EXCISE DUTY PROPOSALS

1. The general duty structure is proposed at 8%, 16% and 24%. Tobacco products, pan masala and petroleum products will continue to have different rates. For textiles, a separate package has been prescribed.

2. Special Excise Duty (SED) on following items has been reduced from 16% to 8%:-

• Tyres

• Aerated soft drinks

• Polyester Filament Yarns

• Air Conditioners and components

• Motor Cars

3. The 4% rate of excise duty without CENVAT has been abolished. Some of the items attracting this rate have been exempted from excise duty and the rest have been taken to 8% rate. The 8% rate will now be with Cenvat credit. As a consequence, the following items have been exempted from excise duty :-

• Bicycle and parts

• Toys

• Mosaic tiles

• Utensils and kitchen articles of metal

• Knives, spoons and similar items of kitchenware / tableware

• Unbranded surgical bandages

• Articles of wood

• Imitation zari

• Adhesive tape

• Tubular knitted gas mantle fabric for use in incandescent gas mantles

• Umbrellas

• Walking sticks, riding-crops and like

• Articles of mica

• Kerosene pressure lanterns

• Glasses for corrective spectacle lenses, flint buttons

• Registers, accounts books, etc.

• Slag arising on manufacture of iron and steel

• Gold arising in the course of copper / zinc smelting

• Recorded audio CDs

4. The following items, which were earlier liable to duty at 4% without Cenvat or 16% with Cenvat would now attract 8% excise duty with Cenvat credit :-

• Light weight concrete building blocks. The 8% rate is being extended to aerated and cellular light weight concrete blocks and slabs

• Laboratory glassware

• Crankshafts for sewing machines

• Power driven pumps for handling water

• Medical equipment

• Pre fabricated buildings

5. Excise duty has been reduced from 16% to 8% with fun Cenvat on the following items:-

• Pressure cookers

• Biscuits

• Sugar confectionery (excluding white chocolate) not containing cocoa

• Rough ophthalmic blanks

• Dental chairs

• Electric vehicles

• Scented supari

• Nicotin Polacrilex gun

6. Excise duty at the rate of 8% with Cenvat credit has been imposed on the following items :-

• Refined edible oils (branded and packed for retail sale) *

• Vanaspati, bakery shortening, margarine and other similar edible preparations (branded and packed for retail sale) *

• Lay flat tubing

• Chemical reagents for specified end use

• Wood free particles or fibre board made from agro-waste

• Paper and paper board manufactured from at least 75% non-conventional raw materials (for the first clearances of3500 MT per year) which were attracting Nil duty till now

• Populated printed circuit boards for black and white televisions

7. Excise duty exemption on animal driven vehicle tyres has been withdrawn. Such tyres will attract duty at 24%.

8. Coating of pipes and tubes of headings 73.04 or 73.05, with cement or polyethylene or other plastic materials has been declared as amounting to manufacture.

9. The facility given to integrated steel manufacturers to pay excise duty on the factory gate price, even when their goods are sold from their depots is being withdrawn. The integrated steel manufacturers will pay excise duty on the normal transaction value at depots.

10. For starches falling under heading 11.03, labeling, re-labeling of containers and packing from bulk to retail packs or adoption of any other treatment to render the product marketable to the consumers has been declared as amounting to manufacture.

11. Excise duty on chassis of motor vehicles has been increased from 16% to 16% plus Rs.10,000/- per chassis.

12. Cement

13. Textiles

1. 8% excise duty is being retained only for cotton yam, not containing any other textile material.

2. 16% excise duty on fibres of polyester, viscose, acrylic remain unchanged.

3. Uniform rate of 12% excise duty has been prescribed on polyester cotton, cotton viscose and all other spun yarns. Viscose cotton yarn will attract duty at 12% even if cotton predominates.

4. Excise duty on polyester filament yam has been reduced from 32% to 24%.

5. Excise duty on all other filament yarns (such as viscose filament yam, nylon filament yam) has been reduced from 16% to 12%.

6. SSI exemption benefit has been withdrawn for shoddy and woollen yarn. This change will come into effect from 1.4.2003.

7. Specific duty rates on bleaching, dyeing and other processes done on spun and filament yarn has been withdrawn. Such yams will attract duty at rates applicable to the corresponding yarns. This change will come into effect from 1.4.2003.

8. Specific duty rates on texturizing or twisting of polyester filament yarn carried on by independent texturisers is being withdrawn. Such yarns will attract duty of 24%. This change will come into effect from 1.4.2003.

1. Excise duty on all woven cotton, manmade and woollen fabrics has been reduced from 12 % to 10 %

2. Duty on knitted / crocheted fabrics of cotton has been reduced from 12% to 8%

3. Duty on non-cotton knitted / crocheted fabrics has been reduced from 12% to 10 %

4. All industrial fabrics including rubberized textile fabrics presently attracting duty rates of Nil, 21%, 16% and 16% plus specific rates will be charged to duty at 16%

5. Optional exemption on woven, crocheted or knitted fabrics is being withdrawn with effect from 1.4.2003

6. Deemed credit scheme under which credit can be taken without production of duty paying documents is being withdrawn with effect from 1.4.2003

7. The system of compounded levy on embroidered fabrics (at present charged at Rs.45 per meter length of machine per shift) has been replaced by an ad valorem duty of 10%. This change would come into effect from 1.4.2003

8. Fabrics and garments manufactured by non-profit charitable institutions have been exempted from excise duty.

9. Following exemptions are being removed with effect from 1.4.2003 :-

1. Exemption to hand processors, if power or steam is used in any process;

2. Cotton fabrics used in the manufacture of cotton absorbent lint (will be covered under SSI exemption);

3. Rubberized textile fabrics;

4. Woven, unprocessed cotton belting;

5. Narrow woven fabrics;

6. Pleated, embossed fabrics made from duty paid processed fabrics;

7. Fabric subjected to dew-drop process;

8. Printing frames captively consumed;

9. Processing of embroidery fabrics;

10. SSI exemption to be removed on woven pile and chenille fabrics, terry toweling fabrics, tufted fabrics, tulles and net fabrics.

11. Processed woolen fabrics (below Rs. 150 per square metre) made from shoddy yam etc. for manufacture of shoddy blankets.

1. Excise duty on all woven (including cotton) garments and made ups has been reduced from 12% to 10%

2. Duty on cotton knitted / crocheted garments is being reduced to 8%, while on other knitted / crocheted garments, duty has been reduced to 10 %

3. Optional exemption on woven, knitted and crocheted garments / accessories is being withdrawn with effect from 1.4.2003.

4. The duty on knitted and crocheted articles has been reduced from 16% to 10 %

5. The following exemptions have been withdrawn with effect from 1.4.2003 :-

1. Textile articles made from handloom fabrics (SSI exemption would be available)

2. Raincoats, undergarments and clothing accessories like handkerchief, ties and gloves. These goods will be covered under SSI exemption.

3. SSI exemption on ready made garments

4. Blanket of wool and shoddy yarn below certain price

6. Garments made by tailors, on job work basis, for personal use of customers and not intended for sale, have been exempted from excise duty.

7. Job work facility will be extended across the entire textile sector. The job worker will have the option of not being under excise registration if the supplier of the fibre, yarn, fabrics, undertakes to pay the duty .This would come into effect from 1.4.2003.

8. Cenvat Credit Rules, 2002 have been amended to allow credit of AED (GSI) paid for payment of Cenvat duties and special excise duty.

14. Changes in the rates of excise duty in respect of textiles (except where the present duty is nil) will come into effect immediately w.e.f. 1.3.2003. The withdrawal of exemptions, removal of scheme of deemed credit and removal of goods from SSI exemption scheme will come into force w.e.f. 1.4.2003. The Government has also decided that job work facility will be made available to the textile sector and a separate procedure would be devised to ensure that the large number of power looms in the decentralized sector are not inconvenienced in any way and are exempted from maintenance of central excise records. The duty liability will be on the supplier of the raw materials to the job workers.

15. National Calamity Contingent Duty (NCCD)

• 1% on polyester filament yarn, motor cars and two-wheelers

• Rs.50 per metric tonne on domestic crude oil

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