Snapshot of Changes Made by Indian Union Budget 2011 in Central Excise Rates

1. Presented by: CA Amarpal, 09717105008
ANALYSIS OF UNION BUDGET 2011-12
CHANGES IN CENTRAL EXCISE TARIFF RATES
CHANGES AT A GLANCE
On 28/ 02/2011, Hon’ble Finance Minister presented the Union Budget for the
financial year 2011-12. He has proposed many changes in the Indirect Taxes. Among
them, in order to create a path towards GST (likely to be implemented by 2012), he
has taken a step in removing the exemption regime by levying duty on 130 items out
of 370 where VAT is charged by the States. The items covered are mainly consumer
goods.
Before the Budget 2011-12, the manufacturers of such excisable goods were enjoying
exemptions from the levy of central excise. Now the exemption has been withdrawn
and these products will be liable for payment duty of 1%/5% as the case may be.
They are required to comply with the provisions of the Central Excise law. The
products introduced into the levy include those where the rate of duty is ‘Nil’ by
tariff.
The SSI exemption shall be available to such manufactures but subject to some
conditions. This change shall be applicable from 1st March 2011 itself.
Duty Rates:
The standard rate of central excise is maintained at 10% however the rate of Central
Excise has been increased from 4% to 5% across all goods which were chargeable to
4%. The changes would be effective from 1st March 2011. In this budget vide
notification, as many as 130 entries of goods have been brought under the excise net
and chargeable to duty at the rate of 1% duty without the benefit of Cenvat credit on
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2. Presented by: CA Amarpal, 09717105008
inputs and input services vide notification no.1/2011 i.e. w.e.f. 01.03.2011 as a part of
budget changes the following are the options available:
a) A nominal duty of 1% ad valorem is being imposed on all 130 items with a
condition that the benefit of Cenvat credit paid on inputs and input services is
not availed. (refer notification 01/2011 – CE dated 01st March 2011)
b) A rate of 5% ad valorem is being imposed on most of the products covered
under notification 01/2011 – CE dated 01st March 2011 without any condition
i.e. the benefit of credit of duty paid on inputs and service tax paid on input
services would be available. (Refer notification 02/2011 – CE dated 01st March
2011). The products covered under notification 02/2011 – CE are those
products where the tariff rate is not nil.
SECTOR WISE ANALYSIS
(A) GENERAL CHANGES IN EXCISE TARIFF
(i) An excise duty of 1% without Cenvat credit facility is being
imposed on about 130 specified items, which were hitherto
either fully exempt from excise duty or chargeable to nil rate of
excise duty.
(ii) A mandatory excise duty of 10% is being imposed on branded
readymade garments. Such duty shall be charged on the tariff
value @ 60% of their retail sale price.
(iii) The concessional rate of excise duty of 4% is being increased to
5%.
(iv) An excise duty of 5% is being imposed on automatic looms and
projectile looms.
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3. Presented by: CA Amarpal, 09717105008
(v) Clearance based exemption to units manufacturing papers from
non-conventional material is being withdrawn.
(vi) The exemption on computer hardware items, is being withdrawn.
These will be charges the duty @ 5%.
(vii) Full exemption from excise duty to colour, unexposed
cinematographic film in jumbo rolls of 400 feets and 1000 feets
(B) AUTOMOBILE SECTOR
(i) Concessional rate of excise duty @10% is being extended to factory
built ambulances. Other vehicles retrofitted as ambulances subsequent
to their removal from the factory shall continue to be eligible for refund
based concession.
(ii) The scope of the Taxi Refund Scheme is being extended to include
vehicles carrying 13 persons including the driver.
(iii) To provide refund of 20% of the excise duty paid on vehicles if they are
registered as a taxi subsequent to removal.
(iv) Full exemption from excise duty is being extended to parts of power
tillers when cleared to another factory of the same manufacturer for
manufacturing power tillers.
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4. Presented by: CA Amarpal, 09717105008
(C) CEMENT
The quantity based rates for different types of cement plants and
different types of packaging form is being proposed to be changed to ad
valorem rate of 10%. Proposed rates of ad valorem in some cases have
been combined with quantity based duty also.
(D) CAPITAL GOODS
(i) Exemption to capital goods required for expansion of an existing
mega/ultra mega power project
(ii) Reduction in excise duty from 10% to 5% on specified textile
machineries.
(iii) Full exemption to specified parts of sewing machines which does not
have inbuilt motors.
(E) ENVIRONMENT FRIENDLY AND ENERGY SAVING GOODS
(i) Concessional rate excise duty of 10% on hydrogen vehicles based on
fuel cell technology.
(ii) Reduction in duty from 10% to 5% on hybrid kits for conversion of
fossil fuel vehicles to hybrid vehicles.
(F) FOOD PROCESSING
Full exemption on
- AC Equipments, panels and refrigeration for setting up of cold
chain infrastructure meant for agricultural produces
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5. Presented by: CA Amarpal, 09717105008
- Conveyor belt systems for use in cold storage for agricultural
produces
(G) PAPER & PAPER BOARD
(i) Full exemption from excise duty to cotton stalks particle
(ii) Concessional rates of 5% excise duty on corrugated boxes
(iii) Reduction in excise from 10% to 5% on greaseproof and glassine papers
(H) PRECIOUS METALS
(i) Reduction of duty from Rs. 280/- per 10 gram to Rs. 200/- per 10 grams
on serially numbered gold bars other than tola bars.
(ii) Imposition of excise duty of Rs. 300/- per 10 gram on serially
numbered gold bars manufactured during the process of copper
smelting.
(iii) Imposition of Rs. 1500/- per Kg on silver, manufactured during the
process of copper smelting
(iv) Imposition of duty of 1% on branded jewellary and branded articles of
precious metals.
THE END
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