India Tax & Regulatory

Indirect Tax Alert

IDTX/5/2011 28 March 2011 In this issue:

Central Excise Notifications Custom Notification Contacts

The following are the significant changes made to the Finance Bill 2011:

Central Excise Notifications1 Changes in excise duty structure on textile goods

Branded ready-made garments which are returned to the factory and cleared there from after being re-made, re-conditioned, repacked are exempted from payment of excise duty subject to the following conditions: CENVAT credit on the returned goods is not availed an intimation is submitted to the jurisdictional Central Excise Authority within 48 hours of receipt of the returned goods account of receipt and disposal of such goods provided in monthly return aggregate value of the returned goods does not exceed 10% of the aggregate value of clearances for home consumption in the preceding financial year. The assessable value fixed at 45% instead of 60% of Retail Sale Price (RSP) Small manufacturers who sell the branded garments to the brand owners to pay duty as per the transaction value and not on the basis of RSP

Changes in the excise duty structure on goods subject to 1% Excise Duty

Significant items on which abatement of 35% provided Coffee or tea premixes Sauces, ketchup and the like and the preparation therefor Ready to eat packaged food Ink for fountain pen, ball pen and drawing Tooth powder Surgical rubber gloves or medical examination gloves Radio trunking terminals Recorded Audio CD, Video CD and DVD

Waste, parings and scrap arising in the manufacture of such goods exempted from excise duty Assessees manufacturing only such goods shall file quarterly return in the notified form.

Change in Excise duty structure of Mobile handsets including cellular phones

Mobile handsets including cellular phones subjected to excise duty of 1% ad valorem without any restriction on availment of CENVAT credit and abatement of 35% provided for levy of duty on RSP. Waste, parings and scrap arising in the manufacture of such goods exempted from excise duty.

SSI Exemption
Explanation inserted in the Notification providing SSI exemption to the manufacturers to clarify that packing material includes labels of all kinds. Thus labels meant for use in packing by or on behalf of the person whose brands they bear shall be entitled to SSI exemption.

Custom Notification2
Custom duty concession on Motor Cars and Motor Cycles when imported as a completely knocked (CKD) down kit

Description of goods
Motor cars and motor cycles imported as a CKD kit with: engine, gearbox and transmission mechanism not in a pre-assembled condition engine or gear box or transmission mechanism in pre-assembled form but not mounted on a chassis or a body assembly in any other form

Effective Rate

10% 30% 60%

Source
1. Notification No.20/2011-Central Excise, Notification No. 21/2011-Central Excise, Notification No.22/2011-Central Excise, Notification No.27/2011-Central Excise, Notification No.28/2011-Central Excise, Notification No. 31/2011Central Excise, Notification No. 8/2011-Central Excise (N.T),Notification No. 11/2011-Central Excise (N.T), Notification No. 12/2011-Central Excise (N.T) dated March 24, 2011 2. Notification No. 31/2011-Customs dated March 24, 2011

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