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TMI BlogSalient features of changes in excise and customs dutiesX X X X Extracts X X X X X X X X Extracts X X X X ..... Education Cess imposed in 2004 budget. While the cess will apply in respect of customs and excise duties with effect from 1.3.2007, in respect of service tax, it will come into effect on enactment of the Finance Bill, 2007. 2.2 In the case of customs duties, the Secondary and Higher Education Cess on imported goods will be 1% of the aggregate duties of customs, (but excluding safeguard duty under section 8B and 8C, countervailing duty under section 9, Anti Dumping Duty under section 9 A of the Customs Tariff Act and the two Education Cesses). Items attracting customs duty at bound rates, for example, under the IT Agreement or the Indo-US/Indo-EU Textile Agreement have been exempted from this cess. Suitable provision has been made in the Finance Bill, 2007 (and by notification to cover the period till the date of enactment of the finance Bill) to provide that for calculating the Education Cess of 2004, inter alia, the Secondary and Higher Education cess will not be taken into account. The method of calculation of the Secondary and Higher Education cess will be the same as in the case of Education Cess introduced in 2004 budget. 2.3 In the case of excise duties, Secondary and High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of customs of 4%. Roasted molybdenum ore and concentrate has also been exempted from this levy. 5.2 Cell phone parts, components and accessories are exempt from additional duty of customs of 4% till 30.04.2007. The exemption has been extended till 30.06.2009. 6. Metals: Customs duty has been reduced from 20% to 10% on seconds and defectives of iron and steel. 7. Aircrafts: 7.1 Customs duty has been imposed on aircrafts @ 3%. CV duty of 16%, by way of excise duty, and special additional duty of customs of 4% has also been imposed on such aircrafts. Parts of such aircrafts will also attract these duties. Imports by scheduled airline operators will, however, be exempt. Imports by the Government and PSU's will continue to be exempt (vide S. No.10 of Notification No.39/96-Customs). 7.2 Aircrafts, not registered in India, on flight to or across India and ultimately removed within six months from the date of arrival will be exempt from all duties of customs. 8. Chemicals and Petrochemicals: 8.1 Customs duty has been reduced from 12.5% to 7.5% on goods falling under Chapter 28 (except Titanium Dioxide which will attract customs duty at 10%.), Chapter 29 (except Mannitol, Sorbitol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporter or a manufacturer having an R D wing, registered with Department of Scientific Industrial Research, is being extended to15 additional items. 13. Health: Customs duty on medical equipment has been reduced from 12.5% to 7.5%. 14. Project Import: Digital Cinema Development Projects have been notified as project imports under Heading 9801, and will thus attract the project rate of 7.5% 15. Miscellaneous: 15.1 Customs duty has been reduced from 5% to Nil on dredgers. Since dredgers are exempt from excise/CV duty, dredgers will be exempt from the 4% additional duty of customs. 15.2 Customs duty has been reduced from 5% to 2% on natural boron ore. 15.3 Customs duty has been reduced from 10% to 5% on: a) borax or boric acid; b) butyl rubber; and c) frit. 15.4 Customs duty has been reduced from 12.5% to 5% on: a) ceramic colours; b) watch dials and movements; and c) parts of umbrella, including umbrella panels. 15.5 Customs duty has been reduced from 30% to 20% on: a) dammar batu; b) dextrose monohydrate; and c) dog or cat food. 15.6 A uniform customs duty rate of 5% has been prescribed for urea unconditionally. 15.7 Aramid yarns for manufacture of bulletproof j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of research, subject to certain conditions 22. Metals: The rate of compounded levy on aluminium circles has been increased from Rs.7500/10000 per machine per month to Rs.12000 per machine per month. 23. Information Technology: 23.1 'USB flash memory' is exempt from excise duty. The exemption has now been extended to 'flash memory' in general. 23.2 'DVD drive' is exempt from excise duty. The exemption has now been extended to 'DVD drive/DVD writer'. 24. Tobacco products: 24.1 Specific rates of excise duty on cigarettes have been revised as under: S. No. Description Present rate Proposed rate Non-Filter Cigarettes (Rs. per 1000) 1 Not exceeding 60 mm in length 160 168 2 Exceeding 60 mm but not exceeding 70 mm 520 546 Filter Cigarettes 3 Not exceeding 70 mm in length 780 819 4 Exceeding 70 mm but not exceeding 75 mm 1260 1323 5 Exceeding 75 mm but not exceeding 85 mm 1675 1759 6 Other cigarettes 2060 2163 7 Cigarettes of tobacco substitutes 1150 1208 24.2 Specific rates of excise duty on biris (including cess) have been revised as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per metric tonne. 25.4 It has also been provided that if a bulk package, which does not have RSP, declared on it contains a number of smaller packs with RSP declared on such smaller packs, then assessment will be done on the basis of such declared RSP. It has also been provided that if the bulk package also carries a sale price, per tonne equivalent of which is different from the per tonne equivalent of RSP declared on the smaller packs, then the higher of the two per tonne price equivalents will be relevant for assessment. 25.5 Cement has been included in Third Schedule of the Central Excise Act to provide that in relation to products of sub-heading 252329, packing or repacking in unit container, labelling or relabelling of packages, including the declaration or alteration of RSP on it or adoption of any other treatment to render the product marketable to the consumer, shall amount to 'manufacture'. This provision comes into effect immediately. 25.6 There is no change in excise duty on cement clinkers. Excise duty rates of Rs.400 PMT and Rs.250 PMT on cement cleared in bulk from general cements plants and mini cement plants respectively, also remain unchanged. 26. Retail Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption availed of would be protected but only if the conditions in the relevant notification are satisfied. 29. Other Amendments in Customs Act and Central Excise Act: [To come into effect on enactment of Finance Bill, unless otherwise specified] a) As per sub-section (1) of section 14 of the Customs Act, 1962, valuation of goods is based on the concept of 'deemed value'. Sub-section (1A) of section 14 provides that valuation of imported goods shall be based on the concept of 'transaction value'. To remove this contradiction, existing section 14 is being substituted by a new section 14. The new section provides that the value of imported goods and export goods shall be the transaction value of such goods, as determined in accordance with the rules made in this behalf. Moreover, transaction value of imported goods shall include any amount that the buyer is liable to pay for costs and services, including commissions and brokerages, assists, engineering, design work, royalties and license fees, costs of transportation to the place of importation, insurance and handling charges. Further, where there is no sale or the transaction value of the imported goods or export goods is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, Court or any other authority to the adjudicating authority for fresh adjudication, the applicant shall not be entitled to file an application; g) Section 127B of the Customs Act, 1962 is being amended so as to provide that an applicant shall be eligible to file an application in respect of cases in which he admits short levy on account of misclassification, under valuation, inapplicability of exemption notification but not in respect of the goods not included in the Bill of entry or Shipping Bill, as the case may be. It further provides that while filing any application, he shall deposit the additional amount of customs duty accepted by him along with stipulated interest due thereon. It also proposes to enhance the minimum settlement amount from Rs.2 lakh to Rs.3 lakh. It also provides that in respect of an application filed before 1.06.2007, but pending issuance of an order by the Commission, the applicant shall pay the accepted duty by 30.06.2007, failing which the application shall be rejected; h) Section 127C of the Customs Act, 1962 is being amended so as to specify time limit at every stage for disposal of the application filed before the Settlement Commission. It, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal from appearing, acting or pleading before the said Tribunal on ceasing to hold office. p) Section 129D of the Customs Act, 1962 is being amended so as to provide that the Committee of Chief Commissioners or the Commissioners shall review the orders of the Commissioner or adjudicating authorities below the rank of Commissioner within a period of three months as against the present period of one year from the date of communication of the decision or order of the Adjudicating Authority. It is also proposed to reduce the time available under sub-section (4) for authorized officer to file appeal before the Appellate Tribunal or the Commissioner (Appeals), as the case may be, from three months at present to one month. q) In view of the specific legislation covering Special Economic Zones, sub-section (1) of Section 3 of the Central Excise Act, 1944 is being amended to omit the provisions relating to 'free trade zone' and substitute the meaning of 'special economic zone' so as to harmonize the said provisions with the Special Economic Zone Act, 2005. r) Section 11B of the Central Excise Act, 1944 provides that an application for refund of duty should be made before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant shall pay the accepted duty by 30th June, 2007, failing which the application shall be rejected; w) Section 32F of the Central Excise Act, 1944 is being amended so as specify time limit at every stage for the disposal of the application filed before the Settlement Commission. It, inter alia, provides that in respect of an application filed on or before 31st May, 2007, the order shall be passed by 29th February, 2008, and in respect of application made on or after 1st June, 2006, the order should be passed within 9 months of the application. It also provides that amount of settlement ordered by the Commission shall in no case be less than duty liability admitted by the applicant. It further provides that the settlement amount shall be paid within 30 days of the receipt of the order and no extension for payment of this amount shall be granted by the Commission; x) Section 32H of the Central Excise Act, 1944 is being amended with a view to debar the Settlement Commission from re-opening the completed proceedings in respect of applications received on or after 1.6.2007; y) Section 32 I of the Central Excise Act, 1944 is being amended so as to make consequential changes in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of amount determined under section 11D; amount of erroneous CENVAT credit taken; amount payable under rule 57CC of Central Excise Rules, 1944; amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004; interest payable under the provisions of this Act or the rules made thereunder; within the ambit of expression 'duty demanded' in addition to the duty specified under section 3 of the said Act for the purpose of predeposit, pending appeal, under section 35F of the Act. ff) Section 37 (4) of the Central Excise Act, 1944 provides that if any manufacturer, producer or licensee of a warehouse contravenes any of the provisions stipulated therein, then such person, inter alia, will be liable to a penalty not exceeding duty leviable on such goods or ten thousand rupees, whichever is higher. This section is being amended so as to reduce the penalty from Rs.10000 to Rs.2000 for possessing, transporting, removing, depositing, keeping, concealing, selling or purchasing any excisable goods which are liable to confiscation. Similarly, section 37 (5) is also being amended to reduce the penalty from Rs.10000 to Rs.2000. 30) The Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices covered by said document has been received by the asseessee, and (ii) the receipt of said goods/services has been accounted for in the books of accounts of the receiver. Consequential amendments have also been made in rule 15(1) and 15(3), which provides for penal action. Subrule (3) of rule 9 has been deleted; c) Sub-rule (11) has been inserted in rule 9 so as to allow an assessee to rectify mistakes and file revised return within 60 days from the date of filing of original return, subject to specified conditions; d) New sub-rules (3) (4) have been inserted in rule 11 to provide that when a person opts for exemption from whole of duty (in case of conditional notification) or where a product becomes exempted absolutely, in such cases, the CENVAT credit taken on inputs lying in stock, or in process or contained in the final product lying in stock should be reversed. Similar provision has been made in respect of cases wherein taxable service becomes exempted. However, no reversal of credit of input services is required to be made in such cases. 32. Job work valuation: 32.1 A new rule 10A has been inserted in the Central Excise Valuation (Determination of Price of Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the duty of excise specified in the said clause, can also be given as rebate under this notification. 33.2 Condition no.3 (i) of Notification No.5/2006-CE (NT) dated 14.03.2006 provides that in order to claim refund of accumulated CENVAT credit, the exporter should submit shipping bill or bill of export duly certified by the officer of Customs as a proof of export. This condition has been amended to further provide that photocopy of such documents attested by the same officer of Customs would also be acceptable. 33.3 Chief Commissioners have been empowered to allocate the adjudication cases among the Commissioners or Commissioners (Adjudication) within their jurisdiction. Thus, there would be no need to refer the cases to the Board for transferring adjudication cases from one Commissioner to the other. 34. Revenue foregone statements: 34.1 Last budget, for the first time, a chapter was introduced in 'Receipt Budget', which is part of the Budget documents. This chapter contained a statement on revenue foregone. This year also, similar statements have been prepared as part of budget documents giving revenue foregone figures for 2005-06 and 2006-07 (estimates). These have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of items proposed for MRP based levy, the information may be furnished by 30th April, 2007 as per Annexure IV. 35.5 The reports may kindly be arranged to be sent on time after careful scrutiny. These reports would be required to be sent by the Chief Commissioners after consolidating the reports from all the commissionerates under their charge. 35.6 All rate changes in customs and excise duties are explained in the Explanatory Notes. You would appreciate that number of changes have been carried out through amendments in notifications, rules and Acts. Though every care has been taken to reflect the intention of the Government clearly in all these documents, the chances of human error cannot be ruled out. I would, therefore, request you to kindly go through the explanatory notes, notifications and Finance Bill carefully and bring to our notice at the earliest any omission/error that might have crept in. If there is any doubt or difficulty on any point, you may kindly bring it immediately to my notice or to the notice of Shri Alok Shukla, Director, TRU (Tel No.23092753) or Shri Ravinder Saroop, Director, TRU (Tel No. 23092236). Copies of the FM's speech, notifications, Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d panels and similar laminated wood (v) Pan masala not containing tobacco (vi) Cement Annexure II (Refer Para 35.3) Month wise production, clearance and excise duty paid report for commodities S. No. Month Production Clearance Duty paid Quantity Value (Rs. in crore) Quantity Value (Rs. in crore) Quantity Value (Rs. in crore) 1 April 06 2 May, 06 3 June, 06 4 July, 06 5 August, 06 6 September, 06 7 October, 06 8 November, 06 9 December, 06 10 January, 07 11 February, 07 Note: 1. Annexure II is one time report giving month wise details for April 06 to February 2007. 2. This report should reach us by 31st March, 2007. Annexure III (Refer Para 35.3) Monthly production, clearance and excise duty paid report on (Name of the commodity) For the Month of ___________ 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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