Customs tariff on postal imports revised, reduced effective rate retained; export duties adjusted for iron ore and rice bran cake.
Amendment to Heading 9804 revises the First Schedule to cover all dutiable items imported by post or air for personal use, prescribing a tariff label while maintaining a reduced effective duty via notification for items not prohibited under the Foreign Trade (Development and Regulation) Act, thereby avoiding merit assessment. The Second Schedule is recast to align with the Harmonized System and add de-oiled rice bran cake; export duties are adjusted-iron ore lumps and fines moved to a uniform higher rate, pellets exempt, and de-oiled rice bran cake newly subject to export duty.

Customs exemptions expanded for public access art exhibitions and Project Import security requirements eased for trade facilitation.
Full exemption from import duty for works of art is extended to exhibitions in private galleries open to the public, subject to conditions. Clarificatory amendments define coking coal specifications (exempt) versus non coking coal (dutiable) and narrow the definition of a Completely Knocked Down (CKD) unit to exclude pre assembled engines, gearboxes or transmissions. Water supply projects are confirmed to include pumping and storage facilities. Project Import Regulations' security requirements have been reduced and may be met by bank guarantee, which need not be renewed if finalisation is not completed within six months of documentation submission.

Self-assessment in customs expands importer/exporter responsibility while preserving officer verification, audit and electronic filing norms.
Introduction of self-assessment in the Customs Act replaces officer-led assessment, with section 17 recast to allow importer/exporter determinations subject to customs verification, examination, reassessment with speaking orders, and audits. Electronic filing is made the norm with exceptions, and provisional assessment provisions are aligned. Amendments also unify refund and demand periods, clarify interest computation, empower adjudicating authorities and supervisory approval for show cause notices, create a first charge for recovery of customs dues, address auction sale proceeds, validate retrospective tariff measures and safeguard duties for specified commodities, and restrict certain imports to defined uses.

Central excise duty changes introduce new exemptions, altered effective rates and provisional commencement of specified Finance Bill measures.
A suite of Central Excise notifications revises effective duty rates, amends exemptions across numerous chapters, and introduces an option to pay duty at a higher rate with entitlement to cenvat credit while a lower single-digit rate applies without cenvat credit. SSI exemptions, job-worker registration for ready-made garments, and brand-name exemption withdrawals are addressed. Non-tariff amendments fix tariff values and interest rates and modify Central Excise and CENVAT Credit Rules. Most changes take effect from midnight of 28 February/1 March 2011, with certain Finance Bill provisions provisionally effective under the Provisional Collection of Taxes Act, 1931.

Excise duty revision: standard and merit rates adjusted and mixed and branded-goods levies reshape manufacturing compliance.
Central excise rates were revised: the standard rate was maintained and the merit (CENVAT) rate was raised. Cement duties were restructured to mixed ad valorem plus specific rates and valuation for ad valorem components shifted from retail sale price to transaction value; bulk cement was unified under an ad valorem levy and clinker duty combined ad valorem with a specific component. Branded ready-made garments and made-up articles are taxed at a fixed duty, processes affixing brands are treated as manufacture, merchant manufacturers bear liability for job-worker production, and Cenvat credit and SSI relief mechanisms were adjusted. Concessions and duty rationalisations were made for certain vehicles, precious metals, and mega-power project supplies.

Excise duty exemptions withdrawn; concessional duty now levied with prohibition on input credit for affected goods.
A broad withdrawal of Central Excise exemptions imposes a nominal levy on specified formerly exempt goods with a prohibition on claiming Cenvat credit; formerly nil-tariff items are assigned statutory rates but an alternate concessional rate is prescribed to allow manufacturers to elect Cenvat credit. Amendments to the Cenvat Credit Rules extend the definition of exempted goods, require reversal of attributable credit for shared inputs and input services, bar credit for manufacturers and purchasers of goods under the nominal levy, and prevent discharge of duty using existing Cenvat credit. Specific exemptions for paper, looms, and certain electronic components are withdrawn into the concessional bracket.

Excise exemptions expanded for cold chain, repacked retail goods and specified inputs with procedural valuation conditions for manufacturers.
Full exemption from central excise duty is provided for specified goods used in cold chain infrastructure, conveyors for food storage, inputs for power project expansion, certain machine parts and materials. Concessional duty at one percent is extended to sanitary products and specified water filters. Excise duty reductions and Chapter Notes declare repacking, ore concentration, gold dore refining, and galvanisation as processes amounting to manufacture. Amendments update the CETA First Schedule to HSN and retrospectively include certain vehicle parts in the Third Schedule; sugar and textiles are removed from the Additional Duties Schedule to allow State VAT. A conditional exemption for retail repacking of traditional perfumes requires manufacturer valuation and compliance with Commissioner procedures.

Recovery of excise duty: revised penalty and interest regimes streamline extended limitation and first charge provisions.
Redrafted recovery provisions distinguish extended limitation cases, allowing a mandatory 50% of duty penalty where transactions are recorded in specified books and permitting remission to that level; compounding relief is limited to this category with reduced penalties for pre-notice or early payment. Interest provisions are consolidated to run from the month after duty fell due or from the date of erroneous refund. A first charge on a defaulter's property is created for excise dues, subject to creditor-priority statutes, while search powers, customs machinery borrowing for compounded levies, Board instructions on appeal thresholds, and legal metrology cross-references are amended.

Cenvat credit rules broaden input definitions and limit credit for ship breaking imports to curb misuse.
Amendments broaden input to cover most goods used in the factory including accessories, warranty items and goods for captive power, while excluding construction and personal use goods; input service exclusions are aligned with goods exclusions. Capital goods credit is largely unchanged but permitted for capital goods used outside the factory to generate captive power within the factory. Cenvat credit on additional customs duty for imported ships and floating structures used for breaking is restricted to prevent misuse, and Rule 5B requires repayment of credit where inputs or capital goods are partially written off before use.

Service tax amendments broaden taxable scope and tighten compliance, introducing new services and rule-level credit and refund changes.
Service Tax amendments in Budget 2011 add new taxable services, expand the scope of existing services, and revise valuation and compliance frameworks. Key rule updates include changes to point of taxation procedures, export of services rules, taxation of services provided from outside India and received domestically, determination of value, works contract composition schemes, and Cenvat credit mechanisms. The package also provides exemptions and procedural relief for the small scale sector and clarifies SEZ refund mechanisms.

Service tax on SEZ services: wholly consumed services exempt at source; pro rata refunds for partial consumption.
Notification No. 17/2011-ST defines wholly consumed services for SEZs using Export of Services Rules criteria and treats services received by entities operating solely in SEZs as wholly consumed. Such wholly consumed services are not subject to upfront service tax, including services normally covered by reverse charge. Services not wholly consumed qualify for refunds on a pro rata basis (SEZ turnover to total turnover). The Cenvat Credit Rules, 2004 have been amended to waive rule 6 requirements where services are supplied to SEZ units for authorized operations without payment of tax.

Cenvat credit reform aligns input and input service definitions, narrows eligible credits, and revises allocation and sectoral charges.
Amendments align the definitions of input and input service, expressly excluding certain goods and related services (e.g., petroleum, construction goods except subcontractor cases, employee personal consumption goods, and goods unrelated to manufacture) from qualifying as inputs or input services. The rules revise allocation and valuation mechanics for exempted and partially exempted outputs, reduce the amount payable for services under rule 6 from six to five percent, define valuation for trading and composition schemes, require banking and financial entities to pay 50% (and life insurance/ULIP 20%) of credit availed, allow SEZ authorized operations to receive services without reversal of credit, and add service tax under section 66A to eligible credits retrospectively.

Taxability of services received in India extended to services performed abroad when the recipient is located in India, with targeted exemptions.
Amendments to rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 treat certain services as taxable where the recipient is located in India even if performed abroad. Exemptions carve out transportation of goods by air, road or rail for persons located in India when goods move from outside India to outside India, and exempt air freight to the extent it is included in the customs value, preventing double taxation.

Service tax on high-end restaurant services and short-term accommodation introduced, with prescribed abatements and operational thresholds.
A new service tax targets air-conditioned restaurants with licence to serve liquor, covering service elements in composite bills (ambience, staff, furniture, music) while excluding plain food sales and deliveries; 70% abatement is announced. A related levy applies to short-term accommodation under three months where declared tariff meets specified threshold, taxed on gross amount with a 50% abatement; detailed notifications will follow enactment of the Finance Bill.

Excise and customs concessions broadened to exempt specified capital goods, imports and relief items under budget proposals.
Budget proposals expand excise and customs duty reliefs by creating or extending exemptions and concessional duty treatments for targeted sectors: exemptions for capital goods suppliers to large power projects; full customs exemption for bio asphalt and specified highway machinery; extended exemptions for art and antiquities exhibited in private galleries open to the public; import exemptions for ship repair spares and capital goods to ship owners; concessional duties for printing and mailroom equipment; excise exemption for jumbo cinematographic film rolls and factory built ambulances; and relief for specified inputs such as lactose for homoeopathic medicines.

Excise duty concessions for clean-energy vehicles and related imports announced, with customs reductions for solar and manufacturing inputs.
Targeted indirect tax concessions include full exemption from basic Customs Duty and a concessional Central Excise regime for batteries imported by electric vehicle manufacturers, a concessional excise rate for vehicles based on fuel cell technology, excise relief for hybrid conversion kits, a reduced excise rate and special CVD exemption for LEDs, a reduction in basic Customs Duty on solar lanterns, and full Customs or Excise exemptions for crude palm stearin in soap manufacture and enzyme preparations for pre-tanning.

Customs self-assessment introduced allowing importers and exporters to declare duties with system-driven verification and SEZ service relief simplified.
Introduction of Customs self-assessment permitting importers and exporters to self-declare duty liabilities via the EDI system, subject to selective system-driven verification by customs; proposals also include tax-free receipt of services within SEZs with simplified refund procedures, and expansion of the mega cluster programme to leather products and inclusion of Jodhpur for a Handicraft Mega Cluster.

Excise on consumer goods: nominal duty introduced; mandatory unified levy for branded readymade garments, with input credit and zero-rated exports.
A budgetary change imposes a nominal central excise duty on 130 items formerly exempt, with no Cenvat credit for their manufacture; basic food, fuel and most precious metals remain exempt while branded jewellery is captured. The optional levy for readymade garments and made-ups is converted into a mandatory unified levy applicable only to branded items, with manufacturers entitled to input, capital goods and service credit and exports remaining zero-rated.

Export duty unification on iron ore reshapes export incentives, with pellets exempted to encourage value addition.
The General Budget 2011-12 reconfigures tariffs to promote domestic value addition and reduce duty anomalies by announcing reductions and exemptions in basic customs duty across multiple sectors; implementing a unified export duty on iron ore while exempting iron ore pellets to encourage processing; and reducing basic customs duty on petroleum coke and gypsum to provide relief to the cement industry.

Exemptions for cold chain equipment expanded; customs duties on specified agricultural machinery and micro irrigation reduced while export duty imposed.
Full excise duty exemption is extended to air conditioning equipment and refrigeration panels for cold chain infrastructure and conveyor belts are included in exemptions for cold storages, mandis and warehouses; basic customs duty on specified agricultural machinery is reduced and extended to parts, micro irrigation equipment attracts a lower duty, and de oiled rice bran cake receives full exemption from basic customs duty while an export duty is imposed to discourage exports.