9911796707
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 ..... 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 important changes discussed under Central Excise - such as the ones proposed for ships, vessels and dredgers have a direct relevance for Customs duties owing to CVD. I. CENTRAL EXCISE 3. Rate structure for goods, other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 valorem + Rs. 30 PMT 2. Packaged cement manufactured in a plant other than 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 + Rs. 80 PMT 12% 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 val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 141] has been declared under the Provisional Collection of Taxes Act, 1931, this increase in duty would take effect immediately- from the midnight of 16th/17th March, 2012. 4.3 Cigarettes have been notified under section 4A of the Central Excise Act. Accordingly, the value for the purpose of charging the ad valorem component of duty would be the Retail Sale Price (RSP) printed on the pack less abatement of 50% [Notification Nos. 7/2012-CE(NT) dated 17th March, 2012 refer]. The Third Schedule of the Central Excise Act has also been amended to include cigarettes through clause 140 of the Finance Bill, 2012. The implication is that the processes of packing or repacking of cigarettes and their labeling or relabeling including declaration or alteration of Retail Sale Price shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of this exemption. The exemption will now be available to goods returned or brought back to any registered premises of the same brand owner/ manufacturer and not only to those returned to the same factory. It would be available only if the goods are returned or brought back within a maximum period of one year from the date of their clearance. It has been clarified by way of an explanation that the threshold limit of 10% of the aggregate value of clearances for home consumption in the preceding year is to be computed for each factory/ registered premises separately. It has also been clarified that in computing this limit the value of goods cleared under the provisions of rule 16 of the Central Excise Rules are to be excluded. Finally, duty-free clearance after the prescribed processes have been carried out on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff 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. taking 30% of the transaction value and not full transaction value. It may be noted that the exemption limit for the remaining part of 2011-12 i.e. between 17th March, 2012 and 31st March, 2012 is not being curtailed for manufacturers of unbranded jewellery who would come into the tax net afresh. In other words, eligible manufacturers/ factories would be entitled to exemption for the full threshold limit of Rs. 1.50 crore for this period. For manufacturers who are already availing of the SSI exemption during 2011-12 also the computation of the exemption limit would have to be made on the basis of tariff value of clearances effected during the period from 17th March, 2012 to 31st March, 2012 by virtue of Explanation (C)(ii) of notification no.8/2003-CE dated 1.3.2003. Illustration- If a manufacturer X clears goods of value 1.4 crore ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponent 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. The benefit of the exemption would be available only to those manufacturers registered with the Indian Renewable Energy Development Agency or any State Nodal Agency notified for the purpose by the Ministry of New and Renewable Energy for Central financial assistance. 9.3 In the case of Lithium Ion batteries, the processes of matching, batching and charging or making of battery packs have been deemed to be processes amounting to manufacture. For this purpose, a Note has been inserted in Chapter 85 of the First Schedule to the Central Excise Tariff. The merit rate of 6% shall apply to battery packs of lithium ion batteries when supplied to manufacturers of hybrid or electric vehicles. 10. Ships, vessels and dredgers: 10.1 Full exemption from Central Excise duty (and hence CVD) available to ships, vessels and dredgers (goods of Chapter 89) was withdrawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Line ABC Company as a foreign-going vessel converts into a coastal vessel for 6 months and the value of the vessel declared by the importer is Rs. 2 crore, the duty payable would be calculated in the following manner: (2*0.0618) * 6/120 = Rs. 61,800, where the rate of duty is 6.18% Illustration II: If a vessel is imported by an Indian corporate on lease basis for use after import on payment of a total rental of Rs. 50 lakh for a period of 3 months, the duty payable would be calculated in the following manner: 50* 0.618 = Rs. 3.09 lakh, where the rate of duty is 6.18% Notification No. 12/2012-Customs dated 17th March, 2012 has been issued for this purpose. (d) Unlike other vessels, dredgers do not qualify for treatment as "foreign-going vessels" as they are not engaged in the carriage of goods or passengers In the case of import of dredgers too, additional duty would be payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the Central Excise Tariff depending on the extent to which they have been finished. Polished marble slabs are classifiable under heading 6802 21 90 which attracts the general effective rate of 10% ad val. Concessional excise duty of Rs. 30 per square meter is applicable to marble slabs and tiles falling under heading nos. 25151220, 25151290 or 6802 21 10 in terms of notification no.4/2006-CE dated 1.3.2006. Representation were received by the Board that the benefit of this exemption is not being extended to polished marble slabs of heading 68022190 as the latter does not find specific mention in the exemption entry even though covered by the description. It is pertinent to mention that the Board has examined similar issues in the past on more than one occasion and clarified that the benefit of exemption will be available to goods as long as they are covered by the description. It is clarified that the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 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 important ones are discussed/ highlighted below: 15.2 The provisions of the Central Excise Act relating to offences and penalties are being aligned with those under the Customs Act. In terms of section 9(1)(i) of the Act, offences involving excisable goods where the duty leviable exceeds Rs. 1 lakh are punishable with imprisonment for a term which may extend to seven years and with fine. It is proposed to enhance this duty amount to Rs. 30 lakh. [Clause 130 of the Bill refers] 15.3 Section 9A of the Act presently provides that all offences under the Act shall be deemed to be non-cognizable within the meaning of the Code of Criminal Procedure. Sub-section (1) of this section is proposed to be substituted to prescribe that offences, other than offences punishable with imprisonment of three years or more under section 9, shall be non-cognizable. [Clause 131 of the Bill refers]. Through clause 135 of Finance Bill, 2012, section 13 dealing wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 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 correct classification of polished marble; ii. revise the description of tariff items 2601 11 10 to 2601 11 90 covering iron ore and concentrates based on Fe content; iii. insert a note 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, to avoid classification disputes; iv. insert a note in Chapter 71 to provide that for the purposes of headings 7113 and 7114, the process of affixing or embossing trade name or brand name on articles of jewellery or on articles of goldsmiths‟ or silversmiths‟ wares of precious metal or of metal clad with precious metal, shall amount to "manufacture"; v. insert a note in Chapter 72 to provide that the process of oiling and pickling in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 for such cases have not been amended. II. CUSTOMS 18. Rate structure: 18.1 There is no change in the peak rate of basic customs duty of 10% applicable to non-agricultural goods with few exceptions which are separately discussed. The rates below the peak are also being retained. Notification no. 21/2002-Customs dated 1.3.2002 prescribing the general effective rates is being superceded by Notification No. 12/2012-Customs dated 17.3.2012. 19. Computation of Customs Duties: 19.1 The method of computation of Education Cess and Secondary & Higher Education cess on imported goods is being simplified. Currently, these cesses are first charged on the CVD portion of customs duty and thereafter on the aggregate of customs duties (excluding special CVD). The portion of cesses leviable on the CVD portion of customs duty is being exempted so as to avoid computation of such cesses twice. Illustration: Present Proposed A Assessable value (CIF + Landing Charges) 100 100 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n flat rolled products (HR and CR) of non-alloy steel is being increased * From 2% to 4% on standard gold bars and platinum bars * From 5% to 10% on non-standard gold * From 1% to 2% on gold ore/concentrate and dore bars for refining(CVD) * Basic customs duty of 2% is being imposed on cut and polished coloured gemstones. * [Notification No. 12/2012-Customs dated 17th March, 2012 has been issued for this purpose]. * From 10% to 30% on bicycles and from 10% to 20%. on parts of bicycles [Clause 127] As the said clause has been declared under the Provisional Collection of Taxes Act, 1931, this increase in duty would take effect immediately- from the midnight of 16th/17th March, 2012. 23. Textile Machinery: 23.1 Full Basic Customs Duty exemption has been provided to shuttle less looms, parts/components of shuttle less looms by actual users for manufacture, specified silk machinery viz. Automatic reeling/ dupion reeling machines and their accessories including cocoon assorting machines, cocoon peeling machines, vacuum permeation machine, cocoon cooking machine, reeled silk humidifier, bale press and raw silk testing equipments. The exemption is available only to new machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing machinery. The concessional duty would be available upto 31.3.2014. * Coffee brewing and vending machines (commercial type). The concessional duty would be available upto 31.3.2014. * Specified soluble fertilizers and liquid fertilizers, other than urea. * Raw materials for the manufacture of intermediates, parts and sub-parts of blades for rotors for wind energy generators. * Six specified life saving drugs/vaccines and their bulk drugs is being reduced from 10% to 5% with Nil CVD by way of excise duty exemption * Iodine. (iv) From 7.5% /5% to 2.5%, on- * Sugarcane planter, root or tuber crop harvesting machine and rotary tiller & weeder, parts & components for their manufacture. * Parts required for manufacture of such coffee vending and brewing machines (commercial type). * Specified raw materials for the manufacture of syringes, needles, catheters, cannulae along with Nil SAD and 6% CVD subject to actual user condition * Parts and components for the manufacture of blood pressure monitors and blood glucose monitoring systems (Gluco-meters) along with Nil SAD and 6% CVD. * Capital goods, plant and equipment imported for setting up or substantial expansio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing contained in the Code of Criminal Procedure, 1973, all offences under the Act (except an offence punishable with term of imprisonment of three years or more under section 135) shall be non-cognizable and bailable. It also provides that all offences punishable with a term of imprisonment of three years or more under section 135 shall be cognizable.[Clause 120]. 26.6 Section 104A is being inserted to provide that bail in the case of offences punishable with a term of imprisonment of three years or more under section 135 shall not be granted by a Court or Magistrate without an opportunity being given to the Public Prosecutor to present his case. However in the case of minors, infirm and women the Magistrate may grant bail. It also excludes the jurisdiction of police officers to initiate investigation in cases under the Customs Act, unless authorized in this behalf by the Central Government by a special or general order [Clause 121] 26.7 Section 122 is being amended to enhance the monetary limits for adjudication of cases involving confiscation of goods and imposition of penalty from Rupees two lakh to Rupees five lakh for Deputy/ Assistant Commissioners and from Rs. 10,000 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at concessional duty under the said Rules with the prior permission of the jurisdictional Assistant Commissioner of Deputy Commissioner of Central Excise, as the case may be, subject to the condition that- * Such re-export takes place within six months from the date of importation * The re-export value should not be less than the value of the imports. * Maintenance of separate accounts for these rules should not be insisted upon as long as the records maintained by the importer contain the requisite information. 29. In order to achieve a sharper focus, I have alluded only to the key highlights of the budgetary changes in this communication. The details are contained in the Finance Bill and notifications which alone have legal force. My team and I have made every possible effort to avoid the occurrence of errors or mistakes in the Budget documents. However, given the scale of changes, errors cannot be ruled out. I shall be grateful if the provisions of the Finance Bill are studied carefully and feedback on issues that may need clarification is provided urgently. 30. It may kindly be ensured that the changes are implemented in a smooth manner without causing any inconvenien ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
