Khandsari Sugar Exempted from Excise Duty
THE first Notification in 2012 from the CBEC (Government) has exempted Khandsari Sugar from excise duty. What is the provocation, just about three months before the Budget?
With effect from 01.01.2012, the new version of the Central Excise and Customs Tariffs has come into force, in tune with WCO's Harmonized System Nomenclature (HSN). It seems over two hundred countries are following the HSN. India was ready more than 9 months ago.
In the old Central Excise Tariff, Khandsari Sugar was classified under tariff item '1701 1120' with a nil rate of duty. In the amended tariff, with effect from 01.01.2012, Khandsari Sugar got into item number '1701 1320' and '1701 1420' with a 5 percent duty.
Apparently, the Government never intended to levy excise duty on Khandsari sugar and so has now exempted it unconditionally under a new entry 11A in the table to Notification No. 3/2006 dated 01.03.2006.
Presenting the 1984, Union Budget, the Finance Minister said,
"I propose to fully exempt khandsari sugar from the levy of excise duty. I am taking this measure in view of the labour-intensive character of this industry, and to provide further opportunity for growth of employment in this Industry. The abolition of excise duty will also help this industry to pay better price to cane growers, and will give relief to a large number of khandsari units located in far-flung rural areas. The revenue sacrifice involved in this proposal is Rs.16.42 crores. Khandsari, I am told, is also better for health. If as a result of this measure, the health of the nation improves, I hope the credit will flow to me and not to my distinguished colleague, the Health Minister! "
Any guess as to who was that Finance Minister 28 years ago? Our own Pranab Da!
Similarly, Furniture, bases and covers for sewing machines and parts thereof; other parts of sewing machines falling under the new heading 845290 are exempted by new entry Sl. No. 14B in Notification No. 6/2006 dated 01.03.2006.
Though we hate to find fault with the very first notification of the year, we are afraid, we have to say that this notification will generate unnecessary litigation and paperwork. This notification is dated 03.01.2012, but the amended entries in the tariff came into force on 01.01.2012. So, this exemption was not available for two days.
Now, overactive Central Excise officers can go to Khandsari factories and demand duty for two days, attach properties, issue notices, advise the assesses to go to the Board for a Section 11C Notification …. For the next five years, litigation can go on before Board finally issues that Section 11C Notification.
Why did they not issue this notification on or before 01.01.2012?
Let us hope the Board comes up with a clarification, corrigendum, correction or amendment to the effect that the notification is effective 01.01.2012.
Notification No. , Dated: January 03, 2012