The Budget has addressed a critical issue related to excise valuation for manufacturing companies. In the Fiat case judgment by the Supreme Court, it was held that the company had to pay excise duty on the cost of production plus a mark up rather than on the selling price, which may include a discount.
The Budget now proposes that if a company sells its product at less than the cost of production, including profit, and if no additional consideration flows to it from the buyer, then the transaction value will be the basis for excise valuation.
This should come as big relief to automobile, consumer durables and other manufacturers who might be selling below their cost of production to compete in the market.
The Budget also has a laundry list of products on which it has reduced customs and excise duty. Prominent among these are inputs for manufacture of soaps such as fatty acids, crude palm stearin on which the import duty has been reduced to zero from 7.5 per cent.
Import duties on basic building blocks for the petrochemicals industry such as ethylene, propylene, butadiene, ethane, propane and orthoxylene have been reduced from 5 to 2.5 per cent.
Computers could become cheaper with the Budget doing away with the Special Additional Duty of 4 per cent on components.
LED televisions could turn cheaper too with reduction in duty for panels and other components. Amazon Kindle and other similar e-reader sellers get a boost with the import duty on e-readers dropping to zero from 7.5 per cent.
Cigarettes and tobacco, as always, attract a higher excise duty. The duty on cigarettes up to 65 mm in size will go up by 72 per cent while that on pan masala will go up to 16 per cent from 12 per cent.
