Article explains Changes in Excise duty proposed/carried out by Union Budget 2021 and explains Amendment in Fourth Schedule , Retrospective amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944, Amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944, Imposition Of Agriculture Infrastructure And Development Cess (AIDC) On Petrol And Diesel, Change In Effective Rate Of Basic Excise Duty And Special Additional Excise Duty On Petrol And Diesel [to be effective from 02.02.2021], Exemptions For M-15, E-20 And Other Blended Fuels and Amendments in the Schedule VII of the Finance Act 2001 (NCCD Schedule).

I. Amendment in Fourth Schedule

1. Amendment in Fourth Schedule made by Notification No. 08/2019-CE (N.T.) dated 31.12.2019 shall be made effective w.e.f. 01.01.2020, retrospectively. [Clause 98]

Clause 98 of the Finance Bill 2021 seeks to revise the date of effect to the amendments made in the Fourth Schedule to the Central Excise Act vide notification number G.S.R. 978 (E), dated the 31st December, 2019, issued in exercise of powers under section 3C thereof, so as to give effect to said amendments on and from the 1st day of January, 2020.

2. New tariff items [2404 11 00] and [2404 19 00] inserted in Chapter 24 in the fourth Schedule of the Central Excise Act, 1944 accordance with upcoming Harmonised System 2022 Nomenclature and to prescribe tariff rate of 81% on these tariff items with effect from 01.01.2022. [Clause 96 (ii)]

Clause 96 of the Finance Bill 2021 seeks to amend the Fourth Schedule to the Central Excise Act.

Sub-clause (ii) of the said clause seeks to amend Section heading of SECTION IV and certain entries of Chapter 24 thereof, with effect from the 1st January, 2022 in the manner specified in the Sixth Schedule.

II. Retrospective amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944.

1. (i) It is proposed to specify correct IS “17076” against the tariff item 27101249 and made effective from 01.01.2020, retrospectively. [Clause 97 (i)]

2. (ii) It is proposed that tariff rate of 14%+ Rs. 15.00 per litre against tariff item 2710 20 10 and 2710 20 20 may be prescribed and made effective from 01.01.2020, retrospectively. [Clause 97 (ii) and 97 (iii)]

Text of the Relevant Clause of the Finance Bill 2021

Clause 97 of the Bill seeks to amend the Fourth Schedule to the Central Excise Act so as to rectified errors in certain entries with retrospective effect from the 1st day of January, 2020.

III. Amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944.

Tariff items 2709 10 00, 2709 20 00, and the entries are being substituted relating thereto as under: [to be made effective from 01.04.2021] [Clause [96(i)] of the
Finance Bill, 2021]
Tariff Item Description of goods Unit Rate of duty
2709 Petroleum oils and oils obtained from bituminous minerals, crude
2709 00 10 petroleum crude Kg. Nil
2709 00 20 other Kg. …..

Text of the Relevant Clause of the Finance Bill 2021

Clause 96 of the Bill seeks to amend the Fourth Schedule to the Central Excise Act.

Sub-clause (i) of the said clause seeks to revise the heading, tariff items and entries falling under the heading 2709 of Chapter 27 thereof, with effect from the 1st April, 2021 in the manner specified in the Fifth Schedule;

IV. Imposition Of Agriculture Infrastructure And Development Cess (AIDC) On Petrol And Diesel

An Agriculture Infrastructure and Development Cess (AIDC) as an additional duty of excise has been proposed on Petrol and High speed diesel vide Clause [116] of the Finance Bill, 2021. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure. The details of the cess are as under:

S. No. Commodity Rate of AIDC [Clause [116] of the Finance Bill, 2021]*
1 Motor spirit commonly known as petrol Rs. 2.5 per litre
2 High speed diesel Rs. 4 per litre

*Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Text of the Relevant Clause of the Finance Bill 2021

Clause 116 of the Bill seeks to provide for levy and collection of Agriculture Infrastructure and Development Cess as an additional duty of excise, on excisable goods specified in the Seventh Schedule, at the rate specified in the said Schedule, for the purposes of the Union for financing the agriculture infrastructure and other development expenditure.

V. Change In Effective Rate Of Basic Excise Duty And Special Additional Excise Duty On Petrol And Diesel [to be effective from 02.02.2021]

Consequent to imposition of AIDC, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on Petrol and High-speed diesel is being reduced so that consumer does not have to bear any additional burden on account of imposition of AIDC. The revised duty structure on petrol and HSD shall be as follows.

A Item BED
(Rs/Ltr)
SAED
(Rs/Ltr)
AIDC
(Rs/Ltr)
1 Petrol (unbranded) 1.4 11 2.5
2 Petrol (branded) 2.6 11 2.5
3 High speed diesel (unbranded) 1.8 8 4
4 High speed diesel (branded) 4.2 8 4

VI. Exemptions For M-15, E-20 And Other Blended Fuels

S. No. Amendment to central excise notifications
1. Exemptions from cesses and surcharges on the lines of other blended fuels (like E-5 and E-10) if these blended fuels are made of duty paid inputs

VII. Amendments in the Schedule VII of the Finance Act 2001 (NCCD Schedule)

1. New tariff items [2404 11 00] and [2404 19 00] inserted in accordance with upcoming HS 2022 Nomenclature and prescribe NCCD of 25% on these tariff items with effect from 01.01.2022.

Note:

(a) “Basic Excise Duty” means the excise duty set forth in the Fourth Schedule to the Central Excise Act, 1944.

(b) “Road and Infrastructure Cess” means the additional duty of central excise levied under section 112 of the Finance Act, 2018.

(c) “Special Additional Excise Duty” means a duty of excise levied under section 147 of the Finance Act, 2002.

(d) “NCCD” means National Calamity Contingency Duty levied under Finance Act, 2001, as a duty of excise on specified goods at rates specified in seventh schedule to Finance Act, 2001

(e) Clause Nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2021.

(f) Amendments carried out through the Finance Bill, 2021 come into effect on the date of its enactment, unless otherwise specified.

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