Excise Duty on Jute Bags – Agitated Industry – No Answers
JUTE Industry veterans are worried about what they think is an inadvertent levy of 10% excise duty on jute bags and sacks. They believe that there was no mention of this duty in the budget and suddenly the duty was imposed by a notification dated March 24, 2011. Worried industrialists are frantically calling up consultants and for that matter anybody who could help.
What happened ?
The Controversial jute bags fall under tariff heading 6305 and were exempted vide Sl. No. 16 to the table of Notification No. 30/2004-C.E. dated 09.07.2004. This was the position till 28.02.2011. By Notification No. 12/2011 – C.E dated 01.03.2011, this Sl. No. 16 was amended to provide this exemption to only goods other than those bearing a brand name or sold under a brand name. That means branded bags became dutiable. It seems the Jute Commissioner wrote to the Finance Ministry that branding in jute items was required for various reasons of 'marking' and thus the levy should be withdrawn.
Government must have bestowed serious consideration on this issue and by Notification 30/2011 –C.E dated 24.03.2011, amended the Sl. No. 16 of the table to Notification No. 30/2004-C.E. dated 09.07.2004. This time around they changed the entry as “ 61,62 and 63 (except 6305, 6309 00 00 and 6310,)”, that is jute bags falling under heading 6305 is totally taken out of the exemption, which means both branded and unbranded jute bags became dutiable! If you complain to the King, you are bound to get a few more lashes.
Even the 1% duty not applicable : It is not as if the exemption is withdrawn and the 1% duty is imposed on jute bags. The 1% notification – No. 1/2011 dated 01.03.2011 of course has an entry for 6305, but the exemption is limited to Laminated jute Bags.
So, now the position is that there is no exemption for jute bags and they are liable to a duty of 10% as per the Tariff. Is it a mistake or a conscious decision? If it is a mistake, the Board should correct it immediately; if it is a conscious decision, the Congress is sure to lose a few seats in the FM's Home State, which is also the hub for Jute.
This is a big blow to the Jute Industry and the poor businessmen have stopped even export of the jute products fearing that they would have to pay 10% excise duty, not understanding that duty is not payable on the export goods!