No excise duty concession to Automobiles and Capital Goods beyond 31st December 2014

By Vijay Kumar

WE got this mail from a PSU employee:

There was a concession available to some of the capital goods falling under chapter 84 & 85. Previously, it was 12%. It was reduced to 10%, valid till June '14 and then extended to Dec '14. Please advise if the 10% rate is continuing / withdrawn after Dec' 14. If so, if there is any notification to that effect.

We regret to inform you that the Government has not extended the concession beyond 31 December 2014.

In his last Budget Speech on February 17 2014, the then Finance Minister Chidambaram said,

(i) To stimulate growth in the capital goods and consumer non-durables, I propose to reduce the excise duty from 12 percent to 10 percent on all goods falling under chapter 84 and chapter 85 of the Schedule to the Central Excise Tariff Act for the period up to 30.6.2014. The rates can be reviewed at the time of the regular Budget.

(ii) To give relief to the automobile industry which is registering unprecedented negative growth, I propose to reduce the excise duty as follows for the period up to 30.6.2014:

So the Notification No. 4/2014-Central Excise, dated 17th February 2014 was issued, but the notification allowed the concessional rates only till 30.6.2014.

By 30.6.2014, Mr. Chidambaram ceased to be a Finance Minister and the new Finance Minister was magnanimous to extend this. On 25th June 2014, in a media Statement Mr. Arun Jaitley said, "In order to provide a fillip to the capital goods and automobile sector, and given its commitment to revive the economic growth, the Government of India has decided today to extend these duty concessions beyond 30th June for a period of six months upto 31st December, 2014."

And so Notification No. 6/2014 CE dated 25.06.2014 was issued extending the concession till 31.12.2014.

Everybody thought the Finance Minister will be kind enough to extend this at least till budget, but there was deafening silence from the Government as our phones continued ringing loudly and mail boxes got filled with messages from anxious assessees wanting to know if the concession is extended. Sadly it was not.

When a lawyer friend asked me to give a flash on 31st that the exemption is not extended, I wondered as to why I should give a flash for something that is not done and anyway I wanted to wait.

So, now it is FINAL - the reduced rates are not applicable after 31.12.2014 - Cars have already become costlier; capital goods will follow.

Also please see DDT 2504.