TaxTMI 
TaxTMI 
Changes in excise, customs and service tax through Finance Bill, 2003
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....) on following items has been reduced from 16% to 8%: 1) Tyres 2) Aerated soft drinks 3) Polyester Filament Yarns 4) Air Conditioners and components 5) Motor Cars The duty incidence on all these items will be 24% (16% Cenvat + 8% SED) as against 32% earlier. 1.2 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 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: 1) Bicycle and parts 2) Toys 3) Mosaic tiles 4) Utensils and kitchen articles of metals 5) Knives, spoons and similar items of kitchenware/tableware 6) Unbranded surgical bandages 7) Articles of wood 8) Imitation zari 9) Adhesive tape 10) Tubular knitted gas mantle fabric for use in incandescent gas mantles 1....
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....till now 7) Populated printed circuit boards for black and white televisions * In respect of these products, labelling or relabelling of containers and repacking or adoption of any treatment to render the goods marketable will amount to manufacture. 1) Excise duty exemption on animal driven vehicle tyres has been withdrawn. Such tyres will attract duty at 24%. 2) 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. 3) 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manufacturers to pay excise duty on the factory gate price, even when their goods are sold from their depots is being withdrawn.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. 4) 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. 5)&....
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.... 6) Deemed credit scheme under which credit can be taken without production of duty paying documents is being withdrawn with effect from 1.4.2003; 7) The system of compounded levy on embroidered fabrics (at present charged at Rs. 45 per meter length of machine per shift) has been replaced by an ad valorem duty of 10%.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. (c) Garments and other made up articles: 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) The duty on knitted and crocheted articles has been reduced from 16% to 10%. 4) The following exemptions have been withdrawn. These changes will come into effect from 1.4.2003: (a) Textile articles made from handloom fabrics (SSI exemption would be available....
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....x on sugar, textiles and tobacco products at a rate not exceeding 4% without being denied the 1.5% of total tax revenue, suitable amendments have been made in the above Act. This will come into effect from a date to be notified later [Clause 148 of Finance Bill]. Cenvat Credit Rules, 2002 have been amended to allow credit of AED (GSI) paid for payment of Cenvat duty and special excise duty. 5. Petroleum Products • The Additional Excise Duty on motor spirit (petrol) and high speed diesel oil has been increased from Rs. 1 per litre to Rs. 1.50 per litre [clause 159 & 160 of the Finance Bill]. • Excise duty on light diesel oil (LDO) has been increased by Rs. 1.50 per litre [clause 147 (a) of the Finance Bill]. No Cenvat credit will be allowed in respect of the duty paid on LDO. • Excise duty concessions on ethanol doped petrol etc., have been continued for one more year, upto 29.2.2004. 6. Tea Tea has been exempted from excise duty of Rs. 1 per Kg. In its place, an additional duty of excise of Re. 1 per Kg. by way of surcharge, for development of tea plantation sector, has been introduced.&nbs....
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....ng made in the Central Excise Rules for giving credit or refund of the central excise stamps available with the assessee, but not utilized. 11. Retail Sale Price (RSP) based assessment: 11.1 The RSP based assessment has been extended to pesticides, insecticides and chewing tobacco and preparation containing chewing tobacco. Sanitary ware and fixtures of ceramics have been excluded from the ambit of RSP based levy. 11.2 Rates of abatement on aerated water, air conditioners, biscuits, boiled sweets, sugar confectionery, scented supari and pressure cookers have been reduced by 5%, consequent to the reduction of excise duty on these items. 11.3 Changes in definition of RSP 1) The definition of retail sale price (RSP), as mentioned in Explanation I to section 4A of the Central Excise Act has been modified so as to extend it also to cases where the governing law on such goods permits declaration of retail sale prices exclusive of taxes. 2) Section 2 (f) of Central Excise Act is being amended to provide that for goods presently covered under the provisions of section 4A, any process of packing....
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....ge are covered under Service Tax. The proposal is to extend the same to proprietorship, partnership and other individual concerns providing such services. 3) The present exemption from service tax on hotels has been extended beyond 31.3.2003. 4) Exemption from service tax when payments are received in convertible foreign exchange has been withdrawn. 5) Provision has been made for allowing credit of service tax only when the payment has been made by the service user in respect of services provided. 6) Retrospective amendment to notification No.43/97-ST dated 5.11.1997 has been made so as to exempt service tax on services provided by Goods and Transport Operators to small scale units, traders and private limited trading companies for the period 16.11.2002 to 1.6.2002. 12.1 It may be recalled that with regard to payment of service tax in respect of Goods and Transport Operators (GTO) and C&F services, certain amendments were made in section 65 and 66 of the Finance Act, 1994 to validate the collection of service tax. Certain further amendments are being made in section 68 and 70 of the Finance Act, 1994 ....
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....in a reasonable time, the goods in respect of which the payments are in default would be liable to confiscation and the amount in default may be recovered as if these are arrears of revenue. 14. Monthly payment of duty 14.1 From 1.4.2003, the fortnightly duty payment scheme will be replaced by monthly payment scheme. Duty for a month will have to be paid by 5th of the next month. However, for the month of March, the duty has to be paid by 31st March, both for SSI and non-SSI units. 14.2 It is also being provided that date of payment of cheque in the nominated banks will be the date of payment of duty, provided the cheque is honoured. 15. Valuation 15.1 The introduction of 'transaction value' has brought out significant improvements in reduction of disputes and bringing about certainty in the matter of valuation. There are, however, certain areas where disputes are still continuing. Having regard to this, section 4 of the Central Excise Act has been amended by providing an explanation so as to clarify that the total amount received by a manufacturer will be deem....
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....sold after their clearances from the factory. Suitable amendments have been made to provide that the time of removal in the case of goods removed from the place of removal shall be deemed to be the time of clearance of such goods from the factory. 15.3 Rule 5 of the Valuation Rules provides for deduction of actual cost of transportation when the price at the place of removal is not known. This is subject to production of actual invoice. It is proposed to allow deduction of freight worked out on an average basis. It is clarified that the deduction of average freight or actual freight is only in respect of cost of transportation beyond the place of removal when the goods are sold for delivery at a place other than the place of removal. In case of a depot, the cost of transportation upto the point of depot or any other place from where the goods are sold will continue to be included. 16. Retrospective Amendments 16.1 It may be recalled that notification No.61/2002-CE dated 23.12.2002 was issued to provide that: (i) the Cenvat credit of the duty paid on the inputs used in the manufact....
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....rom 8.7.1999 onwards in respect of these two notifications will have to be revised to ensure that the entire credit of duty paid on the inputs used in the manufacture of the exempted final products is used only for payment of duty on final products cleared under these notifications and refund is restricted to total duty paid less the total credit in respect of the duty paid on inputs. Thus, in the above illustration, refund will be restricted to Rs. 80/-, though the duty paid in cash was Rs. 100/-. Similarly, if any credit taken in respect of inputs used in the manufacture of goods cleared under notification No.32/99-CE and 33/99-CE , was used for payment of duty on other goods not entitled to the benefit under these notifications, such credit is not admissible and amount equal to the credit so utilized has to be demanded from the manufacturers. As the assessee will have to make the payment within 30 days of the enactment of Finance Bill, it is suggested that necessary action be taken to work out the amount to be recovered before this date. Similar amendment has also been made prospectively in the notifications for Kutch district of Gujarat and State of J&K. ....
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.... duty at the rates prevailing on this date. All the budgetary changes, unless otherwise stated, will come into effect from midnight of 28.2.2003/1.3.2003 and clearances effected after this period will attract the new rates of duty. As regards the dutiability of the stocks manufactured prior to 28.2.2003/1.3.2003, pre-budget stocks will be leviable to excise duty at the rates prevailing on the date of their removal. In other words, the goods cleared after 28.2.2003 would be liable to pay duty at the new rates even if they were exempted on or prior to 28.2.2003. However, goods which were not subject to the levy at all, for instance, the levy of NCCD on new items, same will have to be treated differently. In this connection, your attention is invited to the decision of the Supreme Court in the case of CCE Hyderabad vs. Vazir Sultan Tobacco Ltd 1996 (83 )ELT 3(SC) which has laid down the guidelines as regards the duty liability of pre-budget stock. In other words, in respect of a completely new levy, the pre-budget stock will not attract the new levy as there was no liability when the goods were manufactured, irrespective of their date of removal. ....
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....n for the time being in force in respect of the basic customs duty) needs to be taken into account. Other duties such as anti-dumping duty, safeguard duty, etc. should not be taken into account. A view has been expressed that section 3A of the Customs Tariff Act does not permit such interpretation. To place the matter beyond doubt, it is proposed to amend section 3 and section 3A of the Customs Tariff Act so as to make it very clear that for computation of additional duty of customs, only the c.i.f. price, landing charges and basic customs duty will be included. Similarly for determining special additional duty of customs (SAD), only the c.i.f. price, landing charges, basic customs duty and the additional duty of customs will be included. Other duties such as anti-dumping duty, safeguard duty, etc. shall not be taken into account. This amendment will have effect from 1.3.2002. 24. As you would be aware, the 8 digit customs classification was introduced through an Ordinance on 1.2.2003. As a consequential change, some of the exemption notifications have been amended so as to incorporate the 8 digit headings. 25. ....
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....nbsp;12) The name of the Customs, Excise and Gold (Control) Appellate Tribunal is being changed to Customs, Excise and Service Tax Appellate Tribunal. 13) The jurisdiction of the Advance Ruling Authority is being expanded so that it can decide on matters of Service tax, Cenvat credit, and all notifications under the Customs Act, Central Excise Act, and notifications issued under the Finance Acts. Scope of applicability is also being widened. 14) It is being provided that interest will be payable in respect of drawback claims after one month as against two months now. 15) The power of adjudication of Customs Officers is being raised. AC/DC will now have the power to adjudicate upto an amount of Rs. 2 lakhs as against Rs. 50,000/- now. For officers below the rank of AC/DC, the limit will be Rs. 10,000/- as against Rs. 2,500/- now. 16) Section 7 of the Customs Act, 1962 is being amended so as to delegate the powers of the Central Government to the Board for appointment of customs ports/airports/ICDs etc. 17) Section 15(1)(b) of the Customs Act is proposed to be amended so as to provide that the relevant date for determination of....
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....t which should be sent by the Chief Commissioners in respect of the commissionerates in their jurisdiction. This statement for a particular month must be sent so as to reach by 25th of the next month positively (Annexure I). This statement is in addition to other revenue statements being furnished. 26.3 In a number of cases, excise duty rates have been altered. It has been decided to collect data on the price behaviour and revenue implications. The information about the prices may kindly be supplied in the proforma at Annexure-II to this letter. You may kindly ensure that the information furnished is accurate since reliance will be placed on this data at the time of discussion of the Finance Bill in Parliament. The first report in this regard may be sent by 15th March, 2003 and subsequently at an interval of one month i.e. 15th of every month. 26.4 In the Explanatory Memorandum, we have asked for special reports in few cases. They may kindly be arranged to be sent on time after careful scrutiny. 27. I would take this opportunity to thank all of you, on my behalf and on behalf of the officers of the Tax Rese....
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.... 15.3.2003 22.3.2003 29.3.2003 5.4.2003 12.4.2003 19.4.2003 26.4.2003 Notes : 1. Description should be specific and should indicate the brand name and unit of sale, e.g. 'X' brand refined oil - weight 'Y' grams. Subsequent report should refer to this brand name only. New brands, if any, can be added in any subsequent report by mentioning similar details. 2. Information should be confined to goods manufactured in the jurisdiction of the Commissionerate. Retail price should be obtained from market survey along with printed retail price list, if any. 3. In remar....