Excisable goods produced or manufactured in a Special Economic Zone (SEZ) and brought to any other place in India are not exempted under the proposed Central Excise Bill, 2024.
Any exemption is to be notified separately by the central government, if deemed fit, the Bill underlined.
The move, if implemented, could curb the misuse of incentives and alleged duty evasion at SEZ units.
At present, central excise duty is levied on tobacco, crude oil, gasoline, diesel, natural gas, and air turbine fuel, while the majority of goods move to the Goods and Services Tax (GST) regime.
SEZ units get special incentives and tax benefits, including exclusion from central excise duty. “…where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of the duty of excise in regard to such goods or such other factors as may be relevant, is of the opinion that it is necessary to safeguard the interest of revenue, specify, by notification, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section in such manner as may be prescribed,” the Bill reads.
Even though the excise duty basket has few goods, it is a source of significant revenue for both the central and state governments. States tax them with value-added tax rather than state GST. In FY24, central excise collection was over Rs 3 trillion.
Among other proposals, the new Bill outlines the conditions, restrictions, and manner of availing and utilising excise duty credit. The CENVAT credit under the current regime has been proposed to be replaced by the insertion of a specific section dealing with duty credit, namely Central Excise Duty credit. The unutilised credit balances of duty paid under the existing act shall be allowed to be transferred in the proposed act as transitional credit.
The Bill also pitched for certain powers to central excise officers. For instance, it has suggested a structured framework for audit by central excise officers. Currently, there is no formal audit conducted by the excise officials.
Besides, the time limit for the recovery of duties has been extended to three years from the existing two years. Also, the onus of registration is proposed to be on the person desiring to avail Central Excise Duty Credit.
Meanwhile, the time period for granting a refund of duty by the department has been reduced to 60 days from the existing three months.
“By streamlining processes and clarifying regulations, the Bill seeks to create a more conducive environment for businesses across the board. Key provisions such as the transferability of unutilised credit balances and an extended time frame for duty recovery underscore the government’s commitment to facilitating smoother operations for enterprises,” said Saurabh Agarwal, partner, EY.
These measures not only simplify compliance but also foster a business-friendly ecosystem conducive to growth and innovation, he said.
First Published: Jun 05 2024 | 8:21 PM IST
