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In his Budget Speech 2005-06, Finance Minister, Shri P. Chidambaram had announced that an Advisory Committee would be set up to advise the Government on the extent of abatement for both excise duty and service tax. There should also be a mechanism to review the rate of abatement to reflect changed circumstances. In pursuance of this, Ministry of Finance has constituted an Advisory Committee under the Chairmanship of the Member (Central Excise), Central Board of Excise & Customs (CBEC), Department of Revenue. CBEC Member (Service Tax) will be the Co-Chairperson. Additional Chief Advisor (Cost), Department of Expenditure and Joint Secretary (Tax Research Unit), Department of Revenue, will be the Member and Member-Secretary. The Committee may co-opt officers from other concerned Ministries/Departments of Government of India and invite experts and representatives from trade and industry as special invitees.
Government has been receiving representations from trade and industry to evolve a system to make the process of quantifying the abatement transparent and to review the rate of abatement to reflect changed circumstances. Shri Chidambaram in his Budget speech, had also announced that the process of quantifying the level of abatement for goods chargeable to duty on retail sale price basis should be made transparent.
Section 4A of the Central Excise Act, 1944, empowers the Central Government to notify certain excisable goods, subjected to ad valorem levy, the excise duty of which is to be assessed with reference to their retail sale price. In such cases, the assessable value is arrived at after deducting the notified percentage of abatement from the retail sale price. The quantum of abatement is notified by taking into account the amount of duty of excise, sales tax and other taxes and trade margins. In case of certain taxable services, specified abatements from gross value are prescribed to arrive at the assessable value on which service tax is charged.
BSC/BY/CS-214/05
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