Concessional Duty of 10% Excise on Machinery, Consumer Durables and Electronics Expires on 31 Dec

Auto Industry Cut to 8% too Goes

Normal Duty of 12% to Apply from 1 Jan in New Year

SNos. 345 (Chapter 84), 346 (Chapter 85) and 347-369 (Chapter 87) in Jumbo Excise Notification 12-Central Excise dated 12.03.2012 which were valid only till 31 December 2014 have expired since the Government has not issued any notification to renew these exemptions. The normal schedule rate of 12% will apply from 1 January 2015.

The concessional duty measure was announced on 17 February 2014 in a move to pep up the economy. The exemptions were valid only till 30 June 2014. The Modi Government extended the validity by six months to 31 December 2014.

The concessions have not been continued on ground of revenue shortfall which is said to be below target by Rs one lakh crores. The Government is enthused by fall in inflation rate and feels that the fall in fuel prices, the demand for motor vehicles will go up and the industry will cough up with revenue even at the old rates.

Capital goods under Chapter 84 and 85 too are in the same boat as motor vehicles and they too have inadvertently suffered a duty hike. Price rise of consumer durables such as mobiles and other electronic goods can be expected.

The interim Budget of former Finance Minister P Chidambaram had reduced the excise duty on small cars, scooters, motorcycles and commercial vehicles to eight per cent from 12 per cent on 17 February 2014. There were only two duty rates for other motor vehicles, 20% for mid size cars and 24% for SUVs and large cars.

Now the status quo ante is restored giving us a rate of 30% for SUVs, 24% for mid size cars and 27% for large size ones.

Finance Minister P Chidambaram had said that demand will revive with the cuts in excise, the buoyancy factor will make up for the fall in revenue due to the steep cut of four percent on two wheelers and small size cars.

There is no reaction from the Government on whether the expectation of revenue buoyancy was fulfilled. There is no official word on the reasons withdrawal of the concessions and the “return to normalcy”.- Ed.