LEGISLATIVE CHANGES in Central Excise and Customs

Advance Ruling

Section 28E of the Customs Act, 1962 defines “advance ruling”. “Advance ruling” means “the determination, by the Advance Ruling Authority, of a question of law or fact specified in the application regarding the liability to pay in relation to an activity which is proposed to be undertaken by the applicant”. “Activity” is defined to mean “import or export”. The definition of “activity” is being expanded to include any new business of import or export so as to enable such importer or exporter to seek advance ruling when he starts a new line of business. Similar amendment has been proposed in section 23A of the Central Excise Act, 1944. “Activity” now includes any new business of production or manufacture by the existing producers or manufacturers. This will enable such producers or manufacturers to seek advance ruling when starting a new line of business.

Under 23 (C) (e) of the Central Excise Act, 1944, an advance ruling can be sought, inter- alia, on the issue of admissibility of credit of excise duty paid or deemed to have been paid on the goods used in/ in relation to the manufacturer of excisable goods. This section is being amended so as to extend the advance ruling provisions also to the admissibility of the credit of service tax paid on or deemed to have been paid on input services used in the manufacture of excisable goods.

Under section 28E of the Customs Act, 1962, only a select category of persons are eligible for advance ruling. This includes joint ventures and resident public limited companies. Presently, the latter category is not eligible for advance ruling under the Central Excise law. Notifications are being issued to make “resident public limited companies” eligible for seeking advance ruling on central excise and service tax matters as is available on the Customs side

Arrests and Prosecutions

Section 104 of the Customs Act, 1962 contains provisions relating to arrest. This section is being amended to make certain offences punishable under section 135 as non-bailable. The offences are:

(a)          Evasion or attempted evasion of duty exceeding Rs. fifty lakh;

(b)          Prohibited goods notified under section 11 which are also notified under sub-clause (C) of clause (i) of sub-section (1) of section 135;

(c)           Import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds Rs. one crore;

(d)          Fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds Rs. fifty lakh.

Barring the offences mentioned above, all other offences under the Customs Act are bailable. Similar changes have been proposed in the Central Excise Act, 1944 and Finance Act, 1994 (relating to Service tax).

Stay Order by Appellate Tribunal and Other Matters

Section 35C (2A) of the Central Excise Act, 1944 and the corresponding provisions under section 129B (2A) of the Customs Act, 1962 are being amended to provide for a maximum ceiling of 365 days up to which the Tribunal can grant stay of recoveries. By inserting a proviso in the abovementioned sections, it is being stipulated that after 365 days from the stay order, this stay shall stand vacated even if the disposal of the case is pending for no fault of the assessee. By virtue of stipulation under section 86(7) of the Finance Act, 1994, the provisions of the Central Excise Act would be applicable for dispute in Service Tax matters.

Section 129C is being amended to enhance the monetary limit of the Single Bench of the Tribunal to hear and dispose of appeals from Rs.10 lakh to Rs.50 lakh. Corresponding changes have been made in Section 35D of the Central Excise Act, 1944.

Other Amendments in the Customs Act, 1962

(i) Section 11: “Designs and geographical indications” have been included along with patents, trade mark and copy rights to enable the Central government to prohibit either absolutely or conditionally the import or export of goods to protect these legal rights;

(ii) Section 27: Where the amount of refund claimed is less than Rs 100/-, the same shall not be refunded;

(iii) Section 28: Show Cause Notice shall not be served where the amount involved is less than Rs 100/-;

(iv) Section 28BA: This section is being amended to provide for provisional attachment of property belonging to any person to whom notice under sub-section (4) of section 28 has been served.

(v) Section 29: This section is being amended to empower Board to allow landing of vessels or aircrafts at any place other than customs ports or customs airports.

(vi) Section 30 and Section 41: These sections are being amended to provide for electronic filing of Import General Manifest/Export General Manifest. It is also being provided that where this is not feasible, the Commissioner may allow the delivery of such manifest in any other manner.

(vii) Section 47: This section is being amended reduce the interest free period for payment of import duty from 5 days to 2 days;

(viii) Section 49: This section deals with storage of imported goods in a warehouse pending clearance. This section is amended to provide a time limit of 30 days for storage of goods in the interest of accountability and early finalization of assessments. The Commissioner may extend the period of storage for a further period not exceeding 30 days at a time.

(ix) Section 69: This section deals with export of warehoused goods. The document listed under the section is Shipping Bill or Bill of Export. This section is being amended to allow export of warehoused goods under postal export document;

(x) Section 135: In sub-clauses (B) and (D) of clause (i) of section 135(1), the threshold limit for punishment in an offence relating to evasion or attempted evasion of duty or fraudulently availing of or attempting to avail of drawback or any exemption from duty in connection with export of goods,has been increased from Rs.30 lakh to Rs.50 lakh.

(xi) Section 142: A new clause (d) is being inserted in section 142 to provide (i) for recovery of money due to the Central Government from any other person other than the defaulter after giving such other person a notice in writing, (ii) that the person to whom such notice has been issued shall be bound to comply, and (iii) that if the person to whom the notice is issued fails to comply, he shall be deemed to be a defaulter in respect of the amount specified in the notice.

(xii) Section 143A is being omitted.

(xiii) Section 144: Sub-section (3) of section 144 is being amended to remove the duty liability on any sample of goods which is consumed or destroyed during the course of testing or examination.

(xiv) Section 146 is being substituted to change the nomenclature of “customs house agents” to “customs brokers” considering the global practice and internationally accepted nomenclature.

(xv) Section 146A is being amended so as to:- (a) substitute the phrase “customs house agent” with the phrase “customs broker”; (b) include any offence committed under the Finance Act, 1994 as a disqualification for person to act as an authorized representative in customs matters.

(xvi) Section 147: Sub-section (3) of section 147 is being amended to expand the scope of the liability of agents of the owner, importer or exporter of any goods. It now casts equal responsibility on agents for making correct self-assessment.

Other Amendments in the Central Excise Act

(i) Section 9 provides that an offence case involving evasion in which the duty leviable exceeds thirty lakh rupees shall be punishable with a term of imprisonment extending to seven years with fine. This section is being amended so as to substitute the amount of thirty lakh rupees with fifty lakh rupees.

(ii) Section 9A is being amended to make an offence cognizable and non-bailable where the duty liability exceeds Rs.50 lakh and punishable under clause (b) or clause (bbbb) of sub-section (1) of section 9.

(iii) Section 11 is being amended so as to provide for (i) recovery of money due to the Government from any person other than from whom money is due after giving a proper notice, if that other person holds money for or on account of the first person; (ii) the other person to whom such notice has been issued is bound to comply and (iii) if the other person to whom the notice is served fails to comply, he shall face all the consequences under this Act.

(iv) Section 11A is being amended to insert sub-section (7A) providing that service of a statement containing details of duty not paid, short levied or erroneously refunded shall be deemed to be a service of notice under sub-section (1) or (3) or (4) or (5) of this section.

Reference to sub-section (1) in section 11DDA is being omitted.

(v) Section 20 is being amended so as to make the provisions applicable only to offence which is non-cognizable.

(vi) Section 21 is being amended so as to make the provisions regarding release of arrested person on bail or personal bond applicable only to offence which is non-cognizable.

(vii) Section 37C is being amended to specify additional modes of delivery of specified documents i.e. by speed post with proof of delivery or through courier approved by the Central Board of Excise & Customs.

These are the broad changes made through the various clauses of the Finance Bill, 2013. The relevant clauses may kindly be perused to find out the precise changes made.

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