Budget 2014 - Customs - An Analysis

[CA Sumit Aggarwal]

Following table shows the the detailed analysis of proposed amendments to customs law.

Finance Bill, 2014 - Customs
S No.	Section/Rule	Old Provision	New Provision	Impact/Analysis
1	Substitution of new authorities	1. Chief Commissioner of Customs 2. Commissioner of Customs	1. Principal Chief Commissioner of Customs or Chief Commissioner of Customs. 2. Principal Commissioner of Customs or Commissioner of Customs.	Addition of class of officer in the Act.
2	Amendment of Section 3	There shall be the following classes of officers of customs, namely :- (a) Chief Commissioners of Customs; (b) Commissioners of Customs; (c) Commissioners of Customs (Appeals); (cc) Joint Commissioners of Customs; (d) Deputy Commissioners of Customs; (e) Assistant Commissioners of Customs 1[***] (f) such other class of officers of customs as may be appointed for the purposes of this Act.	In the Customs Act, in section 3, for clauses (a), (b), (c), (cc), (d), (e) and (f), the following clauses shall be substituted, namely: - “(a) Principal Chief Commissioners of Customs; (b) Chief Commissioners of Customs; (c) Principal Commissioners of Customs; (d) Commissioners of Customs; (e) Commissioners of Customs (Appeals); (f) Joint Commissioners of Customs; (g) Deputy Commissioners of Customs; (h) Assistant Commissioners of Customs; (i) such other class of officers of customs as may be appointed for the purposes of this Act.”.	Addition of class of officer in the definition of Central Excise Officer.
3	Amendment of Section 15	(1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, - (a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section; (c) in the case of any other goods, on the date of payment of duty : Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be. (2) The provisions of this section shall not apply to baggage and goods imported by post.	In the Customs Act, in section 15, in sub-section (1), in the proviso, after the words “the aircraft”, the words “or the vehicle” shall be inserted.	This amendment provides the provision for determination of rate of duty and tariff valuation for imports through a vehicle in cases where the Bill of Entry is filed prior to the filing of Import Report (as the Manifest is called in case of imports by land).
4	Amendment of Section 25	NA	In the Customs Act, in section 25, after sub-section (6), the following sub-sections shall be inserted, namely: - “(7) The mineral oils (including petroleum and natural gas) extracted or produced in the continental shelf of India or exclusive economic zone of India as referred to in section 6 and section 7, respectively, of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976, and imported prior to the 7th day of February, 2002 shall be deemed to be and shall always be deemed to have been exempted from the whole of the duties of customs leviable on such mineral oils and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, no suit or other proceedings in respect of such mineral oils shall be maintained or continued in any court, tribunal or other authority. (8) Notwithstanding the exemption provided under sub-section (7), no refund of duties of customs paid in respect of the mineral oils specified therein shall be made.”	1. The customs duties on mineral oils including petroleum and natural gas extracted or produced in the continental shelf of India or the exclusive economic zone of India shall not be recovered for the period prior to 7th February, 2002. 3. This amendment will not give the right of refund to the assessee who had been paid the cutoms duty in respect of the mineral oils specified therein.
5	Amendment of Section 46	(3) A bill of entry under sub-section (1) may be presented at any time after the delivery of the import manifest or import report as the case may be : Provided that the Commissioner of Customs may in any special circumstances permit a bill of entry to be presented before the delivery of such report : Provided further that a bill of entry may be presented even before the delivery of such manifest if the vessel or the aircraft by which the goods have been shipped for importation into India is expected to arrive within thirty days from the date of such presentation.	In the Customs Act, in section 46, in sub-section (3), - (i) the first proviso shall be omitted; (ii) for the second proviso, the following proviso shall be substituted, namely: - “Provided that a bill of entry may be presented even before the delivery of such manifest or report, if the vessel or the aircraft or the vehicle by which the goods have been shipped for importation into India is expected to arrive within thirty days from the date of such presentation."	1. As first proviso omitted; now special permission of Commisioner of customs will not require to file BOE before the delivery of import report. 2. Allow the filing of a Bill of Entry prior to the filing of Import Report (as the Manifest is called in case of imports by land) for imports through land route.
6	Amendment of Section 127A	(f) "Settlement Commission" means the Customs and Central Excise Settlement Commission constituted under section 32 of the Central Excise Act, 1944 (1 of 1944); and	In the Customs Act, in section 127A, in clause (f), 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‟.
7	Amendment of Section 127B	(1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, in respect of a case, relating to him make an application, before adjudication to the Settlement Commission to have the case settled, in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, under-valuation or inapplicability of exemption notification 1[or otherwise] and such application shall be disposed of in the manner hereinafter provided: Provided that no such application shall be made unless, - (a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of such goods, as the case may be, and in relation to such bill of entry or shipping bill, a show cause notice has been issued to him by the proper officer; (b) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; and (c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28AB: (2) Where any dutiable goods, books of account, other documents or any sale proceeds of the goods have been seized under section 110, the applicant 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 the Customs Act, in section 127B, - (i) in sub-section (1), in the first proviso, for clause (a), the following clause shall be substituted, namely: - “(a) the applicant has filed a bill of entry, or a shipping bill, or a bill of export, or made a baggage declaration, or a label or declaration accompanying the goods imported or exported through post or courier, as the case may be, and in relation to such document or documents, ashow cause notice has been issued to him by the proper officer;”; (ii) in clause (c), for the word, figures and letters “section 28AB”, the word, figures and letters“section 28AA” shall be substituted; (iii) sub-section (2) shall be omitted.	1. An application for settlement of cases can also be filed in cases where a Bill of Export, Baggage Declaration, Label or Declaration accompanying the goods effected through Post or Courier have been filed. 2. Section 28AB (interest on delayed payment) was omitted vide Finance Act, 2011, w.e.f. 8-4-2011; although corresponding amendment in section 127B was not made. 3. Amended to replace the omitted Section 28AB with a reference to Section 28AA. 4. It means during the period 08-04-2011 upto Finance Bill 2014 get assent; an application before settlement commission can be made without depositing the interest amount. 5.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 127L	(1)Where, (i) an order of settlement passed under sub-section (7) of section 127C 2[as it stood immediately before the commencement of section 102 of the Finance Act, 2007 [22 of 2007.] or sub-section (5) of section 127C] provides for the imposition of a penalty on the applicant under section 127B for settlement, on the ground of concealment of particulars of his duty liability; or	In the Customs Act, in section 127L, 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 officer of customs.	This results in imposition of penalty in the case of concealment of particulars of duty liability before the officer of customs.
9	Amendment of Section 129A	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) the value of the goods confiscated without option having been given to the owner of the goods to pay a fine in lieu of confiscation under section 125; or (ii) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of customs 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 (iii) the amount of fine or penalty determined by such order, does not exceed fifty thousand rupees. (1B) (i) The Board may, by notification in the Official Gazette, constitute such Committees as may be necessary for the purposes of this Act.	In the Customs Act, in section 129A, - (i) in sub-section (1), in the second proviso, for the words “fifty thousand rupees”, the words “two lakh rupees” shall be substituted; (ii) 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 129B	(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 129A, 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. 1[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 Customs Act, in section 129B, 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 129D	(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 Customs Act, in section 129D, 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 Customs.
12	Substitution of new section for Section 129E	Where in any appeal under this Chapter, the decision or order appealed against relates to any duty and interest demanded in respect of goods which are not under the control of the customs 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 proper officer the duty and interest 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 and interest 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 and interest 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.	In the Customs Act, for section 129E, the following section shall substituted, namely: - “129E. The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal, - (i) under sub-section (1) of section 128, unless the appellant has deposited seven and a half per cent. of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an officer of customs lower in rank than the Commissioner of Customs; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 129A, 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 129A, 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.’’.	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.
13	Amendment of Section 131BA	(4) The Appellate Tribunal or court hearing an appeal, application, revision or reference shall have regard to the circumstances under which the appeal, application, revision or reference was not filed by the Commissioner of Customs in pursuance of orders or instructions or directions issued under sub-section (1).	In the Customs Act, in section 131BA, in sub-section (4), for the words “The Appellate Tribunal or court”, the words and brackets “The Commissioner (Appeals) or the Appellate Tribunal or the 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.
14	Amendment of Notification issued under Section25		(1) The notification of the Government of India in the Ministry of Finance (Department of Revenue)number G.S.R. 185 (E), dated the 17th March, 2012, issued under sub-section (1) of section 25 of the Customs Act, as specified in column (1) of the Second Schedule, shall stand amended and shall be deemed to have been amended, retrospectively, in the manner specified in column (2) of that Schedule, on and from and up to the corresponding date specified in column (3) of the said Schedule. (2) For the purposes of sub-section (1), the Central Government shall have and shall be deemed to have the power to amend the notification with retrospective effect as if the Central Government had the power to amend the said notification under sub-section (1) of section 25 of the Customs Act retrospectively, at all material times. (3) The refund shall be made of all such duty of customs which has been collected but which would not have been so collected, had the notification referred to in sub-section (1) been in force at all material times, subject to the provision of section 27 of the Customs Act. (4) Notwithstanding anything contained in section 27 of the Customs Act, an application for the claim of refund of duty of customs under sub-section (3) shall be made within the period of six months from the date on which the Finance (No. 2) Bill, 2014 receives the assent of the President. (5) No act or omission on the part of any person shall be punishable as an offence which would not have been so punishable had the notification referred to in sub-section (1) not been amended retrospectively. Explanation. - For the purposes of sub-section (1), the “corresponding date”, in relation to tariff items specified against S.No.141, means the 8th February, 2013 to 10th July, 2014 (both days inclusive).
Customs Tariff
1	Amendment of Section 8B	(2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any safeguard duty imposed under sub-section (2), unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to articles imported by a hundred per cent. export-oriented undertaking or a unit in a free trade zone or in a special economic zone.	In the Customs Tariff Act, 1975 (hereinafter referred to as the Customs Tariff Act), in section 8B,in sub-section (2A), - (a) for the portion beginning with the words “unless specifically made applicable” and ending with the words “in a special economic zone”, the following shall be substituted, namely: - “shall not apply to articles imported by a hundred per cent. export-oriented undertaking or a unit in a special economic zone unless, - (i) specifically made applicable in such notifications or such impositions, as the case may be; or (ii) the article imported is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area and in such cases safeguard duty shall be levied on that portion of the article so cleared or so used as was leviable when it was imported into India.”; (b) in the Explanation, the words “free trade zone” shall be omitted.	Section 8B of the Customs Tariff Act, 1975 is being amended so as to provide for levy of safeguard duty on inputs/raw materials imported by an EOU and cleared into DTA as such or are used in the manufacture of final products and cleared into DTA. [Clause 86]

Following table shows the analysis of Non Tariff Notification issued by the department:

Budget (2014-15) Notifications Customs (Non-Tariff) dated 11.07.2014
Notification No	Description	Reference	Main Extract of Notification	Impact
50/2014-Customs (NT)	Seeks to amend notification No. 30/98-Customs (NT) dated 2 June 1998 so as to amend Baggage Rules, 1998.		In exercise of the powers conferred by section 79 of the Customs Act, 1962 (52 of 1962), the Central Government hereby makes the following rules further to amend the Baggage Rules, 1998, namely:- 1. (1) These rules may be called the Baggage Amendment) Rules, 2014. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Baggage Rules, 1998 (hereinafter referred to as the said rules), in Appendix A,- (A) against clause (a) of column (1), in item (ii) under column (2), for the symbol and figures “` 35,000”, symbol and figures “` 45,000” shall be substituted; (B) against clauses (b) and (c) of column (1), in item (ii) under column (2), for the symbol and figures “` 15,000”, symbol and figures “` 17,500” shall respectively be substituted. 3. In said rules, in the Annex I, for item 3, the following item shall be substituted, namely:- “3. Cigarettes exceeding 100 or cigars exceeding 25 or tobacco exceeding 125 gms.”.	1. Raise the free baggage allowance from ` 35,000 to `45,000 to all passengers of and above 10 years of age and returning after stay abroad of more than three days. 2. Raise the free baggage allowance from ` 15,000 to `17,500 to all passengers of and above 10 years of age and returning after stay abroad of three days or less. 3. Reduce the duty free allowance of cigarettes from 200 to 100, of cigars from 50 to 25 and of tobacco from 250 gms to 125 gms.
51/2014-Customs (NT)	Seeks to specify class of persons for the purposes of section 28E of the Customs Act, 1962.	section 28E (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, who or which, as the case may be, proposes to undertake any business activity in India; (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 28H; 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 28E of the Customs Act, 1962 (52 of 1962), 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.