Amendments in Central Excise as per Budget 2016

By | March 3, 2016

Central Excise Act,

Amendments made effective immediately 

  • The Clean Energy cess is to be renamed as Clean Environment cess. The effective rate of Clean Energy cess proposed to be increased from Rs.200 per tonne to Rs.400 per tonne.
  • Infrastructure cess is to belevied on motor vehicles under heading 8703 subject to certain exceptions. Further, this cess is not CENVATable and CENVAT credit cannot be utilized for its payment.

Amendments to be effective from the date on which Finance Bill receives the assent of the President

Amendments in the Central Excise Act, 1944

  • Requirement of publishing and offering for sale any notification issued, by the Directorate of Publicity and Public Relations of CBEC under section 5A proposed to be done away with.
  • The time-limit for issuance of show cause notice under section 11A for recovery of service tax not levied/paid/short levied/short paid/erroneously refunded, for non-fraud cases is proposed to be enhanced by 1 year, i.e. from 1 year to 2 years.
  • It is proposed to empower the Board under section 37B to issue orders, instructions and directions for the implementation of any other provision of the Central Excise Act, 1944. 

Amendments effective from 01.04.2016

Amendments in the CENVAT Credit Rules, 2004

The CENVAT Credit Rules, 2004 have been simplified and rationalized with an endeavor to improve CENVAT credit flow, reduce the compliance burden and associated litigations, predominantly those relating to apportionment of credit between exempted and non- exempted final products/services.  Primary amendments include:

  • Banks and other financial institutions are to be allowed to reverse credit in respect of exempted services, on actual basis also, in addition to the option of 50% reversal.
  • Inputs and input services used in an activity which is not a ‘service’ under the Finance Act, 1994 also to attract reversal provisions under rule 6.
  • CENVAT credit of service tax paid on amount charged for assignment by Government or any other person of a natural resource available, over such period of time as the period for which the rights have been assigned.

Amendments in the Central Excise Rules, 2002

The Central Excise Rules, 2002 are proposed to be amended as follows:

(a)   Reduction of the number of returns to be filed by a central excise assessee above a specified threshold to 13, that is, 1 annual return and 12 monthly returns.

The said annual return is also required to be filed by the service tax assessees above a specified threshold.  Thus, now three service tax returns need to be filed instead of two.

(b)   Like under service tax, the facility of revision of return to be available under central excise also.

(c)   Manual attestation of copy of invoice, meant for transporter, is not required in cases where invoices are digitally signed.

(d)   In case of finalization of provisional assessment, the interest will be chargeable from the original date of payment of duty.

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