Budget 2015 : Key Changes under Customs

 

 

REDUCTION IN DUTY ON CERTAIN INPUTS

  • ‘Metal parts’ for use in the manufacture of electrical insulators;
  • Ethylene-Propylene-non-conjugated-Diene Rubber (EPDM), Water blocking tape and Mica glass tape for use in the manufacture of insulated wires and cables;
  • Magnetron upto 1 KW for use in the manufacture of microwave ovens;
  • C- Block for Compressor, Over Load Protector (OLP) & Positive thermal co-efficient and Crank Shaft for compressor, for use in the manufacture of Refrigerator compressors;
  • Zeolite, ceria zirconia compounds and cerium compounds for use in the manufacture of washcoats, which are further used in manufacture of catalytic converters;
  • Anthraquinone for manufacture of hydrogen peroxide;
  • Sulphuric acid for use in the manufacture of fertilizers;
  • Parts and components of Digital Still Image Video Camera capable of recording video with minimum resolution of 800×600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence, using the maximum storage (including the expanded) capacity.

REDUCTION IN BASIC CUSTOMS DUTY

  • Ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) from 2.5% to 2%;
  • Isoprene and Liquefied butanes from 5% to 2.5%;
  • Butyl acrylate from 7.5% to 5%;
  • Ulexite ore from 2.5% to Nil;
  • Antimony metal, antimony waste and scrap from 5% to 2.5%;
  • Specified components for use in the manufacture of specified CNC lathe machines and machining centres from 7.5% to 2.5%;
  • Certain specified inputs for use in the manufacture of flexible medical video endoscopes from 5% to 2.5%;
  • HDPE for use in the manufacture of telecommunication grade optical fibre cables from 7.5% to Nil;
  • Black Light Unit Module for use in the manufacture of LCD/LED TV panels from 10% to Nil;
  • Organic LED (OLED) TV panels from 10% to Nil;
  • CVD and SAD are being fully exempted on specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers;
  • Evacuated Tubes with three layers of solar selective coating for use in the manufacture of solar water heater and system to Nil;
  • Active Energy Controller (AEC) for use in the manufacture of Renewable Power System (RPS) Inverters to 5%, subject to certification by MNRE;
  • Parts, components and accessories (falling under any Chapter) for use in the manufacture of tablet computers and their sub-parts for use in manufacture of parts, components and accessories are being fully exempted from BCD, CVD and SAD.

REDUCTION IN SAD TO AVOID CENVAT CREDIT ACCUMULATION

  • All goods except populated PCBs, falling under any Chapter of the Customs Tariff Act, 1975 (“the Customs Tariff Act”), for use in manufacture of ITA bound goods from 4% to Nil;
  • Naphtha, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) for manufacture of excisable goods from 4% to 2%;
  • Metal scrap of iron & steel, copper, brass and aluminium from 4% to 2%;
  • Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 4% to Nil.

INCREASE IN BASIC CUSTOMS DUTY

  • Metallurgical coke from 2.5% to 5%;
  • Tariff rate on iron & steel and articles of iron or steel, falling under Chapters 72 and 73 of the Customs Tariff, from 10% to 15%. However, there is no change in the existing effective rates of basic customs duty on these goods;
  • Tariff rate on Commercial Vehicles from 10% to 40% and effective rate from 10% to 20%. However, customs duty on commercial vehicles in Completely Knocked Down (CKD) kits and electrically operated vehicles including those in CKD condition will continue to be at 10%.

DECREASE IN BASIC CUSTOM DUTY

  • Export Duty on upgraded ilmenite is being reduced from 5% to 2.5%;
  • Basic Customs Duty on Digital Still Image Video Camera capable of recording video with minimum resolution of 800×600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence, using the maximum storage (including the expanded) capacity is being reduced to Nil. Basic Customs Duty on parts and components of these cameras is also being reduced from 5% to Nil;
  • Concessional Customs Duty structure of Nil Basic Customs Duty, 6% CVD and Nil SAD on specified parts of electrically operated vehicles and hybrid vehicles, presently available upto March 31, 2015, is being extended upto March 31, 2016.

RELIEF MEASURES UNDER CUSTOMS

  • Exemption to artificial heart (left ventricular assist device) from Basic Customs Duty of 5% and CVD.

ADVANCE RULING NOTIFICATION NO. – 27/2015

The Scheme of Advance Ruling is being extended to Resident firm in Customs. Further, for this purpose the term firm, sole proprietorship and resident been specifically defined as:

  • “firm” shall have the meaning assigned to it in Section 4 of the Indian Partnership Act, 1932 (9 of 1932) , and includes-

the limited liability partnership as defined in clause (n) of sub-section (1) of the section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009); or

limited liability partnership which has no company as its partner; or

the sole proprietorship; or

One Person Company.

  •  “sole proprietorship” means an individual who engages himself in an activity as defined in sub-clause (a) of section 28E of the Customs Act, 1962.
  • “One Person Company” means as defined in clause (62) of section 2 of the Companies Act, 2013 (18 of 2013).
  • “resident” shall have the meaning assigned to it in clause (42) of section 2 of the Income-tax Act, 1961 (43 of 1961) in so far as it applies to a resident firm.

CHANGES UNDER CUSTOMS ACT, 1962

1. Section 28 of the Customs Act has been amended as:

Proviso to Section 28(2) of the Customs Act has been inserted to provides that, no penalty shall be imposed and proceeding shall be deemed to be concluded, if duty along with interest is paid in full within 30 days from the date of receipt of the notice in cases not involving fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of duty.

Further, in cases involving fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of duty, the amount of penalty payable shall be 15% instead of 25% of the duty specified in the notice or the duty so accepted by that person.

Furthermore, Explanation 3 to Section 28 has been inserted to provide that where a notice under Section 28 (1) (a) or Section 28(4) of the Customs Act, has been served but an Order determining duty under Section 28(8) thereof has not been passed before the date on which the Finance Bill, 2015 receives the assent of the President, then, without prejudice to the provisions of Sections 135 (Evasion of duty or prohibitions), 135A (Preparing to export any goods in contravention of the Customs Act) and 140 (Offences by companies), the proceedings in respect of such person or other persons to whom the notice is served shall be deemed to be concluded if the payment of duty, interest and penalty under the proviso to Section 28 (2) or Section 28(5) thereof is made in full within 30 days from the date on which such assent is received.

2. Section 112 (b) (ii) of the Customs Act has been amended as to provide that:

Any person who acquires possession of or is in any way concerned with or in any other manner deals with any dutiable goods, other than prohibited goods, which he knows or has reasons to believe are liable to confiscation under Section 111 of the Customs Act, shall, subject to the provisions of Section 114A thereof, be liable to a penalty not exceeding 10% of the duty sought to be evaded or Rs. 5000, whichever is greater.

Further, in case of short levy or non-levy or short payment or non-payment and erroneous refund of duty for reasons of collusion or any willful mis-statement or suppression of facts, if the duty [under Section 28(8)] along with interest [under Section 28AA]  is paid within 30 days from the date of communication of the order of the proper officer determining such duty, then such person is liable to pay 25% of the penalty so determined.

3. Section 114 (ii) of the Customs Act has been amended as to provide that:

Any person who, in relation to any dutiable goods, other than prohibited goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 113 of the Customs Act, or abets the doing or omission of such an act, shall, subject to the provisions of Section 114A, be liable to a penalty not exceeding 10% of the duty sought to be evaded of Rs. 5000, whichever is greater.

Further, in case of short levy or non-levy or short payment or non-payment and erroneous refund of duty for reasons of collusion or any willful mis-statement or suppression of facts, if the duty [under Section 28(8)] along with interest [under Section 28AA] is paid within 30 days from the date of communication of the order of the proper officer determining such duty, then such person is liable to pay 25% of the penalty so determined.

4. Proviso to Section 127A(b) of the Customs Act has been amended as to provide that:

When any proceeding is referred back, whether in appeal or revision or otherwise, by any Court, Appellate Tribunal Authority or any other Authority to the Adjudicating Authority for a fresh adjudication or decision, then such case shall not be entitled for settlement before Settlement Commission.

5. Section 127B(1A) of the Customs Act has been omitted:

Section 127B(1A) of the Customs Act stipulates a case in which payments to be made within thirty days from June 1, June 2007 which has become redundant and is being omitted.

6. Section 127C(6) of the Customs Act has been omitted:

Section 127C(6) of the Customs Act stipulates a case where authorities under Settlement Commission were directed not to pass an order respect of an application filed on or before the 31.05.2007, later than the 29.02.2008 and in cases filed after 31.05.2007, within 9 months. So, the provisions have become redundant and thus the aforesaid Section is being omitted.

7. Section 127E of the Customs Act has been omitted:

Pursuant to Section 127E of the Customs Act, Settlement Commission has no powers to reopen any completed proceedings after expiry of five years from 1-06-2007. Hence, the Section 127E of the Customs Act becomes redundant and therefore is being omitted.

8. Explanation to Section 127H(1) of the Customs Act has been omitted:

Explanation to Section 127H(1) of the Customs Act provided clarification that in case of  an application filed before Settlement Commission, on or before 31-05-2007, it shall be decided as if the amendments made in the said Section were not in force. Since all the applications filed by 31-05-2007 have necessary been disposed of by 29-02-2008, the Explanation has become redundant and therefore omitted.

9. Explanation to Section 127L of the Customs Act has been amended as:

Section 127L of the Customs Act provides the situations in which the person in whose case the order has been passed by the Settlement Commission cannot again approach the Settlement Commission. Further, Section 127L was amended in 2007, which made distinction in respect of the orders passed prior the commencement of Section 102 of the Finance Act, 2007 and after that. In respect of the cases decided after the said commencement, the applicant was barred from making subsequent applications, whereas in the cases decided prior to that he could have made the application if his case was not covered by any of the clauses of Section 127L(1). Furthermore, Section 127L was amended vide Finance Act, 2010, even in cases decided after commencement of section 102 of the Finance Act, 2007 the applicant was allowed to approach Settlement Commission if not hit by any of the clauses to Section 127L(1).Thus, clause (i) and (ii) of Section 127L(1) are being amended so as to delete the phrase “passed under sub-section (7) of the section 127C, as it stood immediately before the commencement of section 102 of the Finance Act, 2007 (22 of 2007) or sub-section (5) of the section 32F” as the same have become redundant.

 

UNDER SWACHH BHARAT INITIATIVES (Customs and the Central Excise)

  • The Scheduled rate of Clean Energy Cess levied on coal, lignite and peat has been increased from Rs. 100 per tonne to Rs. 300 per tonne. The effective rate of Clean Energy Cess has been increased from Rs. 100 per tonne to Rs. 200 per tonne;
  • Concessional Customs and Excise Duty rates on specified parts of Electrically Operated Vehicles and Hybrid Vehicles, presently available upto March 31, 2015, is being extended upto March 31, 2016;
  • Excise Duty on sacks and bags of polymers of ethylene other than for industrial use is being increased from 12% to 15%.

 

UNDER COMPLIANCE FACILITATION UNDER CENTRAL EXCISE AND CUSTOMS:

Online Central Excise/Service Tax Registration within two working days;

  • Facility of direct dispatch of goods by registered dealer from seller to customer’s premises is being provided. Similar facility is also being allowed in respect of job-workers. Registered importer can also send goods directly to customer from the port of importation;
  • Penalty provisions in Customs, Central Excise and Service Tax has been rationalized to encourage compliance and early dispute resolution;
  • Central Excise/Service Tax assessees are being allowed to issue digitally signed invoices and maintain other records electronically.

 

 

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