Ice-cream attracts an excise duty of six per cent whereas diabetic food attracts 12 per cent. Does the government expect people to eat more ice-cream and get diabetic so that it can get more revenue from diabetic food?
If there is something called a national waste, a glowing example is the debate on the central excise duty on ice cream. And also on the definition of ice-cream. Is “soft serve” an ice-cream? The Supreme Court says, yes. The apex court has given a very lengthy and erudite judgment, which has settled the issue about what should be the concept of ice cream. It says that since in the common parlance soft serve is known as ice cream, it should be treated as such for the purpose of Central Excise duty. Technical meaning will not be relevant. When there is no statutory definition of a product in the tariff, the common parlance definition will rule over the technical definition.
Also it held that the concept of ice cream has changed due to technological innovations. It is no longer served in cup in hard condition. These are known grounds which have been revisited. So why do we get the same grounds revisited again and again and again? And the litigation goes on at different stages namely adjudication, appeal, Tribunal, High Court and Supreme Court. This particular case began in 1997, was admitted by the Supreme Court in 2003 and the judgment has come in 2012. The ice cream has not melted in fifteen years!
What is the reason for such a huge waste of time on controversies on rate of duty of ice cream by departmental officers, tribunal and courts? The answer is simply that there too many exemptions, completely unmerited from economic and logical point of view. In my days, I had to waste time on the different rates of duty for paper and paper board. Ash, dross and waste , which are very similar, had different rates. And now ice cream has an exemption. “Ice-cream and non-alcoholic beverages prepared and dispensed by vending machines.... rate of duty was nil and is now six per cent. But the general rate of duty for these goods appearing in chapters 18, 19, 20, 21 & 22 are 12 per cent and six per cent. Let us see how the rates of excise duty on food and food products in chapters 18 to 22 and on machinery in chapters 84 & 85 look like.
Whereas chapter 18 has one rate of 12 per cent and no exemption, other chapters above are store house of controversy. Biscuits of different types have different duties. Biscuit coated with chocolate is 12 per cent, sweet biscuit is six per cent, and biscuit not otherwise specified six per cent and pastry and cake also six per cent. Ginger bread is nil and the poor man’s “mudi” is 12 per cent. Uncooked pasta is 12 per cent. It needs brilliance of mind to make such fine distinction of duties. But such different duties ensure that there will be several Supreme Court decisions on biscuits and cakes and pastries, mudi, and the like in years to come. It is only after a decade that the Supreme Court judgements come . And the uncertainties continue.
Finally, why on earth is there an exemption for “ice and snow” (2201 90 10)? Artificially manufactured snow is too costly. If somebody can buy it , he can pay the duty as well .
Conclusion: This year’s Budget is probably the last before the Goods and Services Tax (GST) comes. So the wisest thing is to drastically remove exemptions which do not make any economic sense. Abolish six per cent and make all goods attract 12 per cent. There may be a few exceptions for pan masala, motor vehicle, etc. This will ensure that there will be no wastage of time, energy and money on litigations right up to the Supreme Court. It will also pave the path for a good GST.
Email: smukher2000@yahoo.com
