Three-tier excise slabs suggested

MUMBAI, JAN 15: The committee appointed by the Union finance ministry for recommendations on rationalisation of excise structure has sugg...

MUMBAI, JAN 15: The committee appointed by the Union finance ministry for recommendations on rationalisation of excise structure has suggested a three tier classification of commodities to fix excise duty rate. The recommended three rates — 5, 15 and 25 per cent ad valorem — are tilted in favour of `the common man’, with commodities used or produced by the common man/rural populace attracting the five per cent rate.

A commodity usually used by the common man, used as an industrial raw material, a commodity used by the rural population in relation to agriculture, pisci-culture or horticulture, used by the common man as a means of entertainment or for sports activities, ferrous and non-ferrous metals, and building materials should be levied duty at five per cent, the committee has said.

The committee consisted of two members from FICCI, and one from CII, besides three members from the Central Excise department. The chief commissioner of Central Excise, Mumbai, Gopinath Sarangi was the chairman of thecommittee. The committee solicited suggestions and ideas from almost 200 corporates and individuals in the exercise.

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The next slab of duty –15 per cent– should apply to commodities which are intermediate products but could be used as final product, a commodity usually used by the middle class, commodities used in mass communication/transportation, textiles and made-ups (but these should also include the additional excise duty to be shared by state and centre), and commodities such as dyes, dyestuffs, soaps, detergents, paper and paper products, mineral and mineral products, and optical goods.

Commodities generally used by the affluent, those which are not environment friendly and “consumption of which is injurious to society” should qualify for the 25 per cent duty, the group has recommended. The recommendations also include wide ranging changes for SSI units.

More significantly, the committee had suggested levying a special rate of one per cent duty on all commodities which were so far subject tonil rate, restoration of full MODVAT credit, continuation of excise duty exemption to tiny sector units (units with investments upto Rs 25 lakhs), exemption for goods manufactured without use of power only to rural units, and to make a negative list of goods which will be out of the MODVAT credit scheme.

Major suggestions for tax setup also made, including the virtual extinction of the range as an administrative unit. The committee has further recommended the fixation of revenue targets after consultation with chief commissioners.