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Excise duty: Minor twists

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I propose to impose an 8 per cent excise duty on packaged software sold over the counter. Customised software and software packages downloaded from the Internet will be exempt from this levy.

I propose to fully exempt from excise duty DVD Drives, Flash Drives and Combo Drives.

Packaged foods

Many food items, including packaged items, attract nil excise duty. With a view to giving a fillip to the food processing industry, I propose to fully exempt from excise duty condensed milk, ice cream, preparations of meat, fish and poultry, pectins, pasta and yeast. Excise duty on ready-to-eat packaged foods and instant food mixes, like dosa and idli mixes, will be reduced from 16 per cent to 8 per cent.

On high heels

Since leather and footwear are thrust sectors, I propose to exempt from excise duty two vegetable tanning extracts, namely, quebracho and chestnut.

Footwear carrying a retail sale price up to Rs 250 is already exempt from excise duty. I propose to reduce excise duty on footwear with a retail sale price between Rs 250 and Rs 750 from 16 per cent to 8 per cent.

In the kitchen: At present LPG stoves up to a value of Rs 2,000 attract excise duty of 8 per cent. I propose to extend the concessional rate to all LPG stoves without any value limit. I propose to remove rate differences between different kinds of tableware and kitchenware. Consequently, glassware will attract excise duty of 16 per cent on par with ceramicware and plasticware.

Higher oil cess

Domestically produced petroleum crude is subject to a cess under the Oil Industries Development Act. The rate of Rs 1,800 per tonne was fixed in 2002. After consulting the Ministry of Petroleum and Natural Gas, I propose to increase the cess to Rs 2,500 per MT. I have been assured that this increase will be absorbed by the oil producing companies and have no impact on retail prices of petroleum products.

B'right'

To promote the use of energy efficient lamps, I propose to reduce the excise duty on compact fluorescent lamps from 16 per cent to 8 per cent.

Paper finds widespread use in education as well as in packaging. In order to encourage capacity addition, I propose to reduce excise duty on specified printing, writing and packing paper from 16 per cent to 12 per cent.

Excise on request

There are two requests from trade and industry. I had exempted computers from excise duty in order to boost the use of computers.

That purpose has been largely served. Domestic manufacturers have sought re-imposition of excise duty at 12 per cent in order to enable them to take CENVAT credit as well as to face competition from imports. I propose to accept the request.

Since the 12 per cent excise duty will be eligible for full input tax credit, there should not be any impact on price.

The second request is to impose excise duty on set top boxes. I propose to accept the request and levy an excise duty of 16 per cent and, at the same time, reduce the customs duty from 15 per cent to nil.

This change will equalisse the duty rates on various types of set top boxes.

And my duty

To round off, I would be failing in my duty if I did not raise the excise duty on cigarettes. Hence, I propose to increase the excise duty on cigarettes by about 5 per cent.

(This article was published in the Business Line print edition dated March 1, 2006)
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