By TIOL News Service

NEW DELHI, Feb 28, 2006 : ON a request from the computer manufacturers, the kind Finance Minister has imposed a benevolent excise duty of 12% on computers which he justifies by saying that this is to enable the computer manufacturers to avail CENVAT credit. Whether this will increase the prices of computers is to be seen. The FM is more kind to cars than computers. The 24% excise duty on the small cars will come down to 16%. Maruti and Hyundai were quick to announce reduction in their car prices. If your small car is not air-conditioned, this summer you can quench your thirst with low cost Coke and Pepsi for the duty on aerated water with or without pesticides has come down. A cool summer for the fizz industry. The FM brought the whole house down with his exemption to idly, dosa ready mix from 16% to 8%. While going with the cool trend ice cream is totally exempted.

Excise duty reduced from 16% to nil on ice cream, condensed milk and pasta. Ready to eat foods like idly mix, pongal mix etc., to cost less in view of reduction of excise duty from 16% to 8%. In yet other sop to leather industry certain tanning extracts are totally exempted and footwear costing between Rs. 250/- and Rs. 750/- will now attract 8% instead of 16%. Footwear less than Rs. 250/- is already exempted. Excise duty is reduced on printing, writing and packing paper from 16 to 12% and on manmade fibres from 16 to 8%. Processed meat and fish will now be totally exempted from excise duty. Cooking will be slightly cheaper now, if you go for a new sophisticated stove. Hitherto stoves valued upto Rs. 2000/- were exempted; now stoves are exempted without any value limit. However, don’t go for a stove with a grill or oven if your want the exemption.

NEW LEVY:

Silently the FM has introduced 8% excise on several articles like Goggles, Articles of wood, Mica, Account books, Letter pads, Roofing tiles, Paper labels etc. If you are big enough to admit that you are old, your walking-stick is going to be costlier. 8% excise duty has been imposed on parts of walking sticks.

There is 16% excise duty on umbrellas, parts of motor vehicles transferred to a sister unit, railway track machines and Gudaku. Sulphur will attract a 16% duty however it is exempted when it is used in the manufacture of fertilisers.

RSP

While the duty on aerated waters has been reduced from 24% to 16% the abatement has also been reduced from 45% to 42.5%. While excise duty has been imposed on computers and packaged software, DVD drives, Flash drives and Combo drives are now duty-free. Music is going to the cheaper and MP3 players with MPEG4 attracting reduced duty of 8% instead of 16%.

The health tax

As campaigned by the TIOL, the FM has increased the excise duty on cigarettes by a marginal 5%. This he did as a duty to the nation.

DTA clearances of EOUs

Now the Customs duty component has been reduced from 50% to 25%. The TRU letter explained the calculation of duty but unlike last time it does not mention about the computation of education cess twice, thrice or even once.

Large number of exemptions withdrawn

Many of the products manufactured without the aid of power which were exempted will now come under the excise net and this would include Perfumes, Bricks, Tiles, Padlocks, Metal containers, Soap, Wood, Biscuits, Marbles slabs and tiles and Sugar. Similarly exemption given to unbranded products has been withdrawn, and unbranded products like churan for pan and mineral water will attract excise duty.

Exemption to certain industries like Cashew, Tanning, and Coir is withdrawn however these products will continue to be exempted unconditionally. Exemption for durable packing for certain specified goods is also withdrawn. But this notification had become redundant six years ago.

No second schedule and no AED,(GSI)

All goods covered under the second schedule and AED( GSI) are exempted now.

Products

1) Marble – Cutting, or sawing or sizing of marble will amount to manufacture.

2) Food colouring matter – Labelling or re-labelling, repackaging from bulk packs will amount to manufacture.

3) Plastics – Process of metallization amounts to manufacture.

4) Steel –Drawing into bright bar amounts to manufacture.

5) Steel tubes – Coating with cement amounts to manufacture.