Budget 2007 – Central Excise – New Exemption, Change in Effective Rate of duty

With effect from 1-3-2007 the following changes have been made to provide new exemptions or to change the effective rate of duty of excise

1 Relief Measures: 

Excise duty has been fully exempted on:     

(a) Packed biscuits of per Kg. retail sale price equivalent not exceeding Rs.50;       

(b) Food mixes (including instant food mixes);        

(c) Specified water purification equipment based on membrane technology;

(d) Household water filters not using electricity and pressurised tap water;  

(e) Biodiesels. 

Excise duty has been reduced from 16% to 8% on:      

(a) umbrellas;        

(b) plywood, veneered panels and similar laminated wood falling under heading 4412;  

(c) footwear parts/components falling under heading 6406; and wadding, gauze.  

 2 Petroleum:  

Ad valorem component of excise duty on petrol and diesel has been reduced from 8% to 6%.  

3 Textiles:

Excise duty has been reduced from 16% to 12% on caprolactam, nylon chips and benzene for manufacture of caprolactam.

Optional excise duty at 12% has been prescribed on fishnet grade nylon yarns (yarns of 10 deniers and multiples thereof), nylon fishnet fabrics and fishnets.  

Full exemption from excise duty on specified textile machinery has been withdrawn and an excise duty of 8% has been imposed thereon.  

4 Research & Development:

Exemption from excise duty has been extended to specified items when domestically procured by research institutions (other than hospitals) registered with Department of scientific & Industrial Research, for the purpose of research, subject to certain conditions  

5 Metals:

The rate of compounded levy on aluminium circles has been increased from Rs.7500 / 10000 per machine per month to Rs.12000 per machine per month.     

6 Information Technology:           

'USB flash memory' is exempt from excise duty. The exemption has now been extended to 'flash memory' in general.  

'DVD drive' is exempt from excise duty.   The exemption has now been extended to 'DVD drive/DVD writer'.               

5 Tobacco products:  

Specific rates of excise duty on cigarettes have been revised as under: 

Specific rates of excise duty on biris (including cess) have been revised as under: 

(a) Biris, other than paper rolled and manufactured without the aid of machines, from Rs.12 to Rs.16 per thousand.

(b) Other biris from Rs.22 to Rs.29 per thousand.

The exemption limit of 20 lakh unbranded biris in a financial year will now be subject to the condition that a manufacturer wanting to avail of the exemption has to file a prescribed declaration with the Central Excise Department. For availing of the exemption in the month of March, 2007, the manufacturer has to give the declaration by 31st, March, 2007. From next financial year, the declaration has to be filed by the 30th April. Detailed instructions for monitoring of this exemption are being issued by the Board. It may be ensured that there is no harassment and the manufacturers are given necessary guidance in this regard. 24.4    

Excise duty on pan masala not containing tobacco, falling under 2106 90 20, has been reduced from 66% to 45%.  Consequently, the abatement from maximum retail sale price has been reduced from 50% to 44%.

6 Cement:   

Dual rates of excise duty have been prescribed on cement as under:  

General rate (other than mini cement plants)  

Excise duty has been reduced from Rs.400 per metric tonne to Rs.350 per metric tonne for cement of declared retail sale price not exceeding Rs.190 per 50 Kg. bag or per metric tonne retail sale price equivalent not exceeding Rs.3800.

Excise duty has been increased from Rs.400 per metric tonne to Rs.600 per metric tonne for cement of declared retail sale price exceeding Rs.190 per 50 Kg. bag or per metric tonne retail sale price equivalent exceeding Rs.3800.

For cement in respect of which no RSP is required to be declared and thus no RSP is declared, the rates will be Rs 400 per metric tonne.  

Mini cement plants 

Excise duty has been reduced from Rs.250 per metric tonne to Rs.220 per metric tonne for cement of declared retail sale price not exceeding Rs.190 per 50 Kg. bag or per metric tonne retail sale price equivalent not exceeding Rs.3800.  

Excise duty has been increased from Rs.250 per metric tonne to Rs.370 per metric tonne for cement of declared retail sale price exceeding Rs.190 per 50 Kg. bag or per metric tonne retail sale price equivalent exceeding Rs.3800.

For cement in respect of which no RSP is required to be declared and thus no RSP is declared, the rate will be Rs 250 per metric tonne. 

It has also been provided that if a bulk package, which does not have RSP, declared on it contains a number of smaller packs with RSP declared on such smaller packs, then assessment will be done on the basis of such declared RSP. It has also been provided that if the bulk package also carries a sale price, per tonne equivalent of which is different from the per tonne equivalent of RSP declared on the smaller packs, then the higher of the two per tonne price equ" .