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TMI BlogChanges in excise, customs and service tax through Finance Bill, 2004X X X X Extracts X X X X X X X X Extracts X X X X ..... he cess will apply in respect of customs and excise duties with effect from 9.7.2004, in respect of service tax, it will come into effect only on enactment of the Finance Bill. 2.2 In respect of excise, the cess will be 2% of the aggregate duties of excise leviable on the goods. The following illustration explains how the cess should be calculated. An item attracts excise duty of 16%. With education cess, the total incidence of excise duty will be 16.32%. The Cess of 0.32% will be available as credit, but only for payment of education cess leviable on final products as provided for in the CENVAT Credit Rules. 2.3 In the case of customs, the cess will be 2% of the aggregate duty of customs (but excluding safeguard duty under section 8B and 8C, countervailing duty under section 9 and Anti Dumping Duty under section 9 A of the Customs Tariff Act). Items attracting customs duty at bound rates, for example, under the IT Agreement or the Indo-US/Indo-EU Textile Agreement have been exempted from the cess. The following illustration explains how the cess should be calculated and credit will be available. For calculating the customs cess, let landed value of an item be ₹ 1000. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng machine, rotary shifter, lateral cyclon winnower and dividing bypass. CVD has now been exempted by way of excise duty exemption. These exemptions would be available upto 30.4.2005. 3.8 Health 3.8.1 Rehabilitation aids such as talking books, talking calculators, talking thermometers, braille writers, braille computer terminals have been exempted from customs duty. CVD has been exempted by way of excise duty exemption. 3.8.2 Phonographs and cassette players for playing the talking books, magnetic tapes and cassettes for production of talking books, electronic reading machines, television enlargers and optical aids have been fully exempted from customs duty and CVD, if imported by an institution for the blind and deaf. 3.8.3 The conditions prescribed for availing the import duty exemption on tangible appliances for blind, hearing aids etc. when imported by an institution for the blind and deaf that the goods should have either been gifted or purchased out of donations, have been omitted. 3.8.4 Customs duty has been exempted on instruments and implants for physically handicapped patients, joint replacement, spinal instruments and implants including bone cements, crutches, wheel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 16%, namely, cakes and pastries, plastic insulated ware, vacuum flasks, scented supari, pre-fabricated buildings, Laboratory glassware, Clocks and watches of retail sale price not exceeding ₹ 500 per piece (SSI exemption has been extended), monochrome televisions receivers, populated printed circuit boards for monochrome television receivers, imitation jewellery and candles. 4.4 Excise duty on matches made in semi mechanized and mechanized sectors, has been changed from 8% without Cenvat credit, to 16% with credit. 4.5 Excise duty of 16% has been imposed on specified parts of pre-fabricated buildings such as blocks, slabs, concrete beams and stairs and parts of clocks and watches of retail sale price not exceeding ₹ 500 per piece. 4.6 Relief Measures: 4.6.1 The retail sale price (RSP) limit for excise duty exemption on footwear has been raised from ₹ 125 to ₹ 250 per pair. The exemption will now be available only if RSP is indelibly marked or embossed on the footwear itself. 4.6.2 Excise duty has been reduced from 16% to 8% on gas stoves of retail sale price not exceeding ₹ 2000 per unit. 4.6.3 The value limit for excise duty exemption on pens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or for payment of duty at the above rates. The optional route is open for all sectors i.e. handloom, power looms, independent processors, stand alone units as well as composite mills. 4.8.5 All textiles and textiles articles falling under chapter 50 to 63 have been fully exempted from duties under Additional Excise Duty (Goods of Special Importance) Act and Additional Excise Duty (Textiles and textiles Articles) Act, wherever applicable. 4.8.6 Manufacture of polyester filament yarn on job work basis has been excluded from the purview of notification No. 214/86-CE. 4.8.7 Rule 12 B of the Central Excise Rules, 2002 has been omitted. 4.8.8 Provision relating to endorsement of document under clause (e) of sub-rule (1) of Rule 7 and the provisions relating to transfer of credit by exempted textile manufacturer under rule 8A of the Cenvat Credit Rules have been omitted. 4.9 Health: 4.9.1 Existing concessional rate of excise duty of 16% to ambulances for Government run hospitals has been extended to all ambulances. 4.9.2 Rehabilitation aids such as talking books, talking calculators, talking thermometers, Braille writers, Braille computer terminals have been exempted from ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently withdrawn. 5.2 Provisions are being made in central excise and customs laws to allow compounding of offences either before or after initiation of proceedings by the Chief Commissioner. On compounding, the person would get immunity from prosecution, but would have to pay duty, interest and compounding fee. 5.3 A provision is being made in the Central Excise Act to enable recovery of arrears of revenue including the interest from the person, to whom another person liable to pay duty and interest in pursuance of a confirmed demand and an adjudication order, has transferred his business property. 5.4 Provisions are being made in the Central Excise Act to debar the adjudicating authority, Commissioner (Appeals), and the Appellate Tribunal, from granting more than three adjournments of personal hearings. 5.5 The Third Schedule to the Central Excise Act has been amended to extend the provisions of section 2(f)(iii) of the said Act to monochrome (black & white) television sets. 5.6 Customs Act, Central Excise Act and Finance Act, 1994 are being amended to provide for specified amount of fee to be paid when making appeal before appellate tribunal. (IV) SERVICE TAX: 6.1 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe of certain existing services is being extended as follows: (a) Commission and installation of plant, machinery or equipment to include 'erection' thereof. (b) Stock brokers to include 'sub-brokers'. (c) Cable operator service to include 'Multi System Operators (MSO)'. (d) Business auxiliary service also to include service relating to procurement of inputs, production of goods or provision of services on behalf of the client. However, activities amounting to manufacture are excluded from the scope of the service tax. (e) Financial services also to include other specified financial services, namely, lending, issue of pay order, demand draft, cheque, letter of credit, bill of exchange, providing a bank guarantee, overdraft facility, bill discounting, safe deposit lockers, or safe vaults and operation of bank accounts. The interest amount would, however, remain excluded from the purview of service tax. In addition to banking company, financial institution including a non-banking financing company, body corporates, any other commercial concern providing financial services will also be covered. (f) Tour operator services to include such package tour operators also who or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) and section 85 [relating to appeals before Commissioner (Appeals)]. (h) Penalty provisions under Section 75A and 79 of the Finance Act, 1994, are being omitted. The provisions under Section 77 (which presently provides penalty for non filing of returns) are being modified to provide for penalty for committing any contravention of rules and procedures. Technical and consequent amendments are being made in section 76 and 80. (i) Section 81 dealing with prosecution of companies, being otiose, is being omitted. (j) Explanation has been inserted in rule 6 of Service Tax Rules to clarify that in case payment is received in advance, service tax will be payable on pro rata basis. 7. In a number of cases, excise duty rates have been altered. It has been decided to collect data on the price behaviour and revenue implications. The information about the prices may kindly be supplied in the proforma at Annexure to this letter. You may kindly ensure that the information furnished is accurate since reliance will be placed on this data at the time of discussion of the Finance Bill in Parliament. The first report in this regard may be sent by 18 July 2004 and subsequently as per the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice should be obtained from market survey along with printed retail price list, if any. 3. In remarks column, kindly indicate in broad terms the average percentage of input duty which would be available as credit. 4. First report should give the position as on 8.7.2004 and 15.7.2004 and should be sent so as to reach latest by 18.7.2004. Subsequent report should give the position as on 1.8.2004, 16.8.2004, 1.9.2004 and should reach within 5 days after the expiry of the specified date. 5. While submitting the reports for the period subsequent to 15.7.2004, the detail submitted in the earlier reports may kindly be repeated. To illustrate, while submitting the reports for the period ending on, say, 1.8.2004, the details given in the report for 8.7.2004 and 15.7.2004 also be repeated. 6. Copy of the reports meant for TRU should be sent by name to Shri D.K. Pandey, Under Secretary, Tax Research Unit, R.No.146, North Block, and New Delhi-110001. 7. Reports should be in respect of items specified below:- * Iron and steel of chapter 72 * Contact lenses * Playing cards. * Cakes and pastries * Plastic insulated ware * Vacuum flasks * Scented supari * Pre-fabricated buildi ..... 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