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Excise Duty
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An excise or excise tax (sometimes called an excise duty) is atype of tax charged on goods produced within the country.
It is a form of indirect tax.
Excises are distinguished from customs duties, which are taxeson imports. Excises are inland taxes, whereas customs dutiesare border taxes.
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The term "excisable goods" means the goods which are specified
in the First Schedule and the Second Schedule of the Central
Excise Tariff Act, 1985 , as being subject to a duty of excise and
includes salt.
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A cut in excise duty on capital goods to 10% from12%
On small carsexcise duty reduced to 8% from 12%
Excise duty on sports utility vehicles (SUVs) wascut to 24% from 30%
On large and mid-sized cars, the excise duty wasreduced to 20% from 27%
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CENVAT Credit Rules
To remove the cascading effect of excise duty, the Excise Duty
paid on the inputs and capital goods, which are used in themanufacture of final product are permissible to be set-off against
the excise duty liability on the final products under the CENVAT
Credit Rules, 2004.
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Could be availed only onduplicate copy of invoice
Contained provision that dutypaying document will be valid only
for 6 months.
Credit on capital goods could betaken immediately.
Can be availed on any copy ofinvoice.
CENVAT does not contain anysuch restriction.
Credit has to be taken in twoyearly instalments of 50% each.
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Basic-u/s 3 of the 'Central Excises and Salt Act' of
1944
Additional-u/s 3 of the 'Additional Duties of Excise Act'
of 1957
Special-u/s 37 of the Finance Act, 1978
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1. Specific Duty
2. Duty based on value(advalorem duty)
3. Duty based on the Tariff value
4. Duty based on maximum retail price
5. Duty based on transaction value
6. Compounded Duty
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Manufacturer or producer of goods, Those who-
i. personally manufacture the goods in question
ii. get the goods manufactured by employing hired labour
iii. get the goods manufactured by other parties
To pay 25-50% of the amount of duty evaded
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The Central Excise Tariff Act,1985
First Schedule-BasicExcise Duty is leviable
Second schedule-special Excise duty is
leviable
Third schedule-Deemedmanufacture in relation tovarious specified groups.
It is divided in 96 chapters grouped in 20 sections
8 digit classification code
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SECTION 1 ANIMAL PRODUCTS
SECTION 2 VEGITABLE PRODUCTS
SECTION 3 ANIMAL OR VEGS FATS
SECTION 4 PREPARED FOODSTUFF & BEVERAGES
SECTION 5 MINERAL PRODUCTS
SECTION 6 CHEMICALS, FERTILIZERS, SOAP ETC
SECTION 7 PLASTIC , RUBBER & THEIR ARTICLES
SECTION 8 LEATHER & ARTICLES
SECTION 9 WOOD , CORK, STRAW & THEIR ARTICLES
SECTION 10 PULP, PAPER PAPER BOARD ARTICLES
SECTION 11 TEXTILE & TEXTILE PRODUCTTS
SECTION 12 FOOTWEAR, HEADGEAR,UMBRELLAS,
SECTION 13 ARTICLES OF STONE, PLASTER,CERAMIC GLASS
SECTION 14 PEARLS & PRECIOUS METALS
SECTION 15 BASE METALS & ARTICLES OF BASE METALS
SECTION 16 MACHINERY,MECHANICAL APPLIANCES,ELECTRICAL EQUIPMENTS
SECTION 17 VEHICLES, AIRCRAFTS,VESSELS
SECTION 18
OPTICAL PHOTOGRAPHIC,MEDICAL,SURGICAL INSTRUMENTS,CLOCKSMUSICAL
INSTRUMENTS
SECTION 19 ARMS & AMMUNITION
SECTION 20 MISC MANUFACTURED ARTICLES LIKE FURNITURE TOYS ETC
SECTION 21 WORKS OF ART, COLLECTORS' PIECES & ANTIIQUES
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The basic rate of excise duty is 16%
there is a special duty if 8% which makes the excise duty in
those cases at 24%.
There is at present an education cess, which is 2% of theexcise duty
The effective excise duty comes out as 16.32% or 24.48%.
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Following items are included:
1. Primary packing or main packing or necessary packing.
2. Royalty charges.
3. Commission to sales agent
Following items are excluded:
1. Secondary packing.
2. Returnable primary packing like cold drinks bottles, LPG cylinders.
3. Discount given at the time of sales.
Assessable Value = (sale pricedeductions) /
(1+ rate of duty)
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Goods produced in a educational and research institute during the course of
technical training .
Goods produced in Government Factories, Mines, Mints, prisons Defence
Production etc.
Duty in excess of 10% is exempted on goods for supply to Gas Authority of India
Limited, Oil and Natural Gas Corporation Ltd., or the Oil India Limited.
Certain specified goods connected with solar and natural energy.
Specified goods used by units in Export Processing Zones/Free Trade Zones/100%
Export Oriented undertakings but not sold within India
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Hike in Excise Duty for non-taxi
SUVs
Change in rate for Chassis
Impact on Sales
Impact on Companies
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Imposed excise duty on Silver
Negative impact on the sector
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Indian Textile Industry is one of the leading textile industries in the world.
It contributes about 14% to industrial production, 4% to the GDP, and 17%
to the country's export earnings.
Estimated Size 89 Billion and expected to rise to 223 billion by 2021
Domestic Textile market in India is 58 billion and will grow to 141 billion
by 2021
It also provides direct employment to over 35 million persons which aresecond only after agriculture.
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4.5% in the world is the share of the textile market of India.
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Prices of garments had risen by near 25% ever since a net rise of 3.6% on
excise duty was introduced in 2012-13
The Indian ready made garment industry was limping.
The Centre had levied 10% central excise duty during 2010-11 and
increased to 12% during 2012-13 budget.
Roll back on Excise Duty to 0% Excise Duty
protection to the domestic industry from cheap Imports
encourage foreign retailers setting up shop in India to manufacture theirrequirements in India, rather than import from other countries
It will provide a much needed incentive to the brands and manufacturers
to grow, to scale up, and move to the organized sector
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leverage investments in technology up gradation in the Textiles and JuteIndustry
To overcome technological obsolescence
create economies of scale
The globalization of textiles trade mandated for financial assistance to
domestic industry
The benefits under the TUF Scheme are available for modernization /
expansion of existing units.
And for setting up of new units in various segments of textile and jute
industry.
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Excise Duty of 4% imposed on silver produced or manufactured during theprocess of zinc and lead smelting
cash-strapped government, raised import and excise duties on gold and
silver, hoping to mop up about 600 crore to improve their current account
deficit.
Negative Impact
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Import of raw silk
Hike from 5% to 15%
Silk fabric exports - uncompetitive
Impact on volumes (short term)
18% hike
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Excise duty on marble slabs and tiles increased from INR 30
per square meter to INR 60 per square meter
Excise duty on mobile phones with a value exceeding INR
2000 increased from 1 percent to 6 percent
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Abatement of 35% on excise duty on MRP based assessment
Ayurveda, homeopathy, Unani, Siddha & Bio-chemic
systems of medicines
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