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Date : 06-Jan-2009
Subject : Changes in Excise Duty - Union Budget 2009 - 2010


Click Here to see Latest Excise Duty Changes in Budget 2011-2012




CENTRAL EXCISE

Changes come into effect immediately unless otherwise specified.

Major proposals about central excise duties are the following:

A. RATE STRUCTURE

The excise duty rate on items currently attracting 4% duty has been increased to 8% with the following major exceptions:

  1. ! Specified food items including biscuits, sherbats, cakes and pastries
  2. ! Drugs and pharmaceutical products falling under Chapter 30
  3. ! Medical equipment
  4. ! Certain varieties of paper, paperboard and articles thereof
  5. ! Paraxylene
  6. ! Power driven pumps for handling water
  7. ! Footwear of RSP exceeding Rs.250 but not exceeding Rs.750 per pair
  8. ! Pressure cookers
  9. ! Vacuum and gas filled bulbs of RSP not exceeding Rs.20 per bulb
  10. ! Compact Fluorescent Lamps
  11. ! Cars for physically handicapped persons

B. AUTOMOBILE SECTOR

1) Specific component of excise duty applicable to large cars/utility vehicles of engine capacity 2000cc and above has been

reduced from Rs.20,000/- per vehicle to Rs.15,000 per vehicle.

2) Excise duty on petrol driven trucks/lorries has been reduced from 20% to 8%. Excise duty on chassis of such trucks/lorries

has been reduced from ‘20% + Rs.10000’ to ‘8% + Rs.10000’.

C. PETROLEUM SECTOR

1) Excise duty on Special Boiling Point spirits has been reduced to 14%.

2) Excise duty on naphtha has been reduced to 14%.

3) Duty paid High Speed Diesel blended with upto 20% bio-diesel has been fully exempted from excise duties.

4) The ad valorem component of excise duty of 6% on petrol intended for sale with a brand name has been converted into a

specific rate. Consequently, such petrol would now attract total excise duty of Rs.14.50 per litre instead of ‘6% + Rs.13 per

litre’.

5) The ad valorem component of excise duty of 6% on diesel intended for sale with a brand name has been converted into a

specific rate. Consequently, such diesel would now attract total excise duty of Rs.4.75 per litre instead of ‘6% + Rs.3.25 per

litre’.

D. TEXTILES

1) Excise duty on manmade fibre and yarn has been increased from 4% to 8%.

2) Excise duty on PTA and DMT has been increased from 4% to 8%.

3) Excise duty on polyester chips has been increased from 4% to 8%.

4) Excise duty on acrylonitrile has been increased from 4% to 8%.

5) The scheme of optional excise duty of 4% for pure cotton has been restored.

6) Excise duty for man-made and natural fibres other than pure cotton, beyond the fibre and yarn stage, has been increased

from 4% to 8% under the existing optional scheme.

7) An optional excise duty exemption has been provided to tops of manmade fibre manufactured from duty paid tow using 'towto-

top" process at par with tops manufactured from duty paid staple fibre.

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8) Suitable adjustments have been made in the rates of duty applicable to DTA clearances of textile goods made by Export

Oriented Units using indigenous raw materials/inputs for manufacture of such goods.

E. MISCELLANEOUS

1) Full exemption from excise duty has been provided on goods of Chapter 68 manufactured at the site of construction for use

in construction work at such site.

2) Excise duty exemption on ‘recorded smart cards’ and ‘recorded proximity cards and tags’ has been made optional.

Manufacturers have the option to pay the applicable excise duty and avail the credit of duty paid on inputs.

3) EVA compound manufactured on job work for further use in manufacture of footwear has been exempted from excise duty.

4) Benefit of SSI exemption scheme has been extended to printed laminated rolls bearing the brand name of another person

by excluding this item from the purview of the brand name restriction.

5) On packaged or canned software, excise duty exemption has been provided on the portion of the value which represents the

consideration for transfer of the right to use such software, subject to specified conditions.

6) Excise duty on branded articles of jewellery has been reduced from 2% to Nil.

F. AMENDMENTS IN CENTRAL EXCISE ACT, 1944

[These changes to come into effect on enactment of the Finance (No.2) Bill 2009]

1) Section 9A of the Central Excise Act is being amended so as to provide for the manner of compounding of offences and to

provide that certain offences and circumstances shall not be compoundable. Consequential amendment is also being

made in section 37 of the Central Excise Act.

2) Sections 14A and 14AA of the Central Excise Act are being amended so as to empower the Chief Commissioner of Central

Excise to nominate a Chartered Accountant for conducting special audit under these provisions.

3) Section 23A of the Central Excise Act is being amended so as to substitute the definition of the ‘Authority for Advance

Rulings’ to include therein the authority authorized under section 28F of the Customs Act.

4) Section 35G of the Central Excise Act is being amended retrospectively with effect from 01.07.2003 so as to make an

express provision to empower High Courts to condone delay in filing of appeals beyond the prescribed period.

5) Section 35H of the Central Excise Act is being amended retrospectively with effect from 01.07.1999 so as to make an

express provision to empower High Courts to condone delay in filing of applications or memorandum of cross objections

beyond the prescribed period.

G. AMENDMENTS IN FIRST SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985.

[These changes to come into effect immediately]

1) Note 1 to Chapter 8 in the First Schedule to the Central Excise Tariff Act, 1985 has been substituted so as to exclude ‘betel

nut product known as supari’ of tariff item 2106 9030 from its purview.

2) A Note (No. 6) has been inserted in Chapter 21 so as to provide that in relation to product of tariff item 2106 90 30 the

process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients, other than lime,

katha (catechu) or tobacco to betel nut in any form shall amount to ‘manufacture’.

3) In Chapter 58, against tariff item 5801 22 10, in column (3) and (4), the entries ‘m2’ and ‘8%’ respectively are being inserted.

H. AMENDMENTS IN CENTRAL EXCISE RULES AND CENVAT CREDIT RULES.

[These changes to come into effect immediately unless specified otherwise]

1) A new rule is being inserted in Central Excise Rules, 2002 to provide that records seized by the department during an

investigation but not relied upon in the Show Cause Notice should be returned to the party within 30 days of issue of Show

Cause Notice.

2) An explanation is being inserted in Rule 2 of Cenvat Credit rules, 2004 so as to clarify that 'inputs" shall not include cement,

angles, channels, CTD or TMT bars and other items used for construction of shed, building or structure for support of capital

goods.

3) Notification Nos. 33/97-CE (NT) dated 01.08.1997, 44/97-CE (NT) dated 30.08.1997 and 7/98-CE (NT) dated 10.03.1998

are being amended with retrospective effect from the date of issue of respective notifications so as to provide the Central

Government with the power to notify rates of excise duty under these notifications by virtue of powers conferred on it by the

erstwhile section 3A of the Central Excise Act [These changes to come into effect on enactment of the Finance (No.2) Bill

2009] .

4) Rule 6 (3) of the Cenvat Credit Rules, 2004 is being amended to prescribe that a manufacturer of both dutiable and

exempted goods, who does not maintain separate accounts of inputs, shall pay an amount equal to 5% of the total price of

the exempted goods instead of 10%


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