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TMI BlogIntroduction of Finance Bill 2007 : Major changes in Customs & Central Excise Duties : RegardingX X X X Extracts X X X X X X X X Extracts X X X X ..... ry and Higher Education Cess at the rate of 1% of the aggregate duties of customs, excise and service tax has been imposed. The proceeds from this cess will be utilized to finance secondary and higher education. This will be in addition to the 2% 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 Highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms 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 and Caprolactam) and Chapter 31. 8.2 Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3201 to 3207 (except pigments and preparati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 jackets for supply to the Armed Forces have been exempted from both c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, for the purpose of research, subject to certain conditions 22. Metals: The rate of compounded levy on aluminium circles has been increased from ₹ 7500/10000 per machine per month to ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared, the rates will be ₹ 400 per metric tonne. 25.2 Mini cement plants 25.2.1 Excise duty has been reduced from ₹ 250 per metric tonne to ₹ 220 per metric tonne for cement of declared retail sale price not exceeding ₹ 190 per 50 Kg. bag or per metric tonne retail sale price equivalent not exceeding ₹ 3800. 25.2.2 Excise duty has been increased from ₹ 250 per metric tonne to ₹ 370 per metric tonne for cement of declared retail sale price exceeding ₹ 190 per 50 Kg. bag or per metric tonne retail sale price equivalent exceeding ₹ 3800. 25.3 For cement in respect of which no RSP is required to be declared and thus no RSP is declared, the rate will be ₹ 250 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute, Kolkata for use by any Department of the Central Government; c) Goods like brooms, hand operated mechanical floor sweepers, mops, feather dusters, prepared knots and tufts of broom or brush; pain pads rollers, squeezes etc.; d) Recorded video cassettes intended for television broadcasting, supplied in formats such as U-matic, Betacam or any similar format; e) Nicotine polacrilex gum; f) Dust and powder of synthetic stones; g) Cold-set high speed printing machines; h) Specified parts of set top boxes. 28.2 Excise duty exemption (vide notification no 8/2004-CE) on pan masala containing tobacco and other tobacco products manufactured in the North East Region has been withdrawn in respect of clearances made on or after 1.3.2007. In respect of clearances prior to 1.3.2007 the 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 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall be charged at the rate fixed under section 28AB, from the date of payment of drawback till the date of recovery of such drawback. e) Prior to operationalisation of Special Economic Zone (SEZ) Act, 2005, the scheme of SEZs was implemented through Chapter XA of the Customs Act, 1962, and the rules notified under the said Act. In view of the specific legislation covering SEZs, Chapter XA of the Customs Act, 1962 has become redundant. Customs Act, 1962 is accordingly being amended to omit Chapter XA of the said Act. f) Section 127A of the Customs Act, 1962 is being amended so as to provide that an applicant can file an application before the Settlement Commission only in respect of cases pending before the adjudicating authority. It further provides that in respect of cases referred back by the Appellate Tribunal, 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, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded so as to make consequential changes in view of the amendments made in section 127C; m) Section 127L of the Customs Act, 1962 is being amended so as to provide that an applicant can apply for settlement only once during his lifetime so that the scheme of settlement is not treated as a permanent amnesty scheme by the tax evaders. It also provides that in respect of cases involving identical recurring issue, the applicant can file application for settlement provided that his earlier application is pending before the Settlement Commission; n) Section 127MA of the Customs Act, 1962 is being omitted as it has outlived its utility; o) Section 129 of the Customs Act, 1962 is being amended by inserting a new subsection (6) therein with a view to debar the President, Vice-President or other Member of the Customs, Excise and Service Tax Appellate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers shall act as the presiding officer of the Bench, if the Vice-Chairman is not one of the Members; v) Section 32E of the Central Excise Act, 1944 is being amended so as provide that the applicant shall be eligible to file an application in respect of the case in which he admits short levy on account of misclassification, under valuation, inapplicability of exemption notification or CENVAT credit but not in respect of the goods for which he had not filed a return. It further provides that while filing any application, he shall deposit the additional amount of excise duty accepted by him along with stipulated interest due thereon. It also proposes to enhance the minimum settlement amount from ₹ 2 lakh to ₹ 3 lakh. It also provides that in respect of an application filed before 1st June, 2007, but pending issuance of an order by the Commission, the 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. ee) Section 35F of the Central Excise Act, 1944, inter alia, provides that where in any appeal, the decision or order appealed against relates to any duty demanded, the person appealing against such decision or order shall deposit first the duty demanded. This section is being amended so as to insert an Explanation therein with a view to widen the scope of expression duty demanded . The proposed amendment provides for inclusion 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other document like shipping bill, bill of lading, etc., based on which the user of said document is likely to take or has taken any ineligible benefits like CENVAT credit, refund, etc.; 31. The CENVAT Credit Rules, 2004 have been amended as under (with immediate effect): a) Necessary amendments have been made in the Cenvat Credit Rules, 2004 to allow credit of Secondary and Higher Education Cess paid on inputs and capital goods, which can be utilized for payment of Education cesses only. b) Sub-rule (2) of rule 9 has been amended to provide that the CENVAT credit can be taken if all the particulars as prescribed under the rules are available on the invoice or other duty-paying document. Further, in case any of the required particulars (other than specified particulars) are not available on the document, the Assistant/Deputy Commissioner may allow the credit subject to his satisfaction that (i) goods/services 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer where the price is not the sole consideration for sale, the value of such goods shall be determined in terms of principles laid down in rule 6. 32.3 It has also been provided in the rule that the cost of transportation from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods. 32.4 This amendment will come into effect from 1.4.2007. 33. Miscellaneous: 33.1 Explanation to Notification No. 21/2004-CE (NT) dated 06.09.2004 specifies the duties which can be given as rebate This explanation has been amended by inserting a new clause so as to provide that the additional duty leviable under section 3 of the Custom Tariff Act, equivalent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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