CUSTOMS - Finance Bill, 2016

CUSTOMS Note: (a) Basic Customs Duty means the customs duty levied under the Customs Act, 1962. (b) CVD means the Additional Duty of Customs levied under sub-section (1) of section 3 of the Customs Tariff Act, 1975. (c) SAD means the Special Additional Duty of Customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975. (d) Export duty means duty of Customs leviable on goods specified in the Second Schedule to the Customs Tariff Act, 1975. (e) Clause nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2016. Amendments carried out through the Finance Bill, 2016 come into effect on the date of its enactment unless otherwise specified. AMENDMENTS IN THE CUSTOMS ACT, 1962: S. No. Amendment Clause of the Finance Bill, 2016 1. Subsection (43) of Section 2 is being amended so as to add a new class of warehouses for enabling storage of specific goods under physical control of the department, as control over the other types of warehouses would be only record based. [113] 2. Subsection (45) of Section 2 which defines warehousing station is being omitted. [113] 3. Chapter heading of Chapter III is being amended to omit the word warehousing station . [114] 4. Section 9 is being omitted. [115] 5. Section 25 is being amended so as to omit the requirement of publishing and offering for sale any notification issued, by the Directorate of Publicity and Public Relations of CBEC. [116] 6. Sections 28, 47, 51 and 156 are being amended so as to: a) increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, willful mis-statement, etc. b) provide for deferred payment of customs duties for importers and exporters to certain class of importers and exporters. [117], [118], [119], [135] 7. Section 53 is being amended so as to enable the Board to frame regulations for allowing transit of certain goods and conveyance without payment of duty. [120] 8. Sections 57 and 58 are being substituted to provide for licensing by the Principal Commissioner or Commissioner, in place of Deputy/Assistant Commissioner, subject to such conditions as may be prescribed. [121], [122] 9. New section 58A is being inserted to provide for a new class of warehouses which require continued physical control and will be licensed for storing goods, as may be specified. [122] 10. New section 58B is being inserted so as to regulate the process of cancellation of licences which is a necessary concomitant of licencing. [122] 11. The existing section 59 governing warehousing bonds submitted by importers availing duty deferred warehousing is being substituted so as to fix the bond amount at thrice the duty involved and to furnish security as prescribed. [123] 12. The existing section 60 is being substituted to define the date of removal of goods from a customs station and deposit thereof in a warehouse. [124] 13. The existing section 61 is being substituted to extend the period of warehousing to all goods used by Export Oriented Undertakings, Units under Electronic Hardware Technology Parks, Software Technology Parks, Ship Building Yards and other units manufacturing under bond; empower Principal Commissioners and Commissioners to extend the warehousing period upto one year at a time. [125] 14. Section 62 relating to physical control over warehoused goods is being omitted since the conditions for licensing different categories of warehouses and exercising control over the same are being provided under sections 57, 58 and 58A. [126] 15. Section 63 relating to payment of rent and warehouse charges is being omitted in view of the privatization of services, and free market determination of rates, including those by facilities in the public sector. [126] 16. The existing section 64 relating to owner s rights to deal with warehoused goods is being substituted so as to rationalize the facilities and rights extended under the section. [127] 17. Section 65 is being amended to delete the payment of fees to Customs for supervision of manufacturing facilities under Bond; and empower Principal Commissioner or Commissioner of Customs to licence such facilities. [128] 18. Section 68 is being amended to omit rent and other charges on account of omission of section 63. [129] 19. Section 69 is being amended to omit rent and other charges on account of omission of section 63. [130] 20. Section 71 is being amended so as to substitute the word exportation with the word export to align with definition contained in sub section (18) of section 2. [131] 21. Section 72 is being amended to delete clause (c) regarding improper removal of samples [132] 22. Section 73 is being amended to provide for cancellation bond in case of transfer of ownership of the goods, and is thus aligned with sub-section (5) of section 59. [133] 23. New section 73A is being inserted so as to provide for custody of warehoused goods and responsibilities including the liabilities of warehouse keepers. [134] AMENDMENT IN THE CUSTOMS TARIFF ACT, 1975 S. No. Amendment Clause of the Finance Bill, 2016 1. To omit Section 8C [Power of Central Government to impose transitional product specific safeguard duty on imports from People s Republic of China] [137] AMENDMENT IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975 S. No. Amendment Clause of the Finance Bill, 2016 Amendments not affecting rates of duty 1. Editorial changes in the Harmonized System of Nomenclature (HSN) in certain chapters are being incorporated in the First Schedules, to be effective from 01.01.2017. [138(ii)] 2. To: 1) Amend supplementary notes (e) and (f) Chapter 27 so as to change the reference: a) from IS:1460:2000 to IS:1460:2005 for high speed diesel (HSD) and b)from IS:1460 to IS: 15770:2008 for light diesel oil (LDO); 2) Substitute Tariff line 5801 39 10 with description Warp pile fabrics, uncut in place of tariff line 5801 37 11 [with description Warp pile fabrics epingle uncut velvet] and 5801 37 19 [with description Warp pile fabrics epingle uncut other]; 3) Prescribe separate tariff lines for laboratory created or laboratory grown or manmade or cultured or synthetic diamonds; 4) Delete Tariff line 8525 50 50, relating to Wireless microphone. [138 (i)] 3 Natural latex rubber made balloons falling under specified headings 10% 20% Metals 4 Primary aluminium 5% 7.5% 5 Zinc alloys 5% 7.5% Jewellery 6 Imitation jewellery 10% 15% Renewable Energy 7 Industrial solar water heater 7.5% 10% Capital goods and parts thereof 8 Increase the tariff rate of BCD for 211 specified tariff lines in Chapters 84, 85 and 90 7.5% 10% a) The effective rates for 96 specified tariff lines will increase 7.5% 10% b) The effective rate for 115 tariff lines will be maintained 7.5% 7.5% The amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. OTHER PROPOSALS INVOLVING CHANGES IN BCD, CVD, SAD AND EXPORT DUTY RATES S.No. BCD/CVD/SAD/Export Duty From To Export duty Ores and concentrates 1 Iron ore fines with Fe content below 58% 10% Nil 2 Iron ore lumps with Fe content below 58% 30% Nil 3 Chromium ores and concentrates, all sorts 30% Nil 4 Bauxite (natural), not calcined or calcined 20% 15% Basic Customs Duty Food Processing 1 Cashew nuts in shell Nil 5% 2 Cold chain including pre-cooling unit, packhouses, sorting and grading lines and ripening chambers 10% 5% 3 Refrigerated containers 10% 5% Mineral fuels and Mineral oils 4 Coal; briquettes, ovoids and similar solid fuels manufactured from coal 2.5% / 10% 2.5% 5 Lignite, whether or not agglomerated, excluding jet 10% 2.5% 6 Peat (including peat litter), whether or not agglomerated 10% 2.5% 7 Coke and semi-coke of coal, of lignite or of peat, whether or not agglomerated; retort carbon 5% / 10% 5% 8 Coal gas, water gas, producer gas and similar gases, other than petroleum gases and other gaseous hydrocarbons 10% 5% 9 Tar distilled from coal, from lignite or from peat and other mineral tars, whether or not dehydrated or partially distilled, including reconstituted tars 10% 5% 10 Oils and other products of the distillation of high temperature coal tar similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents 2.5% / 5% / 10% 2.5% 11 Pitch and pitch coke, obtained from coal tar or from other mineral tars 5% / 10% 5% Petroleum exploration and production 12 Goods required for exploration production of hydrocarbon activities undertaken under Petroleum Exploration Licenses (PEL) or Mining Leases (ML) issued or renewed before 1 st April 1999 Applicable BCD and CVD BCD - Nil CVD Nil Chemicals Petrochemicals 13 All acyclic hydrocarbons and all cyclic hydrocarbons [other than para-xylene which attracts Nil BCD and styrene which attracts 2% BCD] 5% / 2.5% 2.5% 14 Denatured ethyl alcohol (Ethanol) subject to actual user condition 5% 2.5% 15 Orthoxylene for the manufacture of phthalic anhydride subject to actual user condition SAD 4% SAD 2% 16 Electrolysers, membranes and their parts required by caustic soda / potash unit using membrane cell technology 2.5% Nil Paper, Paperboard and newsprint 17 Wood in chips or particles for manufacture of paper, paperboard and news print 5% Nil 18 Plans, drawings and designs Nil 10% Textiles 19 Specified fibres and yarns 5% 2.5% 20 Specified fabrics [for manufacture of textile garments for export] of value equivalent to 1% of FOB value of exports in the preceding financial year subject to the specified conditions. The entitlement for the month of March 2016 shall be one twelfth of one per cent. of the FOB value of exports in the financial year 2014-15. Applicable BCD Nil Electronics / Hardware 21 Polypropylene granules / resins for the manufacture of capacitor grade plastic films 7.5% Nil 22 E-Readers Nil 7.5% 23 Parts of E-readers Applicable BCD 5% 24 Magnetron of capacity of 1 KW to 1.5 KW for use in manufacture of domestic microwave ovens subject to actual user condition. 10% Nil 25 Machinery, electrical equipment and instrument and parts thereof (except populated PCBs) for semiconductor wafer fabrication / LCD fabrication units Applicable BCD SAD Nil BCD Nil SAD 26 Machinery, electrical equipment and instrument and parts thereof (except populated PCBs) imported for Assembly, Test, Marking and Packaging of semiconductor chips (ATMP) Applicable BCD SAD Nil BCD Nil SAD 27 The exemption from basic customs duty, CV duty, SAD on charger / adapter, battery and wired headsets / speakers for manufacture of mobile phone being withdrawn BCD-Nil CVD - Nil SAD - Nil Applicable BCD CVD 12.5% SAD 4% 28 Inputs, parts and components, subparts for manufacture of charger / adapter, battery and wired headsets / speakers of mobile phones, subject to actual user condition Applicable BCD, CVD SAD Nil BCD Nil CVD Nil SAD 29 Parts and components, subparts for manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets] Applicable BCD, CVD SAD Nil BCD Nil CVD Nil SAD 30 Magnetic - Heads (all types), Ceramic / Magnetic cartridges and stylus, Antennas, EHT cables, Level meters/level indicators/ tuning indicators/ peak level meters/ battery meter/VC meters / Tape counters, Tone arms, Electron guns Nil BCD Applicable BCD 31 To exclude specified telecommunication equipment [Soft switches and Voice over Internet Protocol (VoIP) equipment namely VoIP phones, media gateways, gateway controllers and session border controllers, Optical Transport equipment; combination of one / more of Packet Optical Transport Product/Switch (POTP/POTS), Optical Transport Network(OTN) products, and IP Radios, Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (MPLS-TP) products, Multiple Input / Multiple Output (MIMO) and Long Term Evolution (LTE) Products on which 10% BCD was imposed in 2014-15 Budget being non-ITA I bound] from the purview of the other exemption. Nil BCD 10% 32 Preform of silica for manufacture of telecom grade optical fibre /cables Nil 10% 33 Specified capital goods and inputs for use in manufacture of Micro fuses, Sub-miniature fuses, Resettable fuses, and Thermal fuses Applicable BCD Nil 34 Neodymium Magnet (before Magnetization) and Magnet Resin (Strontium Ferrite compound/before formed, before magnetization) for manufacture of BLDC motors, subject to actual user condition Applicable BCD 2.5% 35 Populated PCBs for manufacture of personal computers (laptop or desktop) Nil SAD 4% SAD 36 Populated PCBs for manufacture of mobile phone/tablet computer Nil SAD 2% SAD Metals, glass and ceramics 37 Silica sand 5% 2.5% 38 Brass scrap 5% 2.5% 39 Other aluminium products 7.5% 10% Jewellery 40 Gold dore bars. 8% CVD 8.75% CVD 41 Silver dore. 7% CVD 7.75% CVD Automobiles 42 Golf cars 10% 60% 43 Specified parts of electric and hybrid vehicles BCD-Nil CVD 6% Upto 31.03.2016 BCD-Nil CVD 6% Without time limit 44 Aluminium Oxide for use in the manufacture of Wash Coat, which is used in the manufacture of catalytic converters, subject to actual user condition 7.5% 5% 45 Engine for xEV (hybrid electric vehicle) Applicable BCD and CVD Nil BCD 6% CVD Capital Goods 46 Specified machinery required for construction of roads CVD Nil CVD 12.5% Defence Production 47 Direct imports of specified goods by Government of India or State Governments, with effect from 01.4.2016 BCD Nil CVD Nil SAD Nil Applicable BCD, CVD and SAD 48 Imports of specified goods for defence purposes by contractors of the Government of India, PSUs or sub-contractors of PSUs, with effect from 01.4.2016 BCD Nil Applicable CVD and SAD Applicable BCD, CVD and SAD Maintenance, repair and overhaul [MRO] of aircrafts 49 Tools and tool kits when imported by MROs for maintenance, repair, and overhauling [MRO] of aircraft subject to a certification by the Directorate General of Civil Aviation Applicable BCD, CVD and SAD Nil BCD Nil CVD Nil SAD 50 Simplify the procedure for availment of exemption from customs duties on parts, testing equipment, tools and tool-kits for maintenance, repair and overhaul of aircraft based on records and subject to actual user condition - - 51 Remove the restriction of one year for utilization of duty free parts for maintenance, repair and overhaul of aircraft - - 52 Further relax the existing conditions of stay [upto 60 days], so as to provide for stay up to 6 months of the foreign aircraft for maintenance, repair or overhauling, and provide for further extension of such period by DGCA as deemed fit - - Ship Repair Units 53 Capital goods and spare thereof, raw materials, parts, material handling equipment and consumable for repairs of ocean-going vessels by a ship repair unit subject to actual user condition. Applicable excise duty Nil 54 Simplify the procedure for availment of exemption from Basic Customs Duty, CVD and SAD by ship repair units based on records and subject to actual user condition - - Miscellaneous 55 Braille paper 10% Nil 56 Disposable sterilized dialyzer and micro barrier of artificial kidney Applicable BCD, CVD, SAD Nil BCD Nil CVD Nil SAD 57 Solar tempered glass / solar tempered (anti-reflective coated) glass, subject to actual user condition Nil 5% 58 Medical Use Fission Molybdenum-99 imported by Board of Radiation and Isotope Technology (BRIT) for manufacture of radio pharmaceuticals 7.5% Nil 59 Pulp of wood for manufacture of sanitary pads, napkins tampons 5% 2.5% 60 Super Absorbent Polymer when used for the manufacture of sanitary pads, napkins tampons 7.5% 5% 61 Merge the exemptions from customs duties on specified goods imported for petroleum exploration under various types of licenses or mining leases, pre-NELP contracts, NELP contracts, Marginal Fields Policy and the Coal Bed Methane Policy into a single exemption with a unified list of specified goods and conditions Nil BCD Nil CVD Nil SAD Nil BCD Nil CVD Nil SAD 62 Specified goods required for exploration production of hydrocarbon activities undertaken under Petroleum Exploration Licenses (PEL) or Mining Leases (ML) issued or renewed before 1 st April 1999 Applicable BCD, CVD, SAD Nil BCD Nil CVD Nil SAD 63 Prescribe actual user condition for the imports of Phosphoric Acid and Anhydrous Ammonia at concessional BCD/CVD for manufacture of Fertilizers - - 64 Prescribe actual user condition for imports of LCD/LED/OLED Panels imported at Nil BCD for manufacture of LCD/LED/OLED TVs - - 65 Foreign Satellite data on storage media when imported by National Remote Sensing Centre (NRSC), Hyderabad Applicable BCD, CVD, SAD Nil BCD Nil CVD Nil SAD RETROSPECTIVE AMENDMENT S. No. Amendment Clause of the Finance Bill, 2016 1. To amend various notifications pertaining to Advance Licence and Duty Free Import Authorization Schemes retrospectively, to correct the reference to section 8 in such notifications to section 8B so as to clearly provide that exemption from safeguard duty under section 8B of the Customs Tariff Act, 1975 was/is available under these notifications on imports under Advance Licence and Duty Free Import Authorization Schemes. [136]