EXCISE / CUSTOMS
EXCISE:
Ø Merit rate of CENVAT for non-petroleum goods has been increased from 4% to 5%. This would impact items such as medical equipment, drugs and food products.
Ø Excise duty exemption on 130 items withdrawn and 1% excise imposed subject to non-availment of CENVAT credit.
Ø Full exemption from duty withdrawn on IT products such as micro processors for computers etc. The products will now be subject to 5% excise duty.
Ø Duty rates on cement changed from specific rate to ad valorem.
Ø Full exemption granted to equipment (air-conditioning/conveyer belt) for used for cold storage.
Ø Excise duty on packaged software to be levied on media value, where not governed by MRP provisions.
CUSTOMS:
v Self-assessment in the Customs Act, 1962 both for imported goods and exported goods.
v Definition of ‘Completely Knocked Down’ added for concessional customs duty under project imports.
v CVD on packaged software to be levied on media value, where not governed by MRP provisions.
v BCD @2.5% levied on import of aircraft by non scheduled operators.
v Exemption from BCD, SAD and CVD @5% on specified parts of hybrid vehicles.
v All clearances (manufactured or traded) from SEZ to DTA exempt from SAD provided VAT/CST is not exempt.
v Exemption from full customs duty on parts, component and accessories for manufacture of PC connectivity cables/ battery chargers/hands free headphones of mobile handsets.
v Time limit for filing of refund claim/ issuance of show cause notice extended from 6 months to 1 year.
CENVAT CREDIT:
ü Definition of inputs and input services has been amended to exclude inputs/ input services used for construction of building/civil structure, laying of foundation, etc.
ü Definition of inputs to include goods cleared for free warranty.
ü Definition of input services amended to exclude trading activity.
ü Inputs and inputs services primarily used for personal use or consumption of
employees excluded.
ü Input services such as outdoor catering, health insurance, life insurance, etc. Has been specifically excluded.
ü Credit required be reversing when inputs or capital goods have been partially or fully writing off in the books of accounts.
ü Definition of inputs and input services has been amended to exclude inputs/ input services used for construction of building/civil structure, laying of foundation, etc.
ü Rule 6 (5) of the Credit rules has been omitted. Now the manufacturer or service provider is eligible to claim proportionate credit on all services attributable to taxable activity in terms of Rule 6(3A).
ü The amount payable on exempted services (when credit on common inputs/input services has been claimed) has been reduced from 6% to 5%.
ü The restriction on credit under Rule 6 is not applicable in case the taxable services are provided without payment of service tax to SEZ unit/zone/ developer.
