Indian Budget 2003-2004

Trade facilitation measures

167. For trade facilitation, I propose to take the following measures,-

1. The present system of fortnightly payment of excise duty will be liberalized to permit payment of duty at the end of the month. Further, the excise duty will be considered to have been paid on the date the cheque is presented to the bank subject to realisation.

2. Deduction from the transaction value is allowed on actual freight incurred, provided that is clearly shown in the invoice. This facility will now be extended to cases where freight is worked out on an equalized basis also.

3. Over the years, the Maximum Retail Price (MRP) based excise levy has proved to be an effective measure of simplification by reducing valuation disputes. I propose to extend the MRP-based excise levy to chewing tobacco and insecticides.

168. Unfortunately, the Nation has been facing a severe drought this year. The funds raised earlier under the National Calamity Contingent Duty are not sufficient. It is, therefore, proposed to impose a 1 per cent National Calamity Contingent Duty on polyester filament yarn, motor cars, multi utility vehicles and two-wheelers. Similarly, crude, domestic or imported, will also be subjected to a duty of Rs.50 per metric tonne for this purpose. However, these new levies will be limited to one year only.

169. While the Small Scale Exemption Scheme aims at providing a distinctive advantage to labour-intensive units, there are reports of misuse of this facility in certain sectors. I propose to withdraw this facility in case of a few items and rationalize the eligibility limit of Rs.3 crore under the general SSI scheme.

170. I propose to enhance the general service tax rate from 5 per cent to 8 per cent, and also impose service tax on 10 new services. While the increase in the tax rates will come into effect on enactment of the Finance Bill, the levy of tax on the new services will take effect from a date to be notified.

171. Last year credit of service tax on input services were extended for payment of service tax, provided the input and the final services fell within the same category. I propose to extend this facility across all services. Thus, the credit will now be available even if the input and the final services fall under different categories.

172. Rate rationalisation and reduction of peak rates of customs duties has been an integral part of economic reform in the country. The economy has not only ‘weathered’ the removal of quantitative restrictions on imports and the reduction in customs duty rates, but has responded by improving its competitiveness and demonstrating the inherent strength of its external balance of payments. As a part of this continuous process, and in line with the pronouncements made by several of my predecessors, I now propose to reduce the peak rate of customs duty from 30 per cent to 25 per cent, excluding agriculture and dairy products.

173. It has been our policy to minimize sector-specific and end-use based customs duty exemptions. This policy will continue. Metallurgical coke and nickel attract customs duty rates at 15 per cent and 5 per cent, depending upon their usage. I, therefore, propose to rationalize the customs duty on these two items to a uniform rate of 10 per cent.

174. Conch shells and seed lac are really handicraft items. Their duty will come down from 30 per cent - why was it ever 30 per cent - to 5 per cent.

175. Import duty on oleo pine resin, a raw material for rosin shall be reduced from 15 per cent to 10 per cent.

176. Value limit for a full customs duty exemption, for bona fide commercial samples and gifts, however, shall be raised from Rs.5,000 to Rs.10,000.

177. I also propose to reduce the customs duty on passenger baggage from 60 per cent to 50 per cent.

178. Phosphoric acid, an input for fertilizers, is exempt from the Special Additional Duty of Customs (SAD). For the sake of uniformity, I propose to exempt rock phosphate and crude sulphur, inputs for phosphoric acid, also from SAD.

179. The basic customs duty on alcoholic liquor will come down to 166 per cent in conformity with our WTO commitments. I also propose to rationalize the countervailing duty in respect of imported alcoholic beverages including wines.