BUDGET 2011 : EXCISE / CUSTOMS

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Ø  Excise duty exemption on 130 items withdrawn and 1% excise imposed subject to non-availment of CENVAT credit.

Ø  Full exemption from duty withdrawn on IT products such as micro processors for computers etc.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.