Discussion on Budget Updates – Central Excise Act CA G Praveenkumar Date: 18 th March 2015 by

2 Measures to curb black money Job Creation through revival of growth and investment and promotion of domestic “manufacturing” and “Make in India” Reduction in Customs Duty on Inputs Minimum Government and Maximum Governance Subsuming Cess, Registration, Digital signature, TL for Cenvat availment, Relaxation in penal provisions Improving quality of life and public health through Swachh Bharat Initiatives Clean energy cess on coal, lignite Standalone proposals to maximise benefits to the economy Budget promises

3 Central Excise Tariff changes Central Excise Non-Tariff changes Central Excise Rules, 2002 Cenvat Credit Rules, 2004 GST Way forward Coverage

Central Excise Tariff – Clause 104  Amendments made to Duty rate for Chewing Tobacco & Pan masala made vide Notification 05&06/2015 – Section 3A [levy based on capacity of production]  Condensed Milk Put in unit containers brought to levy as below – Tariff: or Notification ReferenceDuty RateCondition 07/20152%No Cenvat benefit 08/20156%With Cenvat facility 03/2015(N.T)30% Abatement – MRP based assessment

Central Excise Tariff – Clause 104 (Cont..)  Notification 12/2015 – Enhancement of Ad valorem Duty from 12% to 12.5% for all the goods occurring in Notification12/2012 to be read with Fifth Schedule of Finance Bill  Exemption to Excisable goods consumed within the factory of production [10/96CE] extended to Agarbatti added vide Notification13/2015  Education cess & SHE cess exempted on all goods falling within First Schedule to the Central Excise Tariff Act, 1985 vide Notification No.14 & 15 of 2015 – What about Cess unutilised..? 5

6  Goods manufactured in an EOU/EHTP duty rate revised from 12% to 12.5% for Sl. Nos. 5A, 6, 7A [chapter 52,54,55,60] referred in 23/2003CE.  Provisional collection of Taxes Act, 1931:  Clauses 89, 90, 103, 104, 163, 164 and 188 of the Finance Bill, 2015 Central Excise Tariff – Clause 104 (Cont..)

7  Chapter 21: All goods falling under Chapter sub-heading , including iced tea notified under S.4A of Central Excise Act with an abatement of 30%.  Chapter 22: Excise duty on “waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured” falling under is increased from 12% to 18%.  Chapter 39: Tariff rate of excise duty on all goods falling under tariff item and Chapter sub-heading [other plastics] is being increased from 12% to 18% Central Excise NON Tariff

8  Chapter 64 Basic Excise Duty on leather footwear of Retail Sale Price exceeding Rs.1000 per pair falling under Central Excise Tariff heading 6403 and 6405 is being reduced from 12% to 6%. Further Abatement in this regard reduced from 35% to 25%  Chapter 74 Full exemption from excise duty is being extended to round copper wire and tine alloys for use in the manufacture of PV ribbon (tinned copper interconnect) for manufacture of solar PV cells and modules, subject to certification by Department of Electronics and Information Technology (DeitY) Central Excise NON Tariff (Cont..)

9  Chapter 84:  Excise duty exemption is being withdrawn on solar water heater and system. Further, optional excise duty of Nil without CENVAT credit / 12.5% with CENVAT credit is being extended to solar water heater and system.  Excise duty of 2% without CENVAT credit / 12.5% with CENVAT credit is being provided to tablet computer. Further, excise duty is being exempted on parts, components and accessories for use in manufacture of tablet computer.  Excise duty is also being exempted on sub-parts for use in manufacture of parts, components and accessories of tablet computers [Sl. No.254A&B] Central Excise NON Tariff (Cont..)

10  Chapter 85:  Excise duty on mobile handsets including cellular phone is being changed from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit.  Excise duty is being reduced from 12% to 6% on wafers for use in the manufacture of IC modules for smart cards, subject to actual user condition.  Excise duty is being reduced from 12% to 6% on all inputs for use in manufacture of LED driver and MCPCB for LED lights and Fixtures & LED Lamps.  RSP based assessment is being prescribed expressly for LED lights or fixtures including LED lamps with an abatement of 35%. Central Excise NON Tariff (Cont..)

11  Chapter 87:  Excise duty on chassis for ambulance is being reduced from 24% to 12.5%, subject to actual user condition.  The validity period of concessional excise duty of 6% granted to specified goods used in the manufacture of electrically operated vehicles and hybrid vehicles is being extended by one more year up to 31st March,  Chapter 90  Excise duty is being exempted on specified raw materials for use in manufacture of pacemakers, subject to actual user condition. Central Excise NON Tariff (Cont..)

12  Section 3A(3) empowers the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods, is being amended so as to insert an Explanation to provide that factor relevant to production includes factors relevant to production.  Section 11A – Recovery of Duties not levied or not paid or short levied:  Subsections 5,6,7 have been omitted which dealt with category of cases where fraud, collusion, willful mis-statement, etc. is involved but the transaction is recorded in the specified record New sub section inserted as below:  Provisions of section 11A shall not apply to cases where the non-payment or short payment of duty is reflected in the periodic returns filed and that in such cases recovery of duty shall be made in such manner as may be prescribed in the rules Amendments to Central Excise Act

13  Section 11AC – Penalty for Short-levy or Non-levy of duty Amendments to Central Excise Act (Cont..) ScenarioPenalty Penal provisions in cases where there is no fraud or collusion or intention to evade Duty: Normal situations prevailing10% of the Duty determined or Rs.5,000 which ever is higher Duty along with interest has been admitted & remitted either before issuance of SCN or within 30 days of issuance of SCN No Penalty. Duty along with interest remitted within 30days of communication of Order Penalty shall be 25% of the Duty determined Cases where Fraud or Collusion or Intention to evade duty exists: Normal situations prevailing100% of the Duty determined If the transactions exists in the Books of Accounts penalty shall be reduced to 50%

14 ScenarioPenalty If the Duty along with Interest paid within 30days of communication of SCN Penalty payable shall be 15% of the Duty determined & payable within 30days of serving the SCN. If the same is paid within 30days of communication of SCN proceedings shall be deemed to be concluded If the Duty along with Interest paid within 30days of communication of Order Penalty payable shall be 25% of the Duty determined, provided the same is paid within 30days of communication Order Proceedings in case of pending SCN: Cases involving fraud, collusion, willful mis-statement etc., Payment of Duty and Interest along with a penalty of 15% of the duty amount determined within 30 days of the Finance Bill, 2015 receiving the assent of the President Cases not involving fraud, collusion, willful mis-statement etc., Payment of Duty and Interest within 30 days of the Finance Bill, 2015 receiving the assent of the President Amendments to Central Excise Act (Cont..)

15  Direct dispatch of goods to registered dealer’s/ registered importer’s customers without first bringing them to the dealer’s / importer’s registered premises - Rule 11 of CER and Rule 4 of CCR refers [effective ].  Direct dispatch of inputs and capital goods to job worker without first bringing them to the manufacturer’s /output service provider’s premises subject to the conditions specified therein [effective ].  Rule 18 explanation amended as below:  Explanation. – For the purposes of this rule, “export”, with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft Changes in Central Excise Rules,

16  Issuance of digitally signed invoices and preservation of records in electronic form by a manufacturer - Provided that where the duplicate copy of the invoice meant for transporter is digitally signed, a hard copy of the duplicate copy of the invoice meant for transporter and self attested by the manufacturer shall be used for transport of goods.  Registration process [effective from ] in Central excise is being simplified to ensure that registration is granted within two working days of the receipt of a duly completed application form. Verification of documents and premises, as the case may be, shall be carried out after the grant of the registration.  Deregistration [effective from ] – where there are no pending recovery from Assessee application made online shall be approved within 30days Changes in Central Excise Rules, 2002 (Cont..)

17  Cancellation of Registration [effective from ]  DC /AC empowered to cancel the registration;  Grounds for cancellation premise not found or non-existent or assessee doesn’t respond for rectification of error noticed or factory closed and no dues noticed. Changes in Central Excise Rules, 2002 (Cont..)

18  Time limit for Cenvat revised as below [effective from ] :  Inputs – ONE Year  Capital Goods – TWO Years  Rule 4(5)(a) – movement of goods from one Job-worker premise to another made permissible  Rule 5 – Refund of Cenvat Credit “(1A) "export goods" means any goods which are to be taken out of India to a place outside India  Rule 6 – Obligation of a Manufacture or Provider of Output Service - Exempted goods include Non-Excisable goods Change in Cenvat Credit Rules,

19  Seamless Credits;  Maintenance of Books of Accounts electronically;  Refund applications to be made online including documentation;  Status of pending disputes at various stages and authority concerned to deal with – Form C/I/H, Ineligible Cenvat credits, Valuation issues;  Preparedness of Trade & Industry towards the Documentation, support of accounting records and tax planning structure. Way forward for GST

20 When a bird is alive.. It Eats Ants.. When the bird is dead.. Ants eat the Bird.! Time & Circumstances can change at any time. You may be powerful today.., but remember time is more powerful than you..! One tree makes a million match sticks.. Only one match stick needed to burn a million trees..! Be a Good human and leave your finer foot prints…! Before we part…

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