Customs and Central Excise
16. A related proposal that has attracted public attention is the imposition of Central Excise duty on unbranded precious metal jewellery at the rate of 1%. Madam Speaker, I would like to reiterate that the levy was well-intentioned and introduced not so much for raising revenue as for rationalization and movement towards GST. However, the outpouring of sentiment both within and outside the House indicates that we are not ready for it. As such, the Government has decided to withdraw the levy on all precious metal jewellery, branded or unbranded, with effect from 17th March, 2012.
17. The House would recall that certain amendments were proposed in the Customs and Central Excise Law in respect of the classification of offences as cognizable and non-bailable. In response to concerns expressed by Members that the proposal regarding grant of bail only after hearing the public prosecutor is too harsh, I propose to omit this provision entirely. In addition, only serious offences under the customs law involving prohibited goods or duty evasion exceeding Rs.50 lakh, shall be cognizable. However, all these offences shall be bailable.
18. There are a few other proposals relating to rationalization and adjustment of central excise and custom duties which I will place before the House while replying to the debate.
Service Tax
19. As Hon'ble Members are aware, taxation of services has undergone a paradigm shift with the introduction of a Negative List. This initiative has been widely welcomed.
20. The negative list has been drawn keeping in view the federal nature of the polity. Some of the States, through the Empowered Committee of State Finance Ministers, have expressed their concerns. I have decided to address their concerns by making changes in the definition of "service" which will exclude the activities specified in the Constitution as "deemed sale of goods". The definition of "works contract" has also been enlarged to include movable properties.
21. Exemption for specified services relating to agriculture in the Negative List has also been extended to agricultural produce enlarging the scope of the entry.
22. There are some other minor changes in the definitions based on the widespread feedbacks and suggestions that we have received from various stakeholders and are specified in the revised draft.
23. Notifications to give effect to these changes would be issued in due course and laid on the table of the House.
I would now like to hear the views of my colleagues from both sides of the House on the Budget proposals.
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