Budget 2016 – Change in Excise Duty

Budget 2016 – Change in Excise Duty

•  Basic Excise Duty increased on pan masala [2106 90 20] from 16% to 19%.  Accordingly, the duty leviable under the compounded levy scheme has also been modified.
• Excise duty on “waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured” falling under Chapter sub-heading 2202 10 increased from 18% to 21%.
•  The additional duty of excise levied under the Seventh Schedule to the Finance Act, 2005 on non-filter and filter cigarettes of sub-heading 2402 20 Clause 231 of the Finance Bill, 2016 refers.  There is no change in the Basic Excise Duty leviable under the First Schedule to the Central Excise Tariff Act,1985 and the NCCD leviable under Seventh Schedule to the Finance Act, 2001.
• Basic Excise Duty on other tobacco products falling under heading 2402  increased.
• The tariff rate of Basic Excise Duty on Paper rolled biris [whether handmade or machine made] and other biris [other than handmade biris] [2403 19 29] increased from Rs.30per thousand to Rs.80 per thousand. However, there is no change in effective basic excise duty rate on these goods which is presently Rs.21 per thousand.
•  Basic Excise Duty  increased on un-manufactured tobacco, and jarda scented tobacco,gutkha and chewing tobacco.  There is no change in NCCD and Health Cess rates.  Accordingly, the duty leviable under the compounded levy scheme has also been modified. Further, the speed slabs and the deemed production and duty payable per month on chewing tobacco without lime tube / lime pouches and jarda scented tobacco  aligned.
• Oil Industries Development Cess levied on domestically produced crude oil under the OilIndustry (Development) Act, 1974  reduced from Rs.4500 PMT to 20% ad valorem.
• The Basic Excise Duty rate on aviation turbine fuel [ATF] [2710 19 20] increased from 8% to 14%. However, ATF for supply to Scheduled Commuter Airlines [SCA] from theRegional Connectivity Scheme [RCS] airports shall attract 8%.
•  The Schedule Rate of Clean Energy Cess, levied on coal, lignite and peat,  increased from Rs.300 per tonne to Rs.400 per tonne. Further, the Clean Energy Cess is being renamed as Clean Environment Cess.
• Clean Energy Cess on all goods produced or extracted as per traditional and customary rights enjoyed by local tribals without any license or lease in the State of Nagaland fully exempted.
• Basic Excise Duty on micronutrients falling under Chapter 28, 29 or 38, which are coveredunder Sr. No. 1(f) of Schedule 1 Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under FCO, 1985, reduced from 12.5% to 6%.
• Basic Excise Duty on mixture of fertilizers, made by physical mixing of chemical fertilizers on which appropriate 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,  fully exempted.
• All types of Soaps and Surface cleaning agents falling under Chapter Heading 3401 and 3402 are notified under Section 4A with an abatement of 30%.The Third Schedule to the Central Excise Act, 1944 is also being amended so as to include therein all goods falling under heading 3401 and 3402.
•  Ready Mix Concrete [3824 50 10] manufactured at the site of construction for use inconstruction work at such site is being fully exempted from excise duty.
•  Basic Excise Duty on sacks and bags of polymers of any plastics  rationalized at 15%.
•  Basic Excise Duty on rubber sheets & resin rubber sheets for soles and heels [4008 29 10]  reduced from 12.5% to 6%.
•  Basic excise duty on PSF / PFY manufactured from plastic scrap or plastic waste including waste PET bottles is being changed from  2% without CENVAT credit or 6% with CENVAT credit to 2% without CENVAT credit or 12.5% with CENVAT credit.
•  Basic Excise Duty of „2% (without CENVAT credit) or 12.5% (with CENVAT credit) is being imposed on readymade garments and made up articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff, except those falling under 6309 00 00 and 6310, of retail sale price (RSP) of Rs. 1000 and above when they bear or are sold under a brand name. This optional levy would apply to such readymade garments and made up articles of textiles regardless of the composition of the garment / made up article. However, in respect of readymade garments and made up articlesof textiles other than those mentioned above, the optional levy of Nil (without CENVAT credit) or 6% (with CENVAT credit) in case of garments / articles of cotton, not containing any other textile material and Nil (without CENVAT credit) or 12.5% (with CENVAT credit) in case of garments / made up articles of other composition, as the case may be, shall continue. The tariff value for readymade garments and made up articles of textiles increased from 30% to 60%.. Further, the SSI exemption is being restricted for the month of March, 2016 to Rs.12.5 lakh, subject to the condition that the turnover during financial year 2014-15 has not exceeded Rs. 4 crore.
• Abatement rate from RSP, for all categories of footwear is being increased from 25% to 30%.
•  Basic Excise Duty of 1% (without Cenvat Credit) and 12.5% (with Cenvat Credit) imposed on Articles of Jewellery [excluding articles of silver jewellery, other than thosestudded with diamonds, ruby, emerald or sapphire].
• SSI threshold exemption for Articles of Jewellery [excluding articles of silver jewellery,other than those studded with diamonds, ruby, emerald or sapphire] is being increased to Rs.6 crore in a year, with an eligibility limit of Rs. 12 crore in the preceding financial year. For the month of March, 2016, the SSI exemption for such articles of jewellery is being restricted to Rs. 50 lakh.
•  Optional centralized registration extended to manufacturers of Articles of Jewellery.
•  Basic Excise duty on Gold Bars manufactured from gold ore or concentrate; gold dore barand silver dore bar  increased from 9% to 9.5%.
• Basic Excise duty on Gold bars and gold coins of purity not below 99.5%, produced during the process of copper smelting increased from 9% to 9.5%.
•  Basic Excise duty on silver manufactured from silver ore or concentrate; silver dore bar and gold dore bar  increased from 8% to 8.5%.
• Basic Excise duty on silver in any form, except silver coins of purity below 99.9%, produced during the process of copper smelting  increased from 8% to 8.5%.
•  Basic Excise duty on silver produced during the process of zinc or lead smelting increased from 8% to 8.5%.
• Aluminium foils of a thickness not exceeding 0.2 mm [7607] notified under section 4A  with an abatement of 25%.
•  The excise duty structure on „disposable aluminium foil containers‟ changed from 2% without CENVAT credit and 6% with CENVAT credit  to 2% without CENVAT credit and 12.5% with CENVAT credit.
•  Basic Excise Duty on 5 specified parts required for the manufacture of centrifugal pump  reduced from 12.5% to 6%, subject to actual user condition.
• Accessories of goods, like cranes, fork-lifts, bulldozers etc. falling under tariff item 8426 41 00, heading 8427, 8429 and subheading 8430 10 notified under  Section 4A  with an abatement of 30% .
•  Wrist wearable devices (commonly known as “smart watches”) [8517 62]  notified  under Section 4A with an abatement of 35%.
• Excise duty exemption withdrawn on charger/adapter, battery and wired headsets/speakers for use in manufacture of mobile handsets including cellular phones.
•  Excise duty of 2% without CENVAT credit / 12.5% with CENVAT credit prescribed for charger/adapter, battery and wired headsets/speakers, for manufacture of mobile handsets including cellular phone, subject to actual user condition.
• Excise duty  exempted on inputs and parts for use in manufacture of charger/adapter, battery and wired headsets/speakers of mobile handsets including cellular phone. Excise duty is also  exempted on inputs and sub-parts for use in manufacture of parts of charger/adapter, battery and wired headsets/speaker of mobile handsets including cellular phone. These exemptions are subject to actual user condition.
• Excise duty of 4% without CENVAT credit / 12.5% with CENVAT credit prescribed for the following Consumer Premise Equipments (CPEs). (i) Routers  (ii) Broadband Modems (iii) Set-top boxes for gaining access to internet (iv) Reception apparatus for television but not designed to incorporate a video display (v) Digital Video Recorder (DVR)/Network Video Recorder (NVR) (vi) CCTV Camera/IP Camera (vii) Lithium-ion batteries, other than those for mobile handsets including cellular phones. Excise duty is being exempted on parts, components and accessories for use in manufacture of above goods. Further, their sub-parts are also exempted.  These exemptions are subject to actual user condition.
• Basic Excise Duty on parts of railway and tramway locomotive reduced to 6%.
• Basic Excise duty on refrigerated containers [8609 00 00] reduced from 12.5% to 6%.
• An Infrastructure Cess, as a duty of excise, is imposed on motor vehicles falling under heading 8703. The effective rates of the Infrastructure Cess are being prescribed vide notification No. 1/2016-Infrastructure Cess dated 1st March, 2016, as under: a) Nil on :  Three wheeled vehicles, Electrically operated vehicles,  Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars for physically handicapped persons(subject to prescribed conditions), and Motor vehicles cleared as ambulances or registered for use solely asambulance(subject to prescribed conditions); b) 1% on Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc; c) 2.5% on Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc; d) 4% on all categories of motor vehicles other than those listed at (a), (b) and (c) above;
• Further, the Cenvat Credit Rules are being amended to provide that CENVAT credit cannot be utilised for payment of this Infrastructure Cess. Further, no credit of this Cess would be available under the Cenvat Credit Rules, 2004.
•  Accessories of certain vehicles falling under Chapter 87 is included for RSP based assessment.
• Excise duty on tools and tool kits for maintenance, repair, and overhauling of aircraft is  exempted.
• Excise duty on Capital goods and spare thereof, raw materials, parts, material handling equipment and consumable for repairs of ocean-going vessels by a ship repair unit exempted subject to actual user condition.
• Solar lamp [tariff item 9405 50 40]  exempted from excise duty.
• Disposable sterilized dialyzer and micro barrier [Chapter 84 or 90] of artificial kidney exempted from excise.
•  Excise duty exemption on 5 specified items for manufacture of rotor blades andintermediates, parts and sub-parts of rotor blades for wind operated electricity generators is withdrawn. They will now attract a concessional excise duty of 6%.
• Excise duty on improved cook stoves including smokeless chulhas for burning wood,agrowaste, cowdung, briquettes, and coal  exempted unconditionally.
•  The excise duty exemption under the existing area based exemptions for production of gold and silver from gold dore, silver dore or any other raw material is being prospectively withdrawn. Thus, a new industrial unit engaged in production of refined gold from gold dore, silver dore or any other raw material, which commences commercial production on or after 1st day of March, 2016, shall not be eligible for the said excise duty exemption.
•  In case of power generation project based on municipal and urban waste, valid agreement between importer with urban local body for processing of municipal solid waste for not less than ten years from the date of commissioning of project is being prescribed for availing customs and excise duty concessions as an alternative to the existing condition of “production of valid power purchase agreement between the importer/producer of power and the purchaser, for the sale and purchase of electricity generated using non-conventional materials”.
• Consequent upon abolition of the Duty Refund Procedure for exports to Nepal, Notification No.8/2003-Central Excise dated 01.03.2003 is being amended so as to exclude value of clearances made for export to Nepal from the definition of „clearances for home consumption‟ under the said notification.