Speech of finance minister Yashwant Sinha while moving the Finance Bill 2002 for consideration in the Lok Sabha on April 26, 2002
Since the presentation of the Finance Bill on 28th February 2002, I have received, as in earlier years, a large number of representations from Members of Parliament, representatives of trade and industry and other interested parties. I have carefully considered all the representations and am convinced of the merit in some of them.
I wish to reiterate that a moderate tax regime and a large number of exemptions go ill together. I do recognise that those who are accustomed to enjoying the benefit of exemptions would like to resist the withdrawal of exemptions. While this cannot be accepted as a matter of rule, in some specific areas I am inclined to make some changes.
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Many industry associations have argued that 4 per cent excise duty at different stages of production would lead to a cascading effect, which is undesirable. I accept the logic of their argument. I, therefore, propose to exempt from excise duty specified parts and accessories of those items that have been subjected to 4 per cent excise duty. These include, parts and accessories of bicycles, parts of hand pumps, parts of toys and parts of umbrellas. I also propose to allow exemption on waste and scrap arising in the course of manufacture of items that attract the new levy of 4 per cent.
Roofing tiles have been subjected to 4 per cent excise duty. Since the industry is labour-intensive and such tiles are used extensively by poor people, I propose to withdraw the excise levy on roofing tiles.
I am informed that excise duty on pre-recorded audio cassettes would accentuate piracy to the further disadvantage of genuine cassette producers. Keeping this in view, I propose to restore exemption from 4 per cent excise duty on such cassettes.
Sir, I am not convinced for removal of 4 per cent excise duty on any other item. I wish to emphasise that small-scale units producing these items are already eligible for exemption on clearances up to Rs 1 crore in a financial year.
Mr Deputy Speaker Sir, my budget proposals included a special package for the textiles industry. While I had reduced the overall burden of the excise duty on the textile fabrics, I had proposed withdrawal of certain exemptions relating to yarn and processed fabrics. I had proposed that the exemption applicable to hand processing of textile fabrics by independent processors shall be confined to only three processes, namely scouring, hydro extraction and calendaring. I have received a number of representations for extending the exemption to some other processes also. On a careful consideration of these representations, I propose to include padding (including back filling), damping and flanellete raising in the list of exempted processes even if carried on with the aid of power.
I also propose to reduce the rate of excise duty on hand-processed cotton fabrics processed by independent processors using open-air stenters from 12 per to 8 per cent. With the availability of deemed credit to such processors, the net incidence of duty will be only 4 per cent.
I also propose to exempt cotton waste yarn(up to two counts) cleared in hank form from this duty.
The House may recall that I had withdrawn the exemption from excise duty on granite manufactured in small-scale sector. I had proposed this to bring parity with marble. Many Hon