Through Finance Bill, 2016, FM has proposed the changes in Customs and Central Excise law and rates of duty. The duty changes have been made on inputs to make manufacturing competitive for sectors such as IT, capital goods and defence. Key changes in Excise: Budget 2016.

Excise Duty levied on Certain goods:

• Exemption on articles of Jewellery [excluding silver jewellery, other than studded with diamonds or other precious stones namely, ruby, emerald and sapphire] withdrawn with a higher threshold exemption up to Rs. 6 crore in a financial year subject to the eligibility limit of Rs. 12 crore in the preceding financial year, along with simplified compliance procedure, from Nil to 1% without Input Tax Credit [“ITC”] or 12.5% (ITC).
• Branded readymade garments and made up articles of textiles of retail sale price of Rs. 1000 or more changed from Nil (without ITC) or 6%/ 12.5% (with ITC) to 2% (without ITC) or 12.5% (with ITC).

 

Increase in Excise Duty rate on certain goods:

• Excise Duty on various tobacco products increased by 10% to 15% other than beedi rose to discourage consumption of tobacco and tobacco products.
• Domestically manufactured charger/adapter, battery and wired headsets/speakers for supply to mobile phone manufacturers as original equipment manufacturer, increased from Nil to 2% [without Input Tax Credit (“ITC”)] or 12.5% [with ITC].
• 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] from 12.5% to 4% [without ITC] or 12.5% [with ITC].

 

Decrease in Excise Duty rate on certain goods:

• Exemption from levy of Excise duty provided to improved chulhas (including smokeless chulhas) capable of burning wood, agro-waste, cowdung, briquettes and coal has been withdrawn.
• Electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of centrifugal pump reduced from 12.5% to 6% where more than 50% of such pumps are used in agriculture.
• Refrigerated containers reduced from 12.5% to 6%.
• Micronutrients reduced from 12.5% to 6%.
• Physical mixture of fertilizers, made out of chemical fertilizers on which duty of Excise has been paid, by Co-operative Societies, holding certificate of manufacture for mixture of fertilizers under the Fertilizer Control Order, 1985, for supply to the members of such Co- operative Societies, exempted from 1% (without Input Tax Credit) or 6% (with Input Tax Credit) to Nil.
• Excise Duty on Solar lamp exempt from 12.5% to Nil.
• Inputs, parts and components, subparts for manufacture of charger/adapter, battery and wired headsets/speakers of mobile phone, subject to actual user condition, from 12.5%/ Nil to Nil.
• 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] from 12.5% to Nil.
• Specified Notifications relating to area based exemptions has been amended to deny the said exemption to the certain specified Industrial Units.

 

Amendment in the Central Excise Act, 1944

• Section 5A of the Central Excise Act, 1944 (“the Excise Act”) has been amended to omit the requirement of publishing and offering for sale any notification issued, by the Directorate of Publicity and Public Relations of CBEC.
• Section 11A of the Excise Act has been amended to increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, wilful misstatement, etc.
• Section 37B of the Excise Act has been amended to empower the Board for implementation of any other provision of the said Act in addition to the power to issue orders, instructions and directions.

 

Amendment in the Central Excise Rules, 2002

• In case of finalization of provisional assessment, the interest will be chargeable from the original date of payment of duty.
• Reduced 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. The 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.
• Extended the facility for revision of return, hitherto available to a Service Tax Assessees only, to manufacturers also.
• Provided that in cases where invoices are digitally signed, the manual attestation of copy of invoice, meant for transporter, is done away with.

 

Clean Energy Cess:

The Clean Energy Cess has been renamed as Clean Environment Cess. Also, the Tenth Schedule to the Finance Act, 2010 dealing with Clean Energy Cess has been amended to increase the Scheduled rate of Clean Energy Cess from Rs. 300 per tonne to Rs. 400 per tonne. However, the effective rate of Clean Energy Cess has been increased from Rs. 200 per tonne to Rs. 400 per tonne.

The increase in Clean Energy Cess will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

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