CA Pradeep Jain & Hushen Ganodwala
Recently, Our Finance Minister, Arun Jaitley has increased the rate of excise duty from 12.36% (Including Education Cess and SHE Cess) to 12.5% (without any Education Cess and SHE Cess) for most of the products. In addition to this, amendments have also been made in the exemption notification no. 12/2012-CE dated 17.03.2012. This article is an attempt to analyse the amendment in rate of excise duty made in chapter sub-heading 3923. The Fifth Schedule of the Finance Bill, 2015 in clause (b) for entry in column (4) specifies the rate of excise duty for tariff items 39232100, 39232910 and 39232990 as “18%”.
However, if the new serial numbers 148B, 148C and 148D inserted in the notification no. 12/2015-CE dated 01.03.2015 are pursued, it is found that exemption is also available for the product “sacks and bags”. The relevant entries are produced for the sake of convenient reference as follows:-
|Sl.No.||Tariff Heading||Description of product||Rate of duty|
|“148B||3923 21 00||Sacks and bags, other than for industrial use||15%|
|148C||3923 21 00||All goods, other than goods mentioned at Sl. No. 148B above||12.5% –|
|148D||3923 29||All goods||12.5%|
From the above table we find that rate of excise duty has been increased from 12% to 15% on Sacks and bags falling under 39232100 other than for industrial use. Alternatively, we can say that sale of sacks and bags to Industrial use, in such case excise duty attracts at the rate 12.5% and not 15%. Furthermore, the duty for all goods of 392329 is specified as 12.5% in the exemption notification. Consequently, the rate of excise duty for 39232910 and 39232990 is 12.5%.
It is submitted that the overall effect of the amendment is that the rate of excise duty for chapter 3923 pertaining to Sacks and Bags is as follows:-
|Heading||Rate of excise duty|
|39232100 other than industrial use||15%|
|39232100 for industrial use||12.5%|
It is further submitted that the net result is that the sacks and bags for other than industrial use will be leviable to excise duty at the rate of 15% whereas all other sacks and bags will be leviable to excise duty at the rate of 12.5%. In the opinion of authors, the practice of the government to resort to such a complicate procedure to specify the rate of excise duty for “sacks and bags” is not understandable. When the government had to keep rate of excise duty for all sacks and bags at 12.5% and those used for other than industrial use at 15% then what was the need to specify the rate of excise duty as 18%? And also the approach to amend the notification. All bags and sacks are chargeable general rate of 12.5%. The only exceptional rate applicable to 39232100 is 15% if have other than industrial use.
Well, the tactics of government are known to them best, but this amendments is surely going to keep the manufacturers of “Sacks and bags” busy in determining the rate of excise duty applicable on their product.