January 9, 2002, Chandigarh, India
Ordinance on excise duty hike
New Delhi, January 8
Announcing the Cabinet decision, Parliamentary Affairs Minister Pramod Mahajan said the ordinance had been necessitated as presently there was a cap on raising excise duty beyond twice the rate on various items.
“In some cases, it has been necessary to increase this rate to more than twice and we have decided to enhance this restriction,” Mr Mahajan said.
The ordinance will amend Section 31B of the Central Excise Tariff Act to enable the government to hike the excise duty without a cap on any commodity.
Mr Mahajan, however, said no list of items had been prepared for raising excise duty.
The government would, however, retain other provision of the Act under which any item having nil rate of duty could be increased by a maximum of 50 per cent ad-valorem.
Mr Mahajan said the Finance Ministry might be contemplating to raise excise duty on a few items which were not nil based. He said the amendment would be part of the next year’s Finance Bill.
Meanwhile, the Finance Ministry does not intend to raise the excise duty on commodities “immediately’’ making use of the enhanced powers vested with it by the Union Cabinet on Thursday, Revenue Secretary S. Narayanan said.
Talking to reporters after Finance Minister Yashwant Sinha’s pre-Budget consultations with the business chambers and industrialists, Mr Narayanan also clarified that the Cabinet decision had nothing to do with the developments along the Line of Control.
The move was aimed at bringing parity between the government’s power to raise the customs and excise duties. While the Finance Ministry already had powers to raise the customs duty to any extent, it had authority to hike the excise only by 100 per cent, he explained.
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