AMENDMENTS TO CUSTOMS TARIFF ACT, 1975 BY FINANCE BILL, 2021

[Mr. M. GOVINDARAJAN]

Customs Tariff Act

Section 12 of the Custom Act provides that duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (‘Act’ for short) or other applicable Acts on goods imported into or exported from India. Customs Act, 1962 came into force from 1-2-1963.   The Customs Tariff Act to consolidate and amend the law relating to customs duties. Duties specified in the Schedule are to be levied. The rates at which duties of customs shall be levied under the Customs Act, 1962.

Budgetary amendments

The Finance Bill, 2021 (‘Bill’ for short) amends the Customs Tariff Act also.  The amendments carried out by the Bill are discussed in this article.

Amendment to Section 8B

Section 8B of Customs Tariff Act, 1975 gives powers to the Central Government to apply safeguard measures.  Section 92 of the Finance Bill, 2021 substitutes new explanation for the existing one.  The newly substituted explanation provides that for the purpose s of this section-

• the expression “hundred per cent. export-oriented undertaking” shall have the same meaning as assigned to it in clause (i) of Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944;
• the expression “special economic zone” shall have the same meaning as assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005.

Amendment to section 9

Section 9(1A) provides that where the Central Government, on such inquiry as it considers necessary, is of the opinion that circumvention of countervailing duty imposed under sub-section (1) has taken place, either by altering the description or name or composition of the article on which such duty has been imposed or by import of such article in an unassembled or disassembled form or by changing the country of its origin or export or in any other manner, whereby the countervailing duty so imposed is rendered ineffective, it may extend the countervailing duty to such other article also.

Section 93 of the Bill proposes to insert the words ‘from such date, not earlier than the date of initiation of the inquiry, as the Central Government may, by notification in the Official Gazette, specify’ after the words ‘such other article also’ in section 9(1A) of Act.

The Bill further proposes to insert section 9(1B).  The newly inserted section 9(1B)  provides that where the Central Government, on such inquiry as it considers necessary, is of the opinion that absorption of countervailing duty imposed under sub-section (1) has taken place whereby the countervailing duty so imposed is rendered ineffective, it may modify such duty to counter the effect of such absorption, from such date, not earlier than the date of initiation of the inquiry, as the Central Government may, by notification in the Official Gazette, specify.

The explanation to section 9(1B) provides that for the purposes of this sub-section, “absorption of countervailing duty” is said to have taken place,–

• if there is a decrease in the export price of an article without any commensurate change in the resale price in India of such article imported from the exporting country or territory; or
• under such other circumstances as may be provided by rules.

The Bill also proposes to insert section 9(2A).  The newly substituted section 9(2A) provides that notwithstanding anything contained in sub-sections (1) and (2), a notification issued under sub-section (1) or any countervailing duty imposed under sub-section (2) shall not apply to article imported by a hundred per cent. Export-oriented undertaking or a unit in a special economic zone, unless-

•  it is specifically made applicable in such notification or to such undertaking or unit; or
• such article is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area, in which case, countervailing duty shall be imposed on that portion of the article so cleared or used, as was applicable when it was imported into India.

The explanation to this section defines the expression ‘hundred per cent export-oriented undertaking’ and ‘special economic zone’

The expression ‘hundred per cent export-oriented undertaking’ is defined as having the have the same meaning as assigned to it in clause (i) of Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944.

The expression ‘special economic zone’ is defined as having the same meaning as assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005.

Section 9(6) of the Act provides that the countervailing duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition.  The Bill proposes to substitute the words ‘up to five years’ for the word ‘five years’.

The Bill also substitutes the second proviso to section 9(6) for a new provision.  The newly inserted second provision to section 9(6) provides that if the said duty is revoked temporarily, the period of such revocation shall not exceed one year at a time. 

Amendment to section 9A

Section 94 of the Bill seeks to amend sub-section (1A) of section 9A of the Customs Tariff Act to provide for retrospective levy of anti-dumping duty to counter circumvention.

It further seeks to insert a new sub-section (1B) in the said section to provide for anti-absorption measures in anti-dumping duty. It also seeks to substitute sub-section (2A) in that section to align it with the provisions contained in sub-section (6) of section 8B of the said Act relating to safeguard measures. It also seeks to amend sub-section (5) thereof to provide for further imposition of anti-dumping duty after review, for a period up to five years. It also seeks to insert a third proviso therein so as to provide that if anti-dumping duty is revoked temporarily, the period of such revocation shall not be more than one year at a time.

Amendment to First Schedule

Amendment by second schedule to the Bill

The Bill amends the First schedule to the Act.  The First schedule shall be amended as per the second schedule to the Bill.  The said schedule is also amended in the manner provided in the third schedule to the Bill with effect from 01.04.2021.  The First schedule to the Act. is amended in the manner provided in the Fourth schedule to the Bill with effect from 01.01.2022.

The First Schedule to the Act provides the basic rate of duty/classification/tariff items.  The following is the rate change proposed in the budget-

Sl. No.	Tariff item	Existing rate	Proposed rate
1	2803 00 10	5%	7.5%
2	3925	10%	15%
3	7007	10%	15%
4	7104 90 90	10%	15%
5	8414 30 00	12.5%	15%
6	8414 40	7.5%	15%
7	8414 80	12.5%/7.5%	15%
8	8501 10	10%	15%
9	8501 20 00	10%	15%
10	8501 31, 8501 32, 8501 33, 8501 34, 8501 40, 8501 51, 8501 52, 8502 53	10%	15%
11	8504 90 90	10%	15%
12	8512 90 00, 8536 41 00, 8536 49 00	10%	15%
13	8537	10%	15%
14	8544 30 00	10%	15%
15	9031 80 00	7.5%	15%
16	9032 89	10%	15%
17	9104 00 00	10%	15%

Amendment by third schedule to the Bill

Third Schedule to the Bill  - In the First Schedule to the Customs Tariff Act, in Chapter 27, for heading 2709, tariff items 2709 10 00 and 2709 20 00 and the entries relating thereto, the following shall be substituted with effect from the 01.04.2021, namely-

Tariff Item	Description of goods	Unit	Rate of duty
			Standard	Preferential
(1)	(2)	(3)	(4)	(5)
“2709	PETROLEUM OILS AND OILS OBTAINED FROM BITUMINOUS MINERALS, CRUDE
2709 00	-- Petroleum oils and oils obtained from bituminous minerals, crude
2709 00 10	--- Petroleum crude	kg.	5%	-
2709 00 90	--- Other	kg.	5%