Budget 2014 - Central Excise

[CA Sumit Aggarwal]

The Finance Bill, 2014 proposed legislative amendments. Following table shows an analysis of the same:

Finance Bill, 2014 - Central Excise

S. No.	Excise	Old Provision	New Provision	Impact/Analysis
1	Substitution of new authorities	1. Chief Commissioner of Central Excise 2. Commissioner of Central Excise	1. Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise 2. Principal Commissioner of Central Excise or Commissioner of Central Excise.	Addition of class of officer in the Act.
2	Amendment of section 2 (b)	"Central Excise Officer" means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise or any other officer of the Central Excise Department, or any person (including an officer of the State Government) vested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act;	in section 2, in clause (b) for the words “Chief Commissioner of Central Excise”, the words “Principal Chief Commissioner of Central Excise, Chief Commissioner of Central Excise, Principal Commissioner of Central Excise” shall be substituted.	Addition of class of officer in the definition of Central Excise Officer.
3	Insertion of new sections 15A	NA	15A. (1) Any person, being - (a) an assessee; or (b) a local authority or other public body or association; or (c) any authority of the State Government responsible for the collection of value added tax or sales tax; or (d) an income tax authority appointed under the provisions of the Income-tax Act, 1961; or (e) a banking company within the meaning of clause (a) of section 45A of the Reserve Bank of India Act, 1934; or (f) a State Electricity Board; or an electricity distribution or transmission licensee under the Electricity Act, 2003, or any other entity entrusted, as the case may be, with such functions by the Central Government or the State Government; or (g) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908; or (h) a Registrar within the meaning of the Companies Act, 2013; or (i) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988; or (j) the Collector referred to in clause (c) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; or (k) the recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956; or (l) a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996; or (m) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934, who is responsible for maintaining record of registration or statement of accounts or any periodic return or document containing details of payment of tax and other details or transaction of goods or services or transactions related to a bank account or consumption of electricity or transaction of purchase, sale or exchange of goods or property or right or interest in a property, under any law for the time being in force, shall furnish an information return of the same in respect of such periods, within such time, form (including electronic form) and manner, to such authority or agency as may be prescribed. (2) Where the prescribed authority considers that the information submitted in the information return is defective, he may intimate the defect to the person who has furnished such information return and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such further period which, on an application made in this behalf, the prescribed authority may allow and if the defect is not rectified within the said period of thirty days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, such information return shall be treated as not submitted and the provisions of this Act shall apply. (3) Where a person who is required to furnish information return has not furnished the same within the time specified in sub-section (1) or sub-section (2), the prescribed authority may serve upon him a notice requiring furnishing of such information return within a period not exceeding ninety days from the date of service of the notice and such person shall furnish the information return.	1. Specified persons such as Income Tax Authority, State Electricity Board, VAT or Sales Tax Authorities, Registrar of companies etc. are required to furnish an information return to the authority or agency prescribed by the Central Government. 2. Such prescribed authority is also empower to serve a notice on specified person. 3. Specified person requires to furnish the information return within in 90 days from the date of service of the notice.
4	Insertion of new sections 15B	NA	15B. If a person who is required to furnish an information return under section 15A fails to do so within the period specified in the notice issued under sub-section (3) thereof, the prescribed authority may direct that such person shall pay, by way of penalty, a sum of one hundred rupees for each day of the period during which the failure to furnish such return continues.”.	1. If specified person fails to file the information return within the period specified in the notice issued then such specified person is liable to pay a penalty of ₹ 100 per day during which failure to furnish such return continues. 2. It is interesting to note that now Government Authorities are also under the purview of penal provisions.
5	Amendment of section 31	Section 31(g) "Settlement Commission" means the Customs and Central Excise Settlement Commission constituted under section 32;	in section 31, in clause (g), for the words “Customs and Central Excise Settlement Commission”, the words “Customs, Central Excise and Service Tax Settlement Commission” shall be substituted.	Amended to change the name of the “Customs and Central Excise Settlement Commission” to the “Customs, Central Excise and Service Tax Settlement Commission”.
6	Amendment of section 32	Section 32 (1) The Central Government shall, by notification in the Official Gazette, constitute a Commission to be called the Customs and Central Excise Settlement Commission for the settlement of cases under this Chapter and Chapter XIVA of the Customs Act, 1962 (52 of 1962).	in section 32, in sub-section (1), for the words “the Customs and Central Excise Settlement Commission”, the words “the Customs, Central Excise and Service Tax Settlement Commission” shall be substituted.	Amended to change the name of the “Customs and Central Excise Settlement Commission” to the “Customs, Central Excise and Service Tax Settlement Commission”.
7	Amendment of section 32E	#clause (d) to first proviso the applicant has paid the additional amount of excise duty accepted by him along with interest due under section 11AB: # Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending with the Appellate Tribunal or any court . # (2) Where any excisable goods, books of account, other documents have been seized under the provisions of this Act or rules made thereunder, the assessee shall not be entitled to make an application under sub-section (1), before the expiry of one hundred and eighty days from the date of the seizure.	in section 32E, - (i) in sub-section (1), - (a) in the first proviso, in clause (d), for the word, figures and letters “section 11AB”, the word, figures and letters “section 11AA” shall be substituted; (b) in the second proviso, for the words “Provided further that”, the following shall be substituted, namely: - “Provided further that the Settlement Commission, if it is satisfied that the circumstances exist for not filing the returns referred to in clause (a) of the first proviso to sub-section (1), may after recording the reasons therefore, allow the applicant to make such application: Provided also that”; (ii) sub-section (2) shall be omitted.	1. Section 11AB (interest on delayed payment) was omitted vide Finance Act, 2011, w.e.f. 8-4-2011; although corresponding amendment in section 32E was not made. 2. Amended to replace the omitted Section 11AB with a reference to Section 11AA. 3. New proviso inserted to the effect that Settlement Commission may allow the application even where applicant not file return after recording reasons for the same. 4. After deletion of sub section (2), now applicant may file the application before the Settlement Commission immediately after seizure of its books of accounts. He is no more suppose to wait for expiry of 180 days to file the application.
8	Amendment of section 32-O	Section 32-O. Bar on subsequent application for settlement in certain cases.- (1) Where, (i) an order of settlement passed under sub-section (7) of section 32F as it stood immediately before the commencement of section 122 of the Finance Act, 2007 (22 of 2007.) or sub-section (5) of section 32F, provides for the imposition of a penalty on the person who made the application under section 32E for settlement, on the ground of concealment of particulars of his duty liability; or	in section 32-O, in sub-section (1), in clause (i), the following Explanation shall be inserted, namely: - “Explanation. - In this clause, the concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer.”.	This results in bar on subsequent application in the case of concealment of particulars of duty liability before the CEO.
9	Amendment of section 35B	#Provided further that the Appellate Tribunal may, in its discretion, refuse to admit an appeal in respect of an order referred to in clause (b) or clause (c) or clause (d) where - (i) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or (ii) the amount of fine or penalty determined by such order, does not exceed fifty thousand rupees. # (1B) The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) may, by notification in the Official Gazette, constitute a Committee consisting of two Chief Commissioners of Central Excise for the purposes of this Act."	in section 35B, (a) in sub-section (1), in the second proviso, for the words “fifty thousand rupees”, the words “two lakh rupees” shall be substituted; (b) in sub-section (1B), in clause (i), for the words “by notification in the Official Gazette”, the words “by order” shall be substituted.	1. Appellate Tribunal may refuse admission of appeal where the fine or penalty determined by order is less than two lakhs. 2. It will enable the Board to constitute a review committee by way of an order instead of by way of notification.
10	Amendment of section 35C	(2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed : Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of Section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order : Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. Provided also that where such appeal is not disposed of within the period specified in the first proviso, the Appellate Tribunal may, on an application made in this behalf by a party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend the period of stay to such further period, as it thinks fit, not exceeding one hundred and eighty-five days, and in case the appeal is not so disposed of within the total period of three hundred and sixty-five days from the date of order referred to in the first proviso, the stay order shall, on the expiry of the said period, stand vacated	In the Central Excise Act, in section 35C, in sub-section (2A), the first, second and third proviso shall be omitted.	1. Now department can not seek 100% deposition of duty/penalty and interest involved in the appeal filed before the Appellate Tribunal until unless it is decided.
11	Amendment of section 35E	(3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.	In the Central Excise Act, in section 35E, in sub-section (3), the following proviso shall be inserted, namely: - “Provided that the Board may, on sufficient cause being shown, extend the said period by another thirty days.”.	Board is empower to condone delay for a period upto 30 days for review by the Committee of Chief Commissioners of the orders in original passed by the Commissioner of Central Excise.
12	Substitution of new section for section 35F	Section 35F. Deposit, pending appeal, of duty demanded or penalty levied.- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing. Explanation. - For the purposes of this section ''duty demanded'' shall include , - (i) amount determined under section 11D; (ii) amount of erroneous CENVAT credit taken; (iii) amount payable under rule 57CC of Central Excise Rules, 1944; (iv) amount payable under rule 6 of CENVAT Credit Rules, 2001 or CENVAT Credit Rules, 2002 or CENVAT Credit Rules, 2004; (v) interest payable under the provisions of this Act or the rules made thereunder.'	In the Central Excise Act, for section 35F, the following section shall be substituted, namely: - “35F. The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal, - (i) under sub-section (1) of section 35, unless the appellant has deposited seven and a half percent. of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Commissioner of Central Excise; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent. of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014. Explanation. - For the purposes of this section “duty demanded” shall include, - (i) amount determined under section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004.	1. A mandatory fixed pre deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage; 2. Another 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal; 3. The amount of pre-deposit payable would be subject to a ceiling of ₹ 10 crore. 4. No requirement of filing stay application.
13	Amendment of section 35L	Section 35L. Appeal to the Supreme Court. An appeal shall lie to the Supreme Court from - (a) any judgment of the High Court delivered - (i) In an appeal made under section 35G; or (ii) On a reference made under section 35G by the Appellate Tribunal before the first day of July 2003; (iii) On a reference made under section 35H, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after the passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or (b) any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.	In the Central Excise Act, section 35L shall be numbered as sub-section (1) thereof, and after sub-section (1) as so numbered, the following sub-section shall be inserted, namely: - “(2) For the purposes of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment.”.	Clarify that determination of disputes relating to taxability or excisability of goods is covered under the term 'determination of any question having a relation to rate of duty' and hence, appeal against Tribunal orders in such matters would lie before the Supreme Court.
14	Amendment of section 35R	(4) The Appellate Tribunal or court hearing such appeal, application, revision or reference shall have regard to the circumstances under which appeal, application, revision or reference was not filed by the Central Excise Officer in pursuance of the orders or instructions or directions issued under sub-section (1).	In the Central Excise Act, in section 35R, in sub-section (4), for the words “The Appellate Tribunal or court”, the words “The Commissioner (Appeals) or the Appellate Tribunal or court” shall be substituted.	Amended so as to enable the Commissioner (Appeal) to take into consideration the fact that a particular order being cited as a precedent decision on the issue has not been appealed against for reasons of low amount.

Apart from the above mentioned legislative amendment; there are some amendments which has come in to force from 11th July 2014. The following table shows an analysis thereof.

Budget (2014-15) Notifications Central Excise (Non-Tariff) dated 11.07.2014

Notification No.	Description	Reference	Main Extract of Notification	Impact
17/2014-CE (NT)	Seeks to amend Notification No. 49/2008-CE (NT), dated 24th December, 2008.	Notification No. 49/2008 CE (NT) is for MRP based duty of Excise - Prescribes rate of abatement	In the said notification, in the TABLE, against serial number 140, in column (2), for the existing entry, the following entries shall be substituted, namely:- “8421 21 20, 8421 99 00”.	Parts of filtering or purifying machinery functioning without electricity are liable for assessment based on Retail Sale Price.
18/2014-CE (NT)	Seeks to specify class of persons for the purposes of section 23A of the Central Excise Act, 1944.	SECTION 23A Definitions:- In this Chapter, unless the context other-wise requires,- (c) "applicant" means- (i) ( a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or (b) a resident setting up a joint venture in India in collaboration with a non-resident; or ( c) a wholly owned subsidiary Indian company, of which the holding company is a foreign company. (ii) a joint venture in India; or (iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf, and which or who, as the case may be, makes application for advance ruling under sub-section( 1) of section 23C; Explanation. - For the purposes of this clause, "joint venture in India" means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint control and one or more of the participants or partners or equity holders is a non-resident having substantial interest in such arrangement;	In exercise of the powers conferred by sub-clause (iii) of clause (c) of section 23A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby specifies “the resident private limited company” as class of persons for the purposes of the said clause. Explanation.- For the purposes of this notification,- (a) “private limited company” shall have the same meaning as is assigned to “private company” in clause (68) of section 2 of the Companies Act, 2013 (18 of 2013); (b) “resident” shall have the same meaning as is assigned to it in clause (42) of section 2 read with sub-section (3) of section 6 of the Income-tax Act, 1961 (43 of 1961).	The Scheme of Advance Ruling is being extended to Resident Private Limited Companies.
19/2014-CE (NT)	Seeks to amend Central Excise Rules, 2002	#Provided also that an assessee, who has paid total duty of rupees one lakh or more including the amount of duty paid by utilization of CENVAT credit in the preceding financial year, shall thereafter, deposit the duty electronically through internet banking. #(3A) If the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assessee pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.	2. In rule 8 of the Central Excise Rules, 2002, - (i) in sub-rule (1), the third proviso shall be omitted with effect from the 1st October , 2014 ; (ii) after sub-rule (1A), the following sub-rule shall be inserted with effect from the 1st October , 2014 , namely : - “ (1B) Every assessee shall electronically pay duty through internet banking : Provided that the Assistant Commissioner or the Deputy Commissioner of Central Excise , for reasons to be recorded in writing , allow an assessee payment of duty by any mode other than internet banking . ” ; (iii) for sub-rule (3A), the following sub-rule shall be substituted, namely : - “ (3A) If the assessee fails to pay the duty declared as payable by him in the return within a period of one month from the due date, then the assessee is liable to pay the penalty at the rate of one per cent. on such amount of the duty not paid, for each month or part thereof calculated from the due date, for the period during which such failure continues . Explanation.- For the purposes of this sub-rule, 'month' means the period between two consecutive due dates for payment of duty specified under sub-rule (1) or the first proviso to sub-rule (1) , as the case may be ."	1. From 1st October 2014, every assessee require to pay duty electronically. 2. AC/DC may allow an assessee to pay duty by any mode other than electronic mode; for which reasons to be recorded in writing. 3. In case of default in payment of duty, the assessee shall on his own pay a penalty of 1% per month on the amount of duty not paid for each month or part thereof.
20/2014-CE (NT)	Seeks to amend Central Excise Valuation Rules, 2008	Rule 6. Where the excisable goods are sold in the circumstances specified in clause (a) of sub section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to he the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.	In the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the said rules), in rule 6, before Explanation I , the following proviso shall be inserted , namely :- “ Provided that where price is not the sole consideration for sale of such excisable goods and they are sold by the assessee at a price less than manufacturing cost and profit, and no additional consideration is flowing directly or indirectly from the buyer to such assessee, the value of such goods shall be deemed to be the transaction value.”	1. By the insertion of this proviso, it is made clear that where the price is sole consideration for sale of excisable goods and they are sold by the assessee at a price less than manufacturing cost then value of such good shall be transaction value. 2. Where price is not sole consideration then value of such goods shall be deemed as transaction value only when the following condition fulfilled: a. price may be lesser than manufacturing cost and profit; and b. no additional consideration is flowing directly or indirectly from the buyer.
22/2014-CE (NT)	Seeks to amend Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008		In the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, in FORM – 2, in paragraph 4, for item (iv), the following item shall be substituted, namely:- “(iv) Break-up of duty payment for apportionment between various duties is as per details below.....	Rate of duty on Pan Masala has increased and ratio of the same under different heads of duty has also changed.