SALIENT FEATURES OF BUDGET 2004-05 CENTRAL EXCISE

SALIENT FEATURES OF BUDGET 2004 05 <!--[if gte mso 10]> SALIENT FEATURES OF BUDGET 2004‑05 CENTRAL EXCISE By Mr. Akhtar Javed, Advocate, Lahore Salient features of Budget 2004‑05 relating to central excise measures taken by the Government are given in the following para graphs. Detail comments on budgetary measures for the year 2004‑05 will follow soon. 1. Imposition of central excise duty on edible oils vegetable ghee and cooking oil: 1.1 Central excise duty @ 15 % ad val has been levied on locally manufactured and imported edible oil vegetable ghee and cooking oil.‑‑‑The third proviso subsection (1) of section 3 of the Central Excises Act, 1944 (which was inserted in July 2000) empowers the Federal Government to notify the excisable services on which central excise duty shall be levied and collected as if it were a sales tax under section 3 of the Sales Tax Act, 1990 and all the provisions of that Act and the rules, notifications, orders and instructions made or issued thereunder shall apply. In exercise of those powers, Federal Government had issued S.R.O. 617(I)/2000 dated 2‑9‑2000 through which the following three services had been notified on which excise duty was t6 be collected in the mode of sales tax: Domestic travel by air, by train, in AC and by train in 1st Class Sleeper. Carriage of goods by air. Services provided or rendered by persons engaged in telecommunication work. 1.2 Necessary amendments have been made in third proviso to subsection (1) of section 3 and the Federal Government has also been empowered to notify excisable goods on which excise duty shall be collected in the mode of sales tax. This amendment has been given immediate effect. 1.3 S.R.O. 617 has been superceded vide S.R.O. 503(I)/2004 dated 12‑6‑2004 and the following goods and services have been notified on which excise duty will be charged in the mode of sales tax. Edible oil of PCT heading 15.07, 15.08, 15.09, 15.10, 15.11, 15.12, 15.13, 15.14, 15.15, 15.16, 15.17, 15.18. Vegetable ghee and cooking oil of respective heading Advertisement on closed circuit TV of heading 9802.3000 Advertisement on cable TV network of heading 9802.5000 Facilities for inland travel of heading 9803.1000, 9803.2010, 9803.2020, 9803.2030 Carriage of goods by air of heading; 9804.1000 Services provide or rendered by shipping agents authorized to transact business on behalf of others of heading 9805.1000 Services provided or rendered by persons engaged in telecommunication work in respect of telephone, telegraph, telex, telefax and alike of heading 9812.1000, 9812.2000, 9812.3000, 9812.4000 & 9812.9000. 1.4 Every manufacturer, dealer or a person specified in rule 14 of the Central Excise Rules, 1944 is required to get central excise license however, necessary amendment has been made in sub rule (3) of rule 74 and a proviso has been added which says that the manufacturer or producer of vegetable ghee and cooking oil paying central excise duty in the mode of sales tax shall not be required to obtain central excise license. 1.5 Corresponding amendments have also been made in the Sales Tax Act, 1990 and exemption of sales tax has been granted on import and supply of edible oils and vegetable ghee including cooking oil on which central excise duty is charged, levied and collected as if it were a sales tax. 2. Exemption of central excise duty on Fruit Juices. Syrups, Squashes and non‑aerated waters: 2.1 Central excise duty was levied on following items @ 10% of the retail price: Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter of heading, 20.09. Syrups and squashes (other than syrup concentrates for beverages) of heading 2106.9020. Other syrups and squashes of heading 2106.9090 2.2 Central excise duty on above referred fruit juices and vegetable juices, syrups and squashes has been withdrawn with immediate effect. Necessary amendment in S.R.O. 333(1)/2002 dated 15‑6‑2002 has been made through S.R.O. 502(1)/2004 dated 12‑6‑2004. 2.3 Central excise duty was levied on non‑aerated waters con taining added sugar or sweetening matter or flavoured of heading 2202.1090 @ 10% of the retail price. Central excise duty on said non‑aerated waters containing added sugar or sweetening matter or flavoured has been withdrawn with immediate effect. Necessary amendment in S.R.O. 333(1)/2002 dated 15‑6‑2002 has been made through S.R.O. 502(1)/2004 dated 12‑6‑2004. 3. Exemption of central excise duty on paints, varnishes, lacquers and distempers: 3.1 Central excise duty was levied on following items @ 10% of the retail price paints and varnishes including enamels and lacquers based on synthetic polymer or chemically modified natural polymers dispersed or dissolved in a non‑aqueous medium of heading 32.08. paints and varnishes including enamels and lacquers based on synthetic polymer or chemically modified natural polymers dispersed or dissolved in an aqueous medium of heading 32.09. paints and varnishes including enamels, lacquers and, distempers; prepared water pigments of a kind used for finishing leather of heading 32.10. prepared driers of heading 32.11. 3.2 Central excise duty on above referred paints and varnishes including enamels, lacquers, distempers and prepared driers has been withdrawn with immediate effect. Necessary amendment in S.R.O. 333(1)/2002 dated 15.06.2002 has been made through S.R.O. 502(1)/2004 dated 12‑6‑2004. 4. Rationalization of duty structure on cigarettes: 4.1 Price and excise duty structure on cigarettes have been revised upward. The new and old price / duty structure is given below. The rate of central excise duty on imported cigarettes will however, remain the same i.e. 63% of the retail price across the Board. (i) If retail price of locally produced cigarettes exceeds twelve rupees per ten cigarettes. Sixty‑three per cent of the retail price. (ii) If retail price of locally produced cigarettes exceeds five rupees and thirty‑two paisa per ten cigarettes but does not exceed twelve rupees per ten cigarettes. Two rupees and twenty‑seven paisa per ten cigarettes plus sixty‑nine per cent per incremental rupee or part thereof. (iii) If retail price of locally produced cigarettes does not exceed five rupees and thirty‑two paisa per ten cigarettes. Two rupees and twenty‑seven paisa per ten cigarettes."; 4.2 Adjustment of excise duty paid on unmanufactured tobacco: Central excise duty paid on un‑manufactured tobacco has been made adjustable against the central excise duty payable on cigarettes manufactured therefrom as per procedure laid down in Central Excise General Order No. 02/2003. 5. Exemption of central excise duty on clinkers used in the same cement factory: 5.1 Central excise duty on clinkers used in the same cement factory has been withdrawn with immediate effect. The cement manufacturers will no more be required to follow the provisions of Chapter X of Central Excise Rules, 1944. Necessary amendment in S.R.O. 333(1)/2002 dated 15‑6‑2002 has been made through S.R.O. 502(1)/2004 dated 12‑6‑2004. 6. Reduction in rate of central excise duty on mineral greases: 6.1 Mineral greases of heading 2710.1992 were liable to excise duty @ 50 % ad. vat. The rate of central excise duty on these mineral greases has been reduced from 50% to 25% with immediate effect. Necessary amendment in S.R.O. 333(1)/2002 dated 15‑6‑2002 has been made through S.R.O. 502(1)/2004 dated 12‑6‑2004. 7. Imposition of central excise duty on advertisement on closed circuit TV: 7.1 Advertisement on closed circuit TV of heading 9802.3000 was previously exempt. from payment of central excise duty. Central excise duty @ 15 % of the charges has been imposed on advertisement on closed circuit TV which shall' be collected in the mode of sales tax. The registered person providing or rendering the aforesaid services of advertisement on closed '`circuit TV will be required to get himself registered with sales tax and will be required to issue sales tax invoices and the person receiving those services will be entitled for refund / adjustment of input tax. 8. Imposition of central excise duty on advertisement on cable TV network: 8.1 Advertisement on cable TV network of heading 9802.5000 was previously exempt from payment of central excise duty. Central excise duty @ 15 % of the charges has been imposed on advertisement on cable TV network which shall be collected in the mode of sales tax. The registered person providing or rendering the aforesaid services of advertisement on fable TV network will be required to get himself registered with sales tax and will be required to issue sales tax invoices and the person receiving those services will be entitled for refund / Adjustment of input tax. 9. Imposition of central excise dues on services rendered by shipping agents: 9.1 Services rendered by shipping agents of heading 9805.1000 were previously exempt from payment of central excise duty. Central excise duty @ 15 % of the charges has been imposed on advertisement on services rendered by shipping agents which shall be collected in the mode of sales tax. The registered person providing or rendering the aforesaid services of shipping agents will, be required to get himself registered with sales tax and will be required to issue sales tax invoices and the person receiving those services will be entitled for refund/adjustment of input tax. Special Procedure for Collection of Central Excise Duty has been notified by inserting a new Rule 96ZZK in the Central Excise Rules, 1944. 2. This information is being passed on to you as part of our regular dissemination programme in lieu of the monthly Retainership.