cannot be ruled out. In such a situation, the rate beneficial to the assessee would have to be extended if he fulfils the attendant conditions of the exemption. 3. Drugs and Pharmaceuticals : 3.1 Excise duty on drugs and pharmaceuticals falling under Heading Nos. 3001, 3003 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed mainly for packaging of processed foods, the rate of duty has been reduced from 16% to 8%. These items are: Open Top Sanitary (OTS) cans, aseptic packaging paper and aseptic bags. 5.4 There is already a full exemption for specified equipment for the installation of a cold storage, cold room or refrigerated vehicle, for the preservation, storage and transportation of agricultural produce on end-use basis. Another item has been added to this list. 6. Information Technology Communication sector 6.1 Packaged software hitherto attracted excise duty of 8%. This has been enhanced to 12%. There is no change in the excise duty on other software. Excise duty has been fully exempted on Wireless data modem cards. Consequently, CVD shall also be exempted on imported cards. However, 4% additional duty of customs will be applicable. 6.2 Specified convergence products viz. MP3/ MP4/ MPEG4 player having video and audio reception facility have been provided a concessional excise duty of 8%. 7. Paper and Paper products 7.1 Excise duty on writing paper, printing paper and packing paper falling under heading nos. 4802, 4804, 4805, 4807, 4808 and 4810 has been reduced from 12% t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates on MS/HSD intended for sale without a brand name have been converted from 'ad valorem + specific rate' to pure 'specific rate' as under: S. No. Description From To 1. Motor Spirit 6% + Rs.13 per litre Rs.14.35 per litre 2. HSD 6% + Rs.3.25 per litre Rs. 4. 60 per litre 11.2 The duty rates on branded fuels would continue to attract the present ad valorem cum specific rates i.e. as under: a) Motor Spirit : 6% + Rs.13 per litre b) HSD : 6% + Rs. 3.25 per litre 12. NCCD: (Clause 117 of the Finance Bill, 2008) 12.1 National Calamity Contingent duty (NCCD) at the rate of 1% has been imposed on mobile phones. The CENVAT Credit Rules have been amended to provide that input or capital goods credit of other duties of excise cannot be utilized for the payment of this NCCD. 12.2 NCCD of 1% hitherto leviable on Polyester filament yarn has been withdrawn. Suitable bill entries have been incorporated in the Finance Bill to delete this item from the NCCD Schedule. Till the enactment of the Finance Bill, however, an exemption notification has been issued. 13. Export Oriented Units: 13.1 The effective rate of duty applicable to clearances of goods to domestic tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Act. The details are as under: (i) Section 2(f) (iii) of Central Excise Act contains definition of "deemed manufacture". Similarly, the Notes in some of the chapters of the Tariff also define certain processes as amounting to "manufacture". In respect of the processes of labeling and relabelling and packing/repacking, the definitions in the chapter notes are not aligned with the definition contained in Section 2(f) (iii). The chapter notes have been amended suitably. (ii) The First Schedule of the Central Excise Tariff Act has been amended so as to align entries related to parts and accessories of printers falling under heading 8443 of the Excise Tariff with the corresponding entries in the Schedule to the Customs Tariff. 15.6 Sl. No. 7 of Notification No. 64/95-CE dated 16.3.1995 provides exemption to goods meant for use in the launch vehicle project or a satellite project of ISRO. Inadvertently, the description of goods in Col. 2 was printed under Col. 3 pertaining to conditions. This has now been rectified. II. CUSTOMS 16. Export Duty: (Clause 72 (ii) of the Finance Bill) 16.1 The rate of Export duty on chromium ores and concentrates, all sorts, has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d additives/pre-mixes. 21. IT/Electronic industry: 21.1 A concessional duty of 5% (basic) is already available to certain electronic products such as MP3 and MPEG4 players. This concession has now been extended to "convergence products" i.e. MP3/ MP4 and MPEG player having audio and video reception facility. 21.2 Similarly, full exemption from basic customs duty is available to a large number of raw materials/ inputs for manufacture of specified electronic/ IT products to provide a level playing field to the domestic manufacturers of such products. This concession is now being extended to more raw materials and inputs. 21.3 Set-top boxes are fully exempt from basic customs duty. Specified parts for the manufacture of set-top boxes are also exempt from customs duty, on end-use basis. Two more items viz. SMPS power board and IR module have been added to the list of exempted parts. 22. Drugs and diagnostic kits: 22.1 Basic customs duty on six specified drugs/kits, and bulk drugs for their manufacture, has been reduced from 10% to 5% with Nil CVD by way of excise duty exemption. These drugs are used in the treatment of cancer/diabetes/asthma/Hepatitis B etc. 22.2 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y use in contracts under notification no. 27/2002-Customs dated 1.3.2002 has been increased from 12 months to 18 months. Simultaneously, the period of retention prescribed under notification no.19/65-Customs dated 6.2.1965 has been reduced (for all goods covered by S.No.1 of the notification) from 36 months to 18 months. (ii) The slab rates of duty under both the provisions have now been prescribed on a quarterly basis. Earlier, the rates under notification no.27/2002 were prescribed on half-yearly basis. (iii) The rates have also been aligned with the rates of drawback admissible under section 74(2) of the Customs Act, 1962, depending on the period of retention of the goods in India. No drawback will be admissible when goods for which the benefit of notification no.27/2002-Customs has been claimed, are re-exported. 29.3 Concessional customs duty of 5% provided on polymer long rod insulators has been restricted to polymer long rod insulators of 765 KV rating only. 29.4 Basic customs duty and CVD on 0.177 calibre airguns have been exempted. Consequently, 4% special additional duty of customs shall also be exempted on these airguns. 29.5 Sl. No. 349 of Notification No. 21/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried out in section 11 DD to enable recovery of interest on such amounts if they are not deposited in time. The analogous provision contained in section 28 B of the Customs Act has also been amended in the same manner. e) Orders passed in appeal by Commissioner (Appeals) are currently examined by a Committee consisting of two Commissioners of Central Excise under section 35B of the Central Excise Act, 1944. This provision does not cover a situation where there is a difference of opinion between the two Commissioners about the filing of appeal against the appellate order. It is now being provided that the Committee would refer such cases to the jurisdictional Chief Commissioner specifying the points of difference so that he may decide whether or not to accept the appellate order. A similar amendment has been carried out in section 129A of the Customs Act. f) Orders passed in appeal by a Commissioner of Central Excise are currently reviewed by a Committee consisting of two Chief Commissioners of Central Excise under section 35E of the Central Excise Act, 1944. This provision does not cover a situation where there is a difference of opinion between the two Chief Commissioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the factory for exports. d) The CENVAT Credit Rules, 2004 are being amended to bring in the following significant changes: (i) Rule 3 [except sub-rule (4)] is being amended to allow removal of capital goods outside the premises of the provider of the output service without any time restriction, if the same is for providing output service. This change shall come into effect from 1 st April, 2008. (ii) Sub-rule (4) of Rule 3 is being amended to provide that in case of National Calamity Contingent duty (NCCD) payable on mobile phones, credit of any duty of excise other than NCCD will not be utilized for payment of the said NCCD. This change shall come into effect from 1 st March, 2008. (iii) Rule 6 is being amended to provide,- Following options to a manufacturer, using common inputs or input services for manufacture of dutiable as well as exempted goods and opting not to maintain separate accounts. Such manufacturers can: · either reverse the credit attributable (to be worked out in a manner prescribed in the rule) to the inputs and input services used in the manufacture of exempted goods; or · pay 10% amount of the value (to be determined in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate manner and on a regular basis by the Commissionerates so that the figures of tax expenditure may be computed with greater precision. 33. General 33.1 You may kindly study the budgetary changes carefully and indicate your views, comments and suggestions on their implementation. It is necessary to ensure that the implementation of the proposed changes is smooth and causes no inconvenience to the taxpayers. Special efforts should be made to guide the taxpayers to understand and adopt these changes. The Departmental Officers should also be appropriately briefed on these changes. 33.2 In a number of cases, excise duty rates have been altered. It has been decided to collect data on the price behaviour, revenue implication, volume and value of clearances/ imports etc. as indicated in the foregoing paras. This information may kindly be furnished in the relevant proforma attached with this letter as per the time-lines indicated therein. These reports need to be consolidated at the office of the Chief Commissioner, and the Chief Commissioner should send a consolidated report in respect of all the Commissionerates under his charge. All reports should be sent in excel sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total assessable value of clearance during the month PLA Cenvat 1 2 3 4 5 6 7 (i) Information needed for each unit separately. Whether manufacturer is loan licensee or contract manufacturer should be also mentioned. (ii) This report should be sent so as to reach latest by 10 th April, 2008. While submitting report for the subsequent Month (April, 2008, May, 2008 etc), the report for that particular month should only be furnished in the above format. ANNEXURE-II ( Para 4.5) Data on clearances (excluding exports) and duty paid on vehicles Name of the Zone: Name of the Manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (i) (ii) (a) (ii) (b) 3. Annexure-IV ( Para 16.1) Data on Export of Chromium Ores Concentrates: Name of the Zone ………………… For the Month of ……, 2008 Type Quantity (in lakh MT) Value (in Rs. crore) Customs duty (in Rs. crore) For the month Upto the month For the month Upto the month For the month Upto the Month Chromium ores Chromium concentrates Others Note: 1. The report is to be sent on monthly basis. The first report should, however, cover the months of February 2008 and March, 2008, giving separate figures for each month. 2. Report for a particular month should reach by 10 th of the succeeding month. 3. It is requested that the infor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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