Chapter 1 to 20 and 22, 23: No change

Chapter 21 and 24:

1) The additional duty of excise levied under the Seventh Schedule to the Finance Act, 2005 [commonly known as health cess] on non-filter and filter cigarettes of sub-heading 2402 20 is being increased. Clause 146 of the Finance Bill, 2017 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these increases will come into force with immediate effect. There is no change in the Basic Excise Duty leviable under the First Schedule to the Central Excise Tariff Act, 1985 and the NCCD leviable under Seventh Schedule to the Finance Act, 2001. The changes in additional duty of excise rates on cigarettes are summarized below.

Tariff Item Description Additional Duty of
Excise
(Rs. per 1000 sticks)
Existing
Rate
New Rate
2402 20 10 Non filter not exceeding 65mm 215 311
2402 20 20 Non-filter exceeding 65mm but not exceeding 70mm 370 541
2402 20 30 Filter not exceeding 65mm 215 311
2402 20 40 Filter exceeding 65mm but not exceeding 70mm 260 386
2402 20 50 Filter exceeding 70mm but not exceeding 75mm 370 541
2402 20 90 Other 560 811

2) Basic Excise Duty on other tobacco products falling under heading 2402 is being increased as under:

Tariff Item Description Basic Excise Duty rate
From To
2402 10 10 Cigar and cheroots 12.5% or Rs.3755 per thousand, whichever is
higher
12.5% or Rs.4006 per
thousand whichever is
higher
2402 10 20 Cigarillos 12.5% or Rs.3755 per thousand, whichever is
higher
12.5% or Rs.4006 per thousand whichever is
higher.
2402 90 10 Cigarettes of tobacco substitutes Rs. 3755 per thousand Rs. 4006 per thousand 2402 90 10
2402 90 20 Cigarillos of tobacco substitutes 12.5% or Rs.3755 per
thousand, whichever is
higher
12.5% or Rs.4006 per thousand whichever is
higher.
2402 90 20
2402 90 90 Others of tobacco substitutes 12.5% or Rs.3755 per
thousand, whichever is
higher
12.5% or Rs.4006 per thousand whichever is
higher.
2402 90 90

Clause 118 of the Finance Bill, 2017 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these increases will come into force with immediate effect.

3) The effective basic excise duty rate on Handmade Paper rolled biris and Machine made Paper rolled biris [ both falling under tariff item 2403 19 29] is being increased from Rs. 21 per thousand to Rs. 28 per thousand and from Rs. 21 per thousand to Rs. 78 per thousand However, there is no change in basic excise duty rate on other goods falling under tariff item 2403 19 29, which will continue to be Rs.21 per thousand. Notification No. 12/2012 -Central Excise dated 17.03.2012 as amended by notification No.6/2017-Central Excise dated 02.02.2017 [S.No.48 and new S.Nos.48A and 48B] refers.

4) The additional duty of excise levied under the Seventh Schedule to the Finance Act, 2005 [commonly known as health cess] on jarda scented tobacco, gutkha and chewing tobacco is being increased from 6% to 12%. Clause 146 of the Finance Bill, 2017 and notification No. 6/2005-Central Excise, dated the 1st March, 2005 as amended by notification No.3/2017- Central Excise dated 02.02.2017 [S.Nos.13, 15 and 20 are being omitted] refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these changes will come into force with immediate effect. Further, the effective rate of additional duty of excise levied under the Seventh Schedule to the Finance Act, 2005 on pan masala and unmanufactured tobacco, is being increased from 6% to 9% and 4.2% to 8.3% respectively. Notification No. 6/2005-Central Excise, dated the 1st March, 2005 as amended by notification No.3/2017- Central Excise dated 02.02.2017 [S.Nos.1 and 2] refers. There is no change in the Basic Excise Duty leviable under the First Schedule to the Central Excise Tariff Act, 1985 and the NCCD leviable under Seventh Schedule to the Finance Act, 2001.

5) The excise duty payable per machine per month under the Compounded Levy Scheme applicable to these products is being modified accordingly. Notification No. 16/2010-Central Excise, dated the 27th February, 2010 as amended by notification No.7/2017-Central Excise dated 02.02.2017, notification No. 42/2008-Central Excise, dated the 01.07.2008 as amended by notification No.4/2017-Central Excise dated 02.02.2017, Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 published vide notification No.11/2010 -Central Excise (N.T.), dated the 27.02.2010 as amended by notification No.3/2017-Central Excise (N.T.), dated 02.02.2017 and Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 published vide notification No.30/2008-Central Excise (N.T.), dated the 01.07.2008 as amended by notification No.2/2017-Central Excise (N.T.), dated 02.02.2017 refers. The changes in additional duty of excise rates on smokeless tobacco products as mentioned above are summarized below:

Commodity CETH Present
Health Cess (%)
Proposed
Health Cess (%)
Pan Masala 2106 90 20 6 9
Gutkha 2403 99 90 6 12
Unmanufactured Tobacco 2401 4.2 8.3
Chewing Tobacco 2403 99 10 6 12
Zarda Scented Tobacco 2403 99 30 6 12

Chapter 25 to 30: No change

Chapter 31:

1) Goods falling under heading 3101 of the Central Excise Tariff attract Nil Central Excise duty by tariff. Notification No.12/2012-Central Excise dated 17.03.2012 [S.No.128, which prescribed a concessional excise duty of 1% subject to certain conditions] is being amended so as to exclude goods falling under heading 3101 from the purview of the said entry. Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended by notification No.6/2017-Central Excise dated the 2nd February, 2017 [S. No. 128] refers.

Chapter 32 to 37: No change

Chapter 38 and 39:

1) Excise duty is being exempted on Catalyst [3815 90 00] and Resin [3909 40 90] for use in the manufacture of cast components of Wind Operated Electricity Generator subject to actual user condition. The exemption from excise duty will be valid till 30th June, 2017. Notification No. 12/2012-Central Excise, dated 17th March, 2012 as amended vide Notification No.6/2017-Central Excise, dated 2nd February, 2017, [new S. Nos. 145 B and 145C] refers.

2) Excise duty on Membrane Sheet and Tricot / Shaper, falling under tariff item 3921 19 00, for use in the manufacture of Reverse Osmosis (RO) membrane for household type filters is being reduced from 12.5% to 6% subject to actual user condition. This concessional excise duty will be valid till 30th June, 2017. Notification No.12/2012-Central Excise dated 17th March, 2012 as amended by Notification No.6/2012-Central Excise, dated 2nd February, 2017 [new S. No. 148AAA] refers

Chapter 40 to 69: No change

Chapter 70:

1) Excise duty exemption on solar tempered glass for use in the manufacture of (a) solar photovoltaic cells or modules, (b) solar power generating equipment or systems, (c) flat plate solar collectors, or (d) solar photovoltaic module and panel for water pumping and other applications, [under S. No 187 C and List 8 of S. No. 332 A of Notification No. 12/2012- Central Excise dated 17th March, 2012] is being withdrawn, and 6% concessional excise duty is being imposed on such solar tempered glass, subject to actual user condition. This 6% concessional excise duty will be valid till 30th June, 2017. S. No. 187C and S. No. 332 A of Notification No. 12/2012-Central Excise, dated 17th March, 2012 as amended vide Notification No.6/2017- Central Excise, dated 2nd February, 2017 refers.

2) Excise duty is being reduced from 12.5% to 6% on parts/raw material for use in the manufacture of solar tempered glass, for use in (a) solar photovoltaic cells or modules; (b) solar power generating equipment or systems, (c) flat plate solar collectors, or (d) solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition. This 6% concessional excise duty will be valid till 30th June, 2017. Notification No. 12/20 12- Central Excise, dated 17th March, 2012 as amended vide Notification No.6/20 17- Central Excise, dated 2nd February, 2017 [new S. No. 1 87D] refers.

Chapter 71

1) Nil excise duty, on waste and scrap of precious metals or metals clad with precious metals, arising in course of manufacture of goods, is being made subject to condition that no credit of input or input services or capital goods has been availed by manufacturers of such goods. S. 195 of Notification No. 12/2012-Central Excise dated 17.03.2012 as amended by Notification No.6/2017- Central Excise dated 02.02.2017 refers.

2) Nil excise duty, on strips, wires, sheets, plates and foils of silver, is being made subject to condition that no credit of input or input services or capital goods has been availed by  manufacturers of such goods. S. No. 196 of Notification No. 12/2012-Central Excise dated 17.03.2012 as amended by Notification No.6/2017- Central Excise dated 02.02.2017 refers

3) Nil excise duty, on articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire, is being made subject to condition that no credit of input or input services or capital goods has been availed by manufacturers of such goods. S. No. 199 (III) of Notification No. 12/2012-Central Excise dated 17.03.20 12 as amended by Notification 6/2017- Central Excise dated 02.02.2017 refers.

4) Nil excise duty, on Silver coins of purity 99.9% above, bearing a brand name, is being made subject to condition that no credit of input or input services or capital goods has been availed by manufacturers of such goods. S. No. 200 (III) of Notification No. 12/2012-Central Excise dated 17.03.2012 as amended by Notification No.6/2017- Central Excise dated 02.02.2017 refers.

Chapter 72 to 83: No change

Chapter 84 and 85:

1) Excise duty is being exempted on Micro ATMs as per standards version 1.5.1, fingerprint reader / scanner, and Iris Scanner. Further, excise duty is also being exempted on parts and components for manufacture of these devices, subject to actual user condition. This exemption from excise duty will be valid till 30th June, 2017. Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended vide Notification No.6/20 17- Central Excise, dated 2nd February, 2017, [new S. No. 256C] refers.

2) Excise duty is being exempted on miniaturised POS card reader for mPOS (other than Mobile phone or Tablet Computer). Further, excise duty is also being exempted on parts and components of miniaturised POS card reader for use in the manufacture of miniaturised POS card reader for mPOS (other than Mobile phone or Tablet Computer), subject to actual user This exemption from excise duty will be valid till 30th June, 2017. Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended vide Notification No.6/2017- Central Excise, dated 2nd February, 2017, [new S. No. 256C] refers.

3) Point of Sale [POS] devices and all goods for manufacture of POS devices subject to actual user condition were exempted from central excise / CV duty Vide Notification No.35/2016- Central Excise, dated 28th November, 2016. These exemptions which are valid till 31st March 2017 are being extended up to 30.06.20 17.

Chapter 87:

1) Excise duty on Motor Vehicles falling under tariff items 8702 90 21, 8702 90 22, 8702 90 28 and 8702 90 29 is being reduced from 27% to 12.5% retrospectively from 1st January, 2017. Clause 119 of Finance Bill, 2017 refers. With effect from 11.01.2017, vide S.No.277A of notification No.12/2012-Central Excise, dated 17.03.2012, these goods already attract excise duty of 12.5%.

Chapter 88 to 96: No change

Miscellaneous:

1) 6% concessional excise duty is being prescribed for all items of machinery, including, instruments, apparatus and appliances, transmission equipment and auxiliary equipment (including those required for testing and quality control) and components/parts, required for initial setting up of fuel cell based system for generation of power or for demonstration purposes subject to certain conditions. The concessional excise duty will be valid till 30th June, 2017. Notification No.5/2017- Central Excise dated 2nd February, 2017 refers.

2) 6% concessional excise duty is being prescribed for all items of machinery, including, instruments, apparatus and appliances, transmission equipment and auxiliary equipment (including those required for testing and quality control) and components/parts, required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen, subject to certain The concessional excise duty will be valid till 30th June, 2017. Notification No.5/2017- Central Excise dated 2nd February, 2017 refers.

3) 6% concessional excise duty, currently applicable to LED (Light Emitting Diode) driver and MCPCB (Metal Core Printed Circuit Board) for use in the manufacture of LED lights and fixtures or LED lamps [S. No. 321A of Notification No. 12/2012- Central Excise dated 17th March, 2012 refers], is being extended to all parts for use in the manufacture of LED lights or fixtures including LED Lamps subject to actual user condition. This 6% concessional excise duty will be valid till 30th June, 2017. S.No.321A of Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended vide Notification No.6/2017- Central Excise, dated 2nd February, 2017 refers.

CLARIFICATION

The Sub-section (1) of Section 3 of the Central Excise Act, 1944, provides for levy of excise duty, on goods produced or manufactured in India at rates specified in the First and Second Schedule to the Central Excise Tariff Act, 1985. However, as per the proviso to the said sub-section, goods produced or manufactured by Export Oriented Units [EOUs] units and cleared to domestic tariff area [DTA] are liable to excise duty equal to the aggregate of duties of customs leviable on like goods when imported into India. For such clearances from EOUs to DTA, Notification No. 22/2003-CE dated 31.03.2003 prescribes effective rates of excise duty on such DTA clearances under different circumstances.

In this context, proviso to sub-section (1) of section 5A of the Central Excise Act, 1944 states that unless specifically provided in a notification, no exemption therein shall apply to excisable goods which are produced or manufactured by an EOU and cleared to the DTA.

Further, EOUs are eligible for duty free import or domestic procurement of their inputs or raw materials under Notification No. 22/2003-CE dated 31.3.2003 and Notification No. 52/2003- Customs dated 31.03.2003. However, as per a proviso [the second proviso to para 6 in case of Notification No. 22/2003-CE and first proviso to para 3 in case of Notification No. 52/2003- Customs], if the goods produced or manufactured by EOUs and cleared to DTA if imported are either non-excisable or leviable to Nil basic customs duty [BCD] and additional duty of customs [C\TD], then EOUs cannot avail the exemptions under these notifications on inputs utilized in manufacture/processing/packaging etc. of such goods [cleared to DTA].

In addition, there are a number of customs and excise duty exemption notifications which prescribe concessional [including Nil] duty rates on specified goods [inputs/raw materials etc.] for use in manufacture of specified goods, subject to conditions prescribed. In this context, it has been stated that EOUs are not able to avail benefit of such exemptions on inputs imported or procured domestically by them.

The matter has been examined. As mentioned in para 2 above, non-applicability of exemptions under notifications issued under section 5A of the Central Excise Act, 1944 is only in respect of excisable goods produced or manufactured by an EOU and cleared to DTA and not in respect of inputs/raw materials procured by them domestically and utilised for production/manufacture of goods which are cleared by them to DTA.

In view of the above, it is hereby clarified that EOUs will also be eligible to import or procure raw materials/inputs at other concessional/Nil rate of BCD, excise duty/CVD or SAD, as the case may be, provided they fulfill all conditions for being eligible to such concessional or Nil duty. For these purposes, if an EOU is already registered with the jurisdictional Central Excise Authority, it will not be required to take any fresh registration under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 or the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016, as the case may be. Further, there will be no need for an EOU to separately comply with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 for availing the CVD exemption, if the procedure under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule, 2016 is followed by it for availing exemption / concession from BCD on imports of inputs/raw materials.

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