INDIAN FISCAL BUDGET 1996-97


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CUSTOMS
(Effective from 23.7.1996 )

ABBREVIATIONS

CT : First Schedule to the Customs Tariff Act, 1975 (51 of 1975)
AD : Additional duty of customs

The proposals include the following:-

The First Schedule to the Customs Tariff Act, 1975 is being amended vide relevant clause of the Bill to give effect to the tariff changes relating to the Customs Duties.

Major Proposals involving changes in rates of duty, whether by amendment of tariff rates or by notifications.

Reduction in customs duty on edible oils (other than coconut oil, RBD palm oil, RBD palm kernel oil and palm stearin) from 30% to 20%.
Peak rate reduction in customs duty on:
1. specified dairy produce and edible products from 40% to 30%;
2. mate and spices to 30%;
3. animal and vegetable fats and oils and prepared edible fats from 50% to 40%;
4. cocoa and cocoa preparations from 50% to 40%;
5. non -metallic mineral products, other than DBM, from 50% to 40%.
Reduction in customs duty on:
1. dates falling under sub-heading No. 0804.10 of CT from 40% to 30%;
2. specified fresh fruits falling under sub-heading No. 0810.90 of CT from 50% to 10%;
3. pectic substances falling under sub-heading No. 1302.20 of CT from 50% to 20%;
4. soya bean oil falling under heading No. 15.07 of CT from 35% to 30%;
5. olive oil from 45% to 30%;
6. rape, mustard and colza oils from 35% to 30%;
7. lactose and lactose syrup from 25% to 20%;
8. preparation for infant use put up for retail sale, falling under sub-heading No.1901.10 of CT, from 15% to 10%;
9. compound alcoholic preparations used in the manufacture of beverages from 200% to 195%;
10. specified minerals from 30% to 25%;
11. ) natural borates and concentrates thereof from 50% to 25%.
Increase in customs duty on :
1. products of milling industry such as wheat flour, cereal flour and wheat gluten from 10% to 30%;
2. beer made from malt, grape must and fermented beverages from 145% to 150%.
1. Prescribing uniform customs duty of 10% on ethyl alcohol and other spirits, denatured of any strength.
2. Prescribing uniform customs duty of 150% on all wines not containing more than 42% of proof-spirit in place of specific-cum ad valorem or ad valorem rates of duty.
Reduction in customs duty on:
1. petroleum crude from 35% to 25%;
2. non-coking coal from 35% to 20%;
3. coke from 25% to 20%;
4. bitumen from 30% to 10%.
Exemption from AD on bitumen falling under sub-heading No., 2714.90 for manufacture of fertiliser and generation of power.
Full exemption from customs duty (Basic + AD) on bitumen for manufacture of fertilizer.
Peak rate reduction in customs duty on:
1. inorganic chemicals of Chapter 28 of CT from 50% to 40%;
2. organic chemicals of Chapter 29 of CT from 50% to 40%.
Reduction in customs duty on:
1. caustic soda and soda ash from 40% to 30%;
2. iodine from 25% to 10%;
3. heavy water and specified radio active materials from 15% to 10%;
4. zirconium oxide and yttrium oxide (used in manufacture of synthetic stones) from 20% to 10%;
5. cyclohexane,toluene,cumene and acrylonitrile from 20% to 10%;
6. MEG, DMT and PTA from 35% to 25%;
7. caprolactum from 45% to 30%;
8. acetic acid, adipic acid and its salts,tartaric acid and camphor sulphonic acid from 40% to 25%;
9. hydantoin and its derivatives from 50% to 25%;
10. phenol and its salts and vinyl pyridine monomer from 40% to 30%;
11. specified amino acids from 15% to 10%.
Reduction in peak rate of customs duty on pharmaceutical products from 50% to 40%.
Reduction in customs duty on:
1. specified drugs falling under Chapter 30 of CT from 50%/25% to 20% ;
2. specified bulk drugs falling under Chapter 29 of CT from 50%/25% to 20% ;
3. codeine phosphate and narcotine from 25% to 20% ;
4. specified veterinary drugs and other products from 15% to 10%.
Full exemption from customs duty on all chemicals used for manufacture of contraceptive, centchroman.
Peak rate reduction in customs duty on:
1. fertilisers ( other than exempted) from 50% to 40%;
2. dyes, colours and paints except heading No.32.01 of CT from 50% to 40%;
3. chemicals of Chapters 32, 35 and 36 from 50% to 40%;
4. glues and enzymes from 50% to 40%;
5. explosives and pyrotechnic products from 50% to 40%;
6. photographic goods from 50% to 30%;
7. miscellaneous chemical products from 50% to 40%.
Reduction in customs duty on goods falling under heading No.32.01 of CT from 20% to 10%.
Full exemption from customs duty on potassium nitrate for use as fertilizer.
Reduction in customs duty on:
1. wattle, quebracho and chestnut extracts from 20% to 10%;
2. oleoresins extracts from 25% to 20%;
3. photographic paper, paperboard etc. falling under heading No.37.03 of CT from 50% to 30%;
4. linear alkyl benzene from 40% to 30%;
5. dipping oil and paclobutrazol from 15% to 10%;
6. graphic art films, photopolymer relief image, offset printing plates ( pre-sensitised), cinematographic films (B/W), sound films, colour positive and jumbo rolls of colour roll films from 40% to 30%.
Prescribing a uniform customs duty of 30% on:
1. goods falling under heading Nos. 37.01, 37.02, 37.04 and 37.05 of CT except instant print film;
2. reaction initiators, reaction accelerators and catalytic preparations falling under heading No. 38.15 of CT.
1. Prescribing a uniform customs duty of 30% on plastic polymers and waste/ scrap falling under heading Nos. 39.01 to 39.15 of CT.
2. Reduction in customs duty on plastic semi-manufactures and articles falling under heading Nos. 39.16 to 39.26 of CT from 50% to 40%.
3. Reduction in customs duty on all goods of heading Nos. 68.06 and 69.02 like ceramic fibre blocks and refractories etc. of CT from 50% /35% to 30%.
Reduction in customs duty on :
1. natural rubber from 25% to 20%;
2. retreaded aircraft tyres from 50% to 30%;
3. leather from 50% to 20%;
4. fuel wood,wood chips, wood charcoal, wood in the rough from 50% / 15% to 10%;
5. specified sawn/chipped wood from 35% to 30%;
6. other wood and wood products falling under heading Nos. 44.04 to 44.21 of CT from 50% to 30%;
7. cork and cork products from 40% to 30%;
8. pulps (other than rayon grade) from 10% to 5%;
9. rayon grade pulp from 25% to 5%;
10. waste paper from 40% / 10% to 5%;
11. journals and printed music from 25% to nil;
12. blank cheque forms from 25%/20% to 10%;
13. miscellaneous printed products from 25% to 20%.
Reduction in customs duty on :
1. polyester filament yarn from 45% to 30%;
2. nylon filament yarn from 45% to 30%;
3. viscose filament yarn, cuprammonium filament yarn and acetate filament yarn from 40% to 30%;
4. other man-made filament yarn from 45% to 30%;
5. synthetic and artificial staple fibres and tow from 45% to 30%;
6. woollen and synthetic rags including wool waste from 35% to 30%;
7. vegetable textile fibres including flax fibres and tow from 40% to 30%.
Reduction in customs duty on :
1. HR coils from 30% to 25%;
2. TMBP coils for manufacture of tin plates from 30% to 25%;
3. ferro-alloys (other than of nickel and molybdenum) from 30% to 25%;
4. HR stainless steel coils from 30% to 25%;
5. CR stainless steel coils from 40% to 30%;
6. stainless steel slabs/billets from 40% to 20%;
7. other iron & steel and articles thereof from 40% to 30%.

Reduction in customs duty on non-ferrous metals as under:-

		Metal	                From	 To
   
		Unwrought zinc	        35%	30%
		Unwrought copper	35%	30%
		Unwrought lead	        35%	30%
		Wrought zinc	        40%	30%
		Wrought copper	        40%	30%
		Wrought lead	        40%	30%
		Wrought tin	        40%	30%
		Wrought nickel	        30%	20%
		Wrought aluminium	25%	20%

Prescribing a uniform customs duty of 30% on other base metals such as tungsten, magnesium, molybdenum etc.

Reduction in customs duty for electronic industry on :

  
        	                                From	To
	(a)	specified  raw  materials 	 15%	10%
   
	(b)	specified components	         25%	20%		
   
        (c) 	populated  printed  circuit 
                boards (PCBs)  of   electronic   35%	30%	
                goods
   
	(d)	colour television picture tubes	 40%	30%
   
	(e)	floppy diskette	                 25%	10%
   
        (f)	glass parts of colour picture    30%	25% 
                tube

Reduction in customs duty on specified capital goods imported for manufacture of electronic integrated circuits and micro assemblies from 15% to 10% and to extend this concession to the manufacture of semi-conductor devices etc.

Reduction in customs duty on : From To

 
	(a)    computers  and computer peripherals 	40%	        20%
                
	(b)    hard disk drive, floopy disk drive and   40%/35%/25%	20%
               other storage units
   
	(c)    computer printers capable of being       50%	        20%
	       used with automatic type writers, word 
               processors and other office machines

Reduction in customs duty on following items for non-conventional energy sectors :
1. polycrystalline silicon or ingots and undiffused silicon wafers from 15% to 10%;
2. solar cells/modules and photovoltaic systems from 35% to 30%.
Reduction in customs duty on:
1. telecom equipment from 50% to 40%;
2. cellular/pager/trunking handsets from 50% to 30%;
3. parts and sub-assemblies of (a) and (b) above falling within Chapter 85 of CT from 35% to 30% ;
4. optical fibre for manufacture of telecom cables from 35% to 30%;
5. specified raw materials of optical fibres/telecom cables and fibre reinforced plastic rods from 15% to 10%.
Reduction in customs duty on:
1. musical instruments and their parts and accessories from 50% to 30%;
2. toys, games, sports requisites and their parts and accessories from 50% to 30%.
Reduction in customs duty from 25% + Rs.120/kg on :
1. bearings of more than 50mm bore diameter to 25%;
2. bearings of 50mm bore diameter and below to 10% + Rs. 150 per Kg;
3. parts of bearings to 25%.
Reduction in customs duty on:
1. specified textile machines from 25% to 10%;
2. electrical signalling, safety or traffic control equipment from 50% to 25%.
1. Reduction in customs duty on specified dental , ophthalmic and specified medical equipment and their parts/spare parts from 15% to 10%.
2. Reduction in customs duty on :
  1. other medical equipment falling under heading Nos. 90.18 to 90.21 and sub-heading Nos. 9022.12 to 9022.14 and 9022.21 of CT from 40% to 30%;
  2. parts/spare parts required for other medical equipment from 15% to 10%.
Full exemption from customs duty (Basic + AD) on specified items, if imported for the use of Police forces of the States/UTs or the CRPF for bomb detection/disposal purposes.
Exemption on specified goods imported for use in R & D project funded partially by any Department of Central Government and undertaken by a company in their in-house R & D unit, registered with Department of Scientific & Industrial Research.
Exemption from Basic + AD on goods gifted free of cost under a bilateral agreement between a foreign Government and the Government of India.
1. Reduction in customs duty on baggage from 80% to 60%.
2. Exemption from AD on TVs when imported under baggage.
3. Removing the restriction on maximum duty -free limit of Rs. 3000 for import of VCR/VCP as baggage.
1. Project Import benefit ( Basic 20% + AD 10%) to captive power plants of 5 MW or above.
2. Project import benefit of (Basic 20% + AD 10%) to power transmission projects of 66 KV and above.
3. Reduction in customs duty to 10% on raw material/ components for manufacture and supply of machinery and equipment to power generation plants, other than captive power plants.
4. Extension of concessional rate of basic customs duty of 20%+Nil AD to iron & steel products for modernisation and renovation of power generation plants, other than captive power plants.
Levying a surcharge as special duty of customs on imported goods at the rate of 2% of the value of goods for the period ending 31st March 1999, with the exception of goods which are exempt from the whole of customs duty leviable thereon or chargeable to nil rate of duty and gold and silver, imported as passenger baggage.

UNION EXCISE DUTIES
(Effective from 23.7.1996 unless otherwise stated)

ABBREVIATIONS

BED : Basic Excise duty MODVAT : Modified Value Added Tax AED : Additional excise duty in lieu of sales tax PMT : Per Metric Tonne AT&T : Additional duty on textiles and textile articles CET : Schedule to the Central Excise Tariff Act, 1985(5 of 1986) PSM : Per Square Metre Unless otherwise indicated, the excise duty refer to basic excise duty. The proposals include the following:

GENERAL The schedule to the Central Excise Tariff Act, 1985 is being amended vide relevant clauses of the Finance Bill to give effect to the Tariff changes relating to the Union Excise Duties.
Major Proposals involving changes in rates of duty, whether by amendment of tariff rates or by notifications.
1. Full exemption from excise duty on:
  1. vanaspati and margarine;
  2. animal fats and oils ;
  3. asbestos fibre ;
  4. tapioca products ;
  5. ores of Chapter 26 of CET .
2. Reduction in excise duty on instant coffee from 30% to 25%.
3. Reduction in excise duty on pan masala from 50% to 40%.
4. Increase in excise duty on malt from Nil to 10%.
5. Revision in specific rates of excise duty on cigarettes falling under heading No.24.03 of CET as indicated below:-
```
  
					       Rs. per thousand cigarettes
  			
        			     Present	             Proposed
    
     Non filter Cigarettes	   (BED+AED)	BED	AED   (BED+AED)
   
(a) not exceeding 60 mm in length        60	 51	 24	75
   
(b) exceeding 60 mm but not exceeding   300	214	101	315
    70 mm Filter Cigarettes
  
(c) not exceeding 70 mm in length	400	292	138	430
   
(d) exceeding 70 mm but not exceeding   750	544	256	800
    75 mm
  
(e) exceeding 75 mm  but not exceeding 1000	728	342    1070
    85 mm                                   
 
```
6. Increase in excise duty from 10% to 15% on petroleum products, other than kerosene and petroleum gases.
7. Prescribing 5% duty on:
  1. furnace oil for use other than as feed stock in the manufacture of fertilizer or for use within a heavy water plant;
  2. residues of petroleum oil for use as non-feed stock in the manufacture of fertilizer.
8. Reduction in excise duty on:
  1. tooth paste from 20% to 10%;
  2. detergents from 30% to 25%.
9. Exemption from excise duty on all chemicals used for manufacture of contraceptive, centchroman.
10. Rate rationalisation by :
  1. prescribing a uniform rate of 15% on all drugs except those used in the National Health Programme and certain specified drugs;
  2. prescribing a uniform rate of 15% on photographic or cinematographic goods of Chapter 37 of CET.
11. Rationalising the existing excise duty rates of 5%/10%/15% to a single rate of 10% on paper and paperboard manufactured using 50% or more of unconventional raw materials.
12. Exemption from excise duty on:
  1. writing and printing paper used by State Text Book Publication Corporations/Boards or NCERT for printing educational text books;
  2. natural gums similar to natural rubber;
  3. resin bonded bamboo corrugated roofing sheets.
13. Reduction in excise duty on :
  1. specified animal drawn vehicle tyres, off the road tyres, aero tyres and aero tubes from 35% to 30%;
  2. cartons, boxes, bags, cases and similar containers from 20% to 10%.
14. Prescribing a uniform BED of 10% on:
  1. processed fabrics of Chapters 52,54 and 55 of CET except (i)100% cotton fabrics of value upto Rs.25 PSM which would attract BED of 5% and (ii) fabrics which are exempted from AED(ST);
  2. processed and unprocessed fabrics falling under heading Nos.58.01,58.02 and 58.06 of CET excepting (i) 100% cotton fabrics of value upto Rs.25 PSM, which would attract BED of 5% (ii) narrow fabrics containing elastomeric yarn or rubber thread which continues at 15% (iii) unprocessed narrow woven fabrics of cotton or man-made fibres (other than fabrics of pile, terry towelling, chenille and fabrics containing elastomeric yarn or rubber thread) which continue to be exempted and (iv) fabrics processed without the aid of power or steam which continue to be exempted;
  3. processed and unprocessed fabrics of Chapter 60 of CET excepting (i) cotton fabrics which continue to be fully exempted (ii) narrow fabrics containing elastomeric yarn or rubber thread which continue at 15% and (iii) fabrics processed without the aid of power or steam which continue to be exempted.
15. Extension of MODVAT scheme to the fabrics mentioned at Sl.No.14 wherein the credit of duty paid on yarn would be available on a notional basis and the credit of duty paid on other inputs alongwith capital goods would be available on the basis of duty paying document.
16. Reduction in BED on polyester filament yarn from 50% to 40%.
17. Increase in BED on artificial filament yarn including viscose filament yarn from 15% to 20%.
18. Rationalising the existing AED rates of 5%/10%/20% to a single rate of 10% on processed fabrics of cotton or man-made fibres and falling within Chapters 52,54,55,58 and 60 of CET except 100% cotton fabrics of value upto Rs.25 PSM which continue to attract AED of 5%.
19. Full exemption from AT & T to all fabrics mentioned at Sl. No.14 above and all goods falling under heading No.58.04 of CET.
20. Extension of benefit of concessional BED under general SSI scheme to unprocessed fabrics of cotton or man-made fibres falling within heading Nos. 58.01,58.02, 60.01 and 60.02.
21. Modification of the exemption scheme to fabrics of Chapters 51,52,54 and 55 of CET subjected to minor processes so as to restrict the exemption only if the processor does not have the facility (including plant and equipment) for carrying out bleaching, dyeing or printing with the aid of power or steam.
22. Restricting the full exemption from BED to only such woollen yarns in plain (straight) reel hank where the counts of such yarns do not exceed 10.
23. Prescribing BED of 10% on carded wool.
24. Prescribing BED of 5% on woollen shoddy yarn falling under heading No.51.06 of CET.
25. Rationalisation of duty structure on laces of cotton and man-made fibres, whether or not processed, with BED at 10% and AED at 5%.
26. Exemption on twisting of duty paid polyproplene filament yarn from excise duty.
27. Rationalisation of duty structure of coated fabrics falling under heading No.59.01of CET by prescribing a uniform BED at 10% and AED at 5%, irrespective of its composition.
28. Rationalising the scope of concessional rate of 5% only to ramie yarn (containing 85% or more by weight of ramie fibre) falling under sub heading No.5308.14 of CET.
29. Reduction in excise duty on:
  1. specified glassware produced by semi-automatic process from 20% to 10%;
  2. glassware used for table, kitchen, office, indoor decoration and similar purposes from 15% to 10%;
  3. all goods falling under heading No. 68.04 of CET, such as articles of asbestos cement from 25% to 20%;
  4. ceramic articles (other than glazed tiles) from 20% to 15%.
30. Raising the exemption limit for footwear from Rs.50 per pair to Rs.75 per pair.
31. Rationalisation of excise duty on iron and articles of iron to 15%, at par with steel.
32. Extension of SSI exemption benefit to all goods of Chapter 74 of CET.
33. 1. Rationalisation of excise duty on air-conditioners and air-conditioning machines at a uniform level of 40%.
  2. Rationalisation of excise duty on parts and accessories of refrigerating and air-conditioning appliances and machines (including compressors and parts thereof) at a uniform level of 40% .
34. Rationalisation of excise duty on motor vehicles falling under heading Nos. 87.02 and 87.03 of CET as under:
```
        Heading/Sub-heading  No	 Description	                       Rate
    
        87.02	Motor vehicles principally designed for the transport 
                of more than 6 persons, excluding the driver
        
        8702.10 Motor vehicles principally designed for the transport   20%
		of more than 6 persons but not more than 12 persons,
		excluding the driver. 
   
        8702.90	Others	                                                15%
   
	87.03	Motor cars and other motor vehicles	                40%
                principally designed for the transport of 
                not more than 6 persons ( excluding the
		driver)  including  racing cars.
```
35. Extension of SSI exemption to copper powder, potassium chlorate and cigarette lighters.
36. Full exemption from excise duty on goods manufactured based on an indigenously developed knowhow and patented in any country of European Union or United States of America or Japan for a period of three years from the date of commercial production.
37. Exemption on excisable goods arising at the intermediate stage and captively consumed in the manufacture of specified exempted goods. Estimated net revenue effect
  1. Union Excise Duties Net gain in revenue due to increase in excise duties in one full year is estimated to be Rs.1100 crore. (Rs. in lakh)
```
		                                  CENTRE	STATE	TOTAL
   
	Basic Excise Duty	                   54285	49115	103400
	Additional Excise Duty in lieu of sales tax 145	         6455	  6600
	Net gain for one  full year	          54430	        55570	110000
	Net gain in the remaining part of the	  37578 	38366	 75944 
        current financial year
```
  2. Customs The loss in revenue on account of reduction in customs duties is estimated to be Rs.900 crore in one full year and Rs.650 crore in the remaining part of the current financial year, excluding the revenue gain on account of special duty of customs (Rs.1600 crore for the remaining part of the current financial year).
  SERVICE TAX
  Imposing service tax at the rate of 5% each on:
  1. advertising services;
  2. courier services;
  3. radio paging services.
  The estimated revenue from these three services is likely to be Rs. 150 crore in a year and Rs.70 crore for remaining part of the current financial year. These service taxes will be applicable with effect from the date to be notified in the official gazette.
  Procedural changes in Union Excise and Customs
  1. Introduction of a system of selective audit and doing away with the existing procedure of assessment w.e.f 1.10.96 - a major step towards modernising the excise procedure.
  2. Provision of mandatory penalty on deliberate evasion of excise duties or misuse of Modvat credit. The penalty shall be equal to the amount of excise duty short- levied, short-paid, amount of refund erroneously paid or amount of Modvat credit misused. Similar provision on the customs side also.
  3. Permission to file advance bill of entry within 30 days of the expected arrival of goods.
  4. Central Excise Officers to monitor the end-use based exemptions from customs duty.
  5. Raise the power of single member bench of CEGAT from Rs.1 lakh to Rs.10 lakhs.
  6. Amendments in the Modvat Scheme.
    1. Modification in the scheme of modvatable invoices issued by dealers .Modvatable invoices to be permitted only upto second stage wholesale dealers.
    2. In respect of capital goods, components and instruments, the chapters, headings or sub-headings will be listed out and it will be provided that any product falling within them shall be admissible for Modvat Credit.
    3. Providing for mandatory penalty and penal interest for misuse of Modvat credit scheme.
    4. In the case of a manufacturer manufacturing both fully exempted and dutiable goods, the reversal of Modvat credit in respect of fully exempted goods shall be at the rate of 20% of the value of goods.
    5. Suitable provisions in the Modvat scheme for capital goods so as to allow credit on the strength of original invoice in case the duplicate is lost, subject to suitable safe guards.

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INDIAN FISCAL BUDGET ONLINE

CUSTOMS (Effective from 23.7.1996 ) ABBREVIATIONS

CT : First Schedule to the Customs Tariff Act, 1975 (51 of 1975) AD : Additional duty of customs

UNION EXCISE DUTIES (Effective from 23.7.1996 unless otherwise stated) ABBREVIATIONS

SERVICE TAX

Procedural changes in Union Excise and Customs

CUSTOMS
(Effective from 23.7.1996 )

ABBREVIATIONS

CT : First Schedule to the Customs Tariff Act, 1975 (51 of 1975)
AD : Additional duty of customs

UNION EXCISE DUTIES
(Effective from 23.7.1996 unless otherwise stated)

ABBREVIATIONS