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TMI BlogClarification regarding changes made or proposed in Budget 2012-2013X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, 2012 CENTRAL EXCISE Tariff No. 5/2012-CE to No. 19/2012-CE 17th March, 2012 Non-Tariff No. 7/2012-CE (NT) to No. 18 /2012-CE (NT) 17th March, 2012 M TP Tariff No. 1/2012 M TP 17th March, 2012 Unless otherwise stated, all changes in rates of duty take effect from the midnight of 16th March/17th March, 2012. A declaration has been made under the Provisional Collection of Taxes Act, 1931 in respect of clauses 127, 128, 140, 141 and 151 of the Finance Bill, 2012 so that changes proposed therein also take effect from the midnight of 16th March/17th March, 2012. The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2012. Retrospective amendments in the provisions of law or notifications issued under the respective Acts shall have the force of law only upon the enactment of the Finance Bill, 2012 but with effect from the date indicated in the relevant clause or Schedule. These dates may be carefully noted. 2. Important changes in respect of Customs and Central excise duty are discussed below. Some importa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification no. 12/2012-CE dated 17.3.2012. Cement: 3.6 The rate structure applicable to Portland cement falling under heading no.252329 has been revised. Both for packaged cement manufactured by mini-cement plants as well as non-mini cement plants, there were differential rates of duty depending on the Retail Sale Price (RSP) per bag of 50kgs, so far. Moreover, the rates of duty applicable to mini-cement plants were lower compared to non-mini plants. Now, a uniform rate of duty is being prescribed regardless of the RSP per bag although a difference in the rates applicable to mini and non-mini cement plants is being retained. The details of these changes are as under: S.No. Description of goods Earlier rate Revised rate 1. Packaged cement manufactured in a mini-cement plant (i) Of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne RSP not exceeding Rs. 3800 10% ad valorem 6% ad valorem + Rs. 120 PMT (ii) Of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne RSP not exceeding Rs. 3800 10% ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t exceeding 70mm. Corresponding changes have been made in the Seventh Schedule to the Finance Act, 2001 [pertaining to the levy of National Calamity Contingent Duty NCCD] and the Seventh Schedule to Finance Act, 2005 [relating to the levy of Additional Duty on Tobacco Products]. These changes have been carried out in the First Schedule to the Customs Tariff too. 4.2 As regards the rates of duty applicable to cigarettes, the specific rate of basic excise duty of Rs. 509 per thousand sticks currently applicable to cigarettes of length not exceeding 60mm will now apply to cigarettes of length not exceeding 65mm. Suitable exemption notifications have been issued for all three duties viz. basic excise duty, NCCD and Additional Duty of Excise to prescribe the rate currently applicable to cigarettes of length not exceeding 60mm to cigarettes of length not exceeding 65mm [ Notification nos.9/2012-CE , 10/2012-CE and 11/2012-CE all dated 17th March, 2012 may be seen]. For all slabs above this length i.e. 65mm, an ad valorem component of 10% has been added to the existing specific rates. As the relevant clause by virtue of which this changes is proposed in the Finance Bill [Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid provisions, Cenvat Credit of duty paid on goods cleared in bulk has been allowed to manufacturers packing it in pouches and operating under the compounded levy scheme. 6. Ready-Made Garments, made-up articles and textiles: 6.1 The rate of excise duty applicable to ready-made garments and made-up articles of textiles falling under Chapters 61, 62 and 63 (heading nos.63.01 to 63.08) of the Central Excise Tariff except those falling under heading nos.63.09 and 63.10 when they bear or are sold under a brand name has been increased from 10% to 12%. However, the tariff value for these items has been revised and shall now be equal Retail Sale Price (RSP) less abatement of 70% instead of 55%. In other words, duty would be payable on 30% of the RSP. 6.2 In terms of notification no.31/2011-CE dated 24.3.2011, full exemption from Central Excise duty is available to duty-paid, branded ready-made garments and made-ups returned or brought back to the same factory or premises and cleared after being re-made, re-conditioned, re-packed or subjected to any other process, subject to the fulfillment of certain conditions. Certain procedural relaxations have been made in the operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therto excise duty of 1% ad valorem was applicable to precious metal jewellery manufactured or sold under a brand name. The levy would now apply to both branded and unbranded goods (except silver jewellery) although at the same rate of duty of 1%. The important features of the scheme are as under: i. Duty would be chargeable on tariff value which is being prescribed under section 3 of the Central Excise Act. ii. Tariff value would be equal to 30% of the transaction value declared on the invoice and transaction value shall have the same meaning as assigned to it under section 4 of the Central Excise Act. iii. The benefit of SSI exemption would be available to manufacturers of precious metal jewellery and the aggregate value of clearances (both for the purpose of eligibility and exemption) would be computed on the basis of tariff value. Suitable provisions are being incorporated in notification no.8/2003-CE dated 1st March, 2003 so that for the purpose of determining eligibility of a manufacturer/ factory for SSI exemption for the year 2012-13, the computation of aggregate value of clearances of Rs. 4 crore for the year 2011-12 is made on the basis of the tariff value i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and silver coins of purity 99.9% and above when manufactured from gold or silver on which the appropriate duty of customs or excise has been paid. 8.3 Excise duty on refined gold manufactured starting from the stage of ore, concentrate or dore bars has been increased from 1.5% to 3%. The same rate has been prescribed for refined gold produced from the smelting of copper. Refined silver obtained from the smelting of copper shall henceforth attract excise duty of 4%. 8.4 Excise duty on gold jewellery sold from EOUs into DTA has been increased from 5% to 10%. 9. Chassis for automobiles and parts of electric/ hybrid vehicles 9.1 Excise duty structure applicable to chassis falling under heading 8706 has been rationalized. Hitherto, such chassis attracted composite rates of duty consisting of an ad valorem component of 10% or 22% and a specific component of Rs. 10,000 per chassis. These have now been combined into an ad valorem rate and increased to 15% or 25% ad valorem respectively. 9.2 Concessional excise duty rate of 6% is being prescribed for batteries supplied to manufacturers of electrically operated vehicles, including two and three-wheeled electric motor vehicles. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn-going vessels imported into India for the period from 1st March, 2011 to 16th March, 2012 [ Clause 125 of the Finance Bill, 2012 refers]. This shall come into effect on the date of enactment of the Bill. (c) For the period starting 17th March, 2012, also full exemption from additional duty has been provided to foreign-going vessels imported into India but on the fulfillment of certain conditions viz that a Bill of entry shall be filed for the vessel when it converts into a coastal vessel and additional duty would be payable on the following basis: i. if the licence obtained for coastal trade at the time of conversion is a general one i.e. without specified period of validity, duty would be payable as if there were no exemption; ii. if the licence for coastal trade is for a specified period , and a. import is by the owner of the vessel or his agent, then 1/120th part of the aggregate duty would be payable on the vessel for each month (or part thereof) of stay in India as a coastal vessel; or b. if the import is against a lease agreement/ contract, then duty shall be payable on the lease value of the contract. Illustration I: If a vessel imported by a Shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts, components and specified accessories viz. battery chargers, PC Connectivity Cables, Memory cards and hands-free headphones required for the manufacture of mobile phones are fully exempt. However, standard rate is chargeable when such goods are cleared as spares. Concessional rate of excise duty of 2% is now being provided for such spares on the condition that no CENVAT Credit of any inputs or input services is availed of. 12.3 Excise duty has been reduced from 10% to 6% on: Matches manufactured by semi-mechanised units the latter being units that carry out the processes of frame-filling or dipping of splints with the aid of machines LED lamps Iodine Processed food products of soya Parts of Blood Pressure Monitors and Blood glucose monitoring systems (Gluco-meters) on actual user basis Specified raw materials viz. Polypropylene, Stainless Steel Strip and Stainless Steel capillary tube for manufacture of syringe, needle, catheters, and cannulae on actual user basis. 13. Classification of Natural marble Slabs subjected to processes of resin filling, fibre netting and Polishing: 13.1 Marble slabs and tiles are classified under Chapter 25 or Chapter 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by this exemption. It has been explained by Tamil Nadu Water Supply and Drainage (TWAD) Board that generally Mild steel pipes of 30cm diameter with perforations are driven into the river bed in these projects. As pointed out above, pipes of diameter exceeding 10cm, if these are an integral part of the project, are eligible for exemption. Since pipes used for these projects match the description in the exemption, it is clarified that MS pipes of diameter 30cm used in collector well, infiltration well for water purification are eligible for exemption from excise duty under Serial no.233 of Notification No. 12/2012-CE dated 17.3.2012. 15. Important Legislative Amendments: 16.1 Barring legislative amendments involving an increase in the rate of duty for which a suitable declaration has been made under the Provisional Collection of Taxes Act, all amendments would come into effect on the date of enactment of the Finance Bill, 2012 i.e. the date on which the Bill receives the assent of the President. The legislative amendments relating to Central Excise Act and Central Excise Tariff Act have been explained in the Explanatory Memorandum to the Finance Bill, 2012 . The importan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced penalty only if the reduced penalty is also paid within the specified period of thirty days. [Clause 133] 15.6 Notification No.1/2010-CE dated 6th February, 2010 provides exemption from Central Excise duty to goods cleared from new units or units that have undertaken substantial expansion in the State of Jammu and Kashmir for a period of ten years from the date of commencement of commercial production. Doubts were raised about the interpretation of provisions of this exemption relating to the date from which the ten years period is to be computed in the case of units undertaking substantial expansion. The notification is being amended retrospectively from the date of issue of the said notification i.e. 6th February, 2010 to provide that for units undertaking substantial expansion, the exemption period of ten years would be computed from the date of commercial production from the expanded capacity [Clause 139]. Amendments to First Schedule of Central Excise Tariff Act: 15.7 The First Schedule to the Central Excise Tariff is being amended so as to carry out the following changes: i. omit the words or polishing in Note 6 of Chapter 25 so as to remove doubts about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Rules, 2002 16.1 Rule 22 (3) is being amended to empower the officers of audit, cost accountants and chartered accountants appointed under section 14A or 14AA to prescribe the time limit within which the units being audited will produce the documents. 17. Amendments in Cenvat Credit Rules, 2004 17.1 Rule 3(5) and 3(5A) are being amended to prescribe that in case the capital goods on which Cenvat credit has been taken are cleared after being used then the amount payable shall be either the amount calculated on the basis of Cenvat credit taken at the time of receipt reduced by a prescribed percentage or the duty on transaction value whichever is higher. 17.2 Rule 10A is being inserted to permit transfer of unutilized credit of SAD lying in balance at the end of each quarter to another factory of the manufacturer 17.3 Rule 14 is being amended to substitute the word or with and so that interest is not payable on credit wrongly taken unless the same is utilized. Similar changes are being carried out in Rule 16 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. However, penalty provisions fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No.21/2012-Customs dated 17th March, 2012 requiring the importer of specified goods to declare the State of destination where the goods are intended to be sold for the first time after import and the VAT registration number. This condition would apply to such goods imported on or after 1st May, 2012. 20.5 As mentioned above, CENVAT Credit Rules are being amended to permit transfer of unutilized credit of SAD lying in balance at the end of each quarter to other registered premises of the same manufacturer. This change would come into effect from 1.4.2012. [ Notification No.18/2012 CE (NT) dated 17th March, 2012 refers] 21. Baggage Allowance: 21.1. The duty-free allowance under the Baggage Rules is being increased from Rs. 25000 to Rs. 35000 for passengers of Indian origin and from Rs. 12000 to Rs. 15000 for children upto 10 years of age. 22. Rate changes on Specific Items: 22.1 Increases: 22.2. The basic customs duty/CVD is being increased on the following items: From 60% to 75% on Completely Built Units (CBUs) of large cars/ MUVs/ SUVs permitted for import without type approval (value exceeding US$40,000 and engine capacity exceeding 3000cc for pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary stent systems and artificial heart valves subject to actual user condition. Equipment imported for road construction projects awarded by Metropolitan Development Authorities along with Nil CVD and Nil SAD Tunnel excavation and specified lining equipment along with Nil CVD and Nil SAD Coal mining projects New and retreaded aircraft tyres along with Nil CVD. Parts of aircraft and testing equipment for maintenance and repair of aircraft imported by third-party Maintenance, Repair and Overhaul (MRO) units. Tunnel boring machines for hydel and road projects for all infrastructure projects. The exemption is also being provided to parts required for assembly of such machines. Tri-band phosphor Waster paper Lithium ion batteries for the manufacture of battery packs for supply to electric or hybrid vehicle manufacturers along with 6% CVD and Nil SAD 24.2 The basic customs duty is being reduced on the following items: (i) From 30%/15% to 10% on,- Isolated soya protein and soya protein concentrate Probiotics. (ii) From 10% to 7.5% on,- Railway safety (Train Protection and Warning System) equipment and railway track laying machines Mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been made under the Provisional Collection of Taxes Act, all amendments would come into effect on the date of enactment of the Finance Bill, 2012 i.e. the date on which the Bill receives the assent of the President. The legislative amendments relating to Customs Act and Customs Tariff Act have been explained in the Explanatory Memorandum to the Finance Bill, 2012 . The important ones are discussed/ highlighted below: 26.2 Sections 2 and 7 are being amended to include airfreight stations‟ [Clause 114 and 115] 26.3 A new section 28AAA is being inserted to provide for recovery of duties, from the person to whom the instrument such as duty credit scrips was issued, where the instrument was obtained by means of collusion or wilful mis-statement or suppression of facts by the such person without prejudice to any action that may be taken against the importer. [Clause 116]. Section 28BA is being amended to make the provisions relating to provisional attachment of property applicable to the proposed Section 28AAA [Clause 116]. 26.4 Section 47 is being amended to insert a new proviso therein to provide that the Central Government may, by notification in the official gazet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntent insert Note 13 in Chapter 48 to provide that notwithstanding anything contained in Note 12, if the paper and paper products of heading 4811, 4816 or 4820 are printed with any character, name, logo, motif or format they shall remain classified under Chapter 48 as long as such products are intended to be used for further printing. This would prevent classification disputes. align the entries relating to copper scrap, brass scrap, nickel scrap, aluminium scrap, lead scrap and zinc scrap with the revised ISRI classification. [Clause 127] 27.2 The Second Schedule to the Customs Tariff Act is being amended to enhance the rate of export duty on chromium ore from Rs. 3000 per tonne to 30% ad valorem. [Clause 128] This change will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. 28. Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 28.1 The Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 is being amended to further liberalize and simplify the procedure. The important changes are as under: Eligibility Cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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