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Central Excise classification follows Six-digit classification code at present and is broadly based upon HSN (Harmonized System of Nomenclature) classification. However, there are a number of differences with HSN classification and as such the present scheme is not totally aligned with HSN. Eight-digit HSN based Commodities Classification Code was adopted for the purpose of levy of Customs duty with effect from 1st February 2003. Same eight-digit Code has already been adopted by DGFT for EXIM Policy and by DGCIS for compilation of trade statistics. In this backdrop, it was desirable to adopt a common commodity classification code for all trade related transactions so as to avoid disputes and facilitate smooth flow of trade. To adopt the eight-digit classification code for the levy of Central Excise duty also, Central Excise Tariff (Amendment) Bill was moved in 2004. The said Bill has been passed by both the Houses of the Parliament and has received the assent of Hon’ble President. The provisions of this Act shall come into force with effect from 28th February 2005. While shifting from six-digit to eight-digit classification code, the existing duty rates have been retained. The Central Excise Tariff (Amendment) Act, 2004 (5 0f 2005) is aimed at,-
Having common classification code for Customs, Central Excise, DGFT and DGCIS to facilitate documentation and standardization of trade related transactions;
Reducing transaction cost by eliminating disputes arising due to multiplicity of classification codes;
Facilitating computerization of tax administration and electronic data processing;
Facilitating collection, compilation, analysis and sharing of trade statistics.
BSC/BY/GN-50/05
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