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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise - D.O.F.No. 334/7/2017-TRU

Extract

..... a), 110, 118 and 146 of the Finance Bill, 2017 so that changes proposed therein take effect from the midnight of 1st February / 2nd February, 2017. The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2017. These dates may be carefully noted. 2. Important changes in respect of Customs and Central Excise duty rates and legislative changes are contained in the four Annexes appended to this letter: 1) Annex I contains Chapter wise changes relating to Customs; 2) Annex II contains Chapter wise changes relating to Central Excise; 3) Annex III contains clarification being issued relating to Central Excise; 4) Annex IV provides a bird’s eye view of legislative changes proposed in the Finance Bill, 2017. 2.1 The Annexes I, II and IV provide a summary of the changes made and should not be used in any quasi-judicial or judicial proceedings, where only the relevant legal texts need to be referred to. 3. In order to achieve a sharper focus, this letter discusses only the key budgetary changes. 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 th .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... quo;Other aluminium ores, including laterite’ falling under tariff item 2606 00 90. However, goods other than the said goods falling under tariff item 2606 00 90 (concentrates) will continue to attract Nil export duty. S.No.24E and S.No.24F of notification No. 27/2011-Customs, dated 1st March, 2011 as amended by notification No.3/2017-Customs, dated the 2nd February, 2017 refers. Chapter 27: 1) Basic Customs Duty on Liquefied Natural Gas (LNG) falling under tariff item 2711 11 00 is being reduced from 5% to 2.5%. S.No.138 of notification No.12/2012-Customs, dated 17th March, 2012, as amended by notification No.6/2017-Customs, dated 2nd February, 2017 refers. Chapter 28: 1) Concessional 5% Basic Custom Duty is being extended to Clay 2 Powder (Alumax) [2818 20 90], for use in ceramic substrate for catalytic convertors, subject to actual user condition. Notification No.12/2012-Customs, dated 17th March, 2012, as amended by notification No.6/2017-Customs, dated the 2nd February, 2017 [New S.No.371E] refers. Chapter 29: 1) Basic Customs Duty on o-Xylene [2902 41 00] is being reduced from 2.5% to Nil. Notification No.12/2012-Customs, dated 17th March, 2012, as amended by notificati .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... ms, dated 17th March, 2012 as amended vide Notification No.4/2017- Customs, dated 2nd February, 2017 [new S. Nos. 14H and 14I] refer. Chapter 40 to 53: No change Chapter 54: 1) Basic Customs Duty on Nylon Monofilament yarn falling under Customs Tariff Item 5404 19 90 for use in Monofilament long line systems for tuna fishing is being reduced from 7.5% to 5%, subject to certain conditions. Notification No. 12/2012-Customs, dated 17th March, 2012 as amended vide notification No.6/2017- Customs, dated 2nd February, 2017 [new S. No. 294A] refers. Chapter 55 to 69: No change Chapter 70: 1) Basic Customs Duty (BCD) is being reduced from 5% to Nil on solar tempered glass or solar tempered (anti-reflective coated) glass for manufacture of Solar cells/panels/modules, subject to actual user condition. S. No. 305A of Notification No.12/2012-Customs, dated 17th March, 2012 as amended vide Notification No.6/2017- Customs, dated 2nd February, 2017 refers. Chapter 71 1) CVD exemption [under S.No.324 of notification No. 12/2012-Customs dated 17.03.2012] on silver medallions and coins having silver content not below 99.9%, other semi-manufactured forms of silver or articles of silver is being withd .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... %. Clause 109 (a) of Finance Bill, 2017 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, this increase will come into force with immediate effect. 2) However, all other goods falling under tariff item 8421 99 00 will, continue to attract BCD at 7.5%. Notification No. 12/2012-Customs dated 17th March, 2012 as amended by Notification No.6/2017-Customs, dated 2nd February, 2017 [new S. No. 400A] refers. 3) Concessional Basic Customs duty of 2.5% is being extended to Ball Screws [8483 40 00], Linear Motion Guides [8466 93 90] and CNC Systems [8537 10 00] for use in the manufacture of all types of CNC machine tools falling under headings 8456 to 8463, subject to actual user condition. S. No. 406B, 406C and 406D of Notification No. 12/2012-Customs dated 17th March, 2012 as amended by Notification No.6/2017-Customs, dated 2nd February, 2017 refers. 4) Populated PCBs of mobile phones are being excluded from the purview of Nil SAD under S. No. 1 of Notification No. 21/2012-Customs [which exempts SAD on items, which are exempt from BCD and CVD]. S. No. 1 of Notification No. 21/2012-Customs dated 17th March, 2012 as amended vide Notification No.4/2017- Cus .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... e) of such goods. Condition No.40A of notification No.12/2012Customs, dated 17th March, 2012, as amended by notification No.6/2017-Customs, dated 2nd February, 2017 refers. Further, it is also clarified that this relaxation shall, mutatis mutandis, apply for domestically manufactured goods supplied against International Competitive Bidding at Nil excise duty under notification No.12/2012- Central Excise, dated 17.03.2012 [S.No.336, Condition No.41]. It is also clarified that goods allowed to be cleared on payment of duty under this provision include unused, surplus, condemned and obsolete items. 2) The exemption limit for duty free imports [exempted from BCD, CVD, and SAD] of Buckles; ‘D’ rings; eyes; rivets; studs; etc. imported by a manufacturer of leather footwear or synthetic footwear or other leather products for exports by that manufacturer is being increased from 3% of the FOB value of goods exported during the preceding financial year to 5% of the FOB value of goods exported during the preceding financial year. S. No. 283 of Notification No. 12/2012-Customs dated 17.03.2012 as amended by Notification No.6/2017Customs dated 02.02.2017 refers 3) 5% concessional ba .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... em Description Additional Duty of Excise (Rs. per 1000 sticks) Existing Rate New Rate 2402 20 10 Non filter not exceeding 65mm 215 311 2402 20 20 Non-filter exceeding 65mm but not exceeding 70mm 370 541 2402 20 30 Filter not exceeding 65mm 215 311 2402 20 40 Filter exceeding 65mm but not exceeding 70mm 260 386 2402 20 50 Filter exceeding 70mm but not exceeding 75mm 370 541 2402 20 90 Other 560 811 2) Basic Excise Duty on other tobacco products falling under heading 2402 is being increased as under: Tariff Item Description Basic Excise Duty rate From To 2402 10 10 Cigar and cheroots 12.5% or ₹ 3755 per thousand, whichever is higher 12.5% or ₹ 4006 per thousand whichever is higher 2402 10 20 Cigarillos 12.5% or ₹ 3755 per 12.5% or ₹ 4006 per Tariff Item Description Basic Excise Duty rate From To thousand, whichever is higher thousand whichever is higher. 2402 90 10 Cigarettes of tobacco substitutes ₹ 3755 per thousand ₹ 4006 per thousand 2402 90 20 Cigarillos of tobacco substitutes 12.5% or ₹ 3755 per thousand, whichever is higher 12.5% or ₹ 4006 per thousand whichever is higher. 2402 90 90 Others of tobacco substitutes 12.5% or ₹ .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... ended by notification No.4/2017-Central Excise dated 02.02.2017, Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 published vide notification No.11/2010-Central Excise (N.T.), dated the 27.02.2010 as amended by notification No.3/2017-Central Excise (N.T.), dated 02.02.2017 and Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 published vide notification No.30/2008-Central Excise (N.T.), dated the 01.07.2008 as amended by notification No.2/2017-Central Excise (N.T.), dated 02.02.2017 refers. The changes in additional duty of excise rates on smokeless tobacco products as mentioned above are summarized below: Commodity CETH Present Health Cess (%) Proposed Health Cess (%) Pan Masala 2106 90 20 6 9 Gutkha 2403 99 90 6 12 Unmanufactured Tobacco 2401 4.2 8.3 Chewing Tobacco 2403 99 10 6 12 Zarda Scented Tobacco 2403 99 30 6 12 Chapter 25 to 30: No change Chapter 31: 1) Goods falling under heading 3101 of the Central Excise Tariff attract Nil Central Excise duty by tariff. Notification No.12/2012-Central Excise dated 17.03.2012 [S.No.128, which prescribed a concessional excise duty .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... e and panel for water pumping and other applications, subject to actual user condition. This 6% concessional excise duty will be valid till 30th June, 2017. Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended vide Notification No.6/2017- Central Excise, dated 2nd February, 2017 [new S. No. 187D] refers. Chapter 71 1) Nil excise duty, on waste and scrap of precious metals or metals clad with precious metals, arising in course of manufacture of goods, is being made subject to condition that no credit of input or input services or capital goods has been availed by manufacturers of such goods. S. No. 195 of Notification No. 12/2012-Central Excise dated 17.03.2012 as amended by Notification No.6/2017- Central Excise dated 02.02.2017 refers. 2) Nil excise duty, on strips, wires, sheets, plates and foils of silver, is being made subject to condition that no credit of input or input services or capital goods has been availed by manufacturers of such goods. S. No. 196 of Notification No. 12/2012-Central Excise dated 17.03.2012 as amended by Notification No.6/2017- Central Excise dated 02.02.2017 refers 3) Nil excise duty, on articles of silver jewellery, other than t .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... y from 1st January, 2017. Clause 119 of Finance Bill, 2017 refers. With effect from 11.01.2017, vide S.No.277A of notification No.12/2012-Central Excise, dated 17.03.2012, these goods already attract excise duty of 12.5%. Chapter 88 to 96: No change Miscellaneous: 1) 6% concessional excise duty is being prescribed for all items of machinery, including, instruments, apparatus and appliances, transmission equipment and auxiliary equipment (including those required for testing and quality control) and components/parts, required for initial setting up of fuel cell based system for generation of power or for demonstration purposes subject to certain conditions. The concessional excise duty will be valid till 30th June, 2017. Notification No.5/2017- Central Excise dated 2nd February, 2017 refers. 2) 6% concessional excise duty is being prescribed for all items of machinery, including, instruments, apparatus and appliances, transmission equipment and auxiliary equipment (including those required for testing and quality control) and components/parts, required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen, subject to certain conditions. The concessional excise .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... tifications on inputs utilized in manufacture/processing/packaging etc. of such goods [cleared to DTA]. 4. In addition, there are a number of customs and excise duty exemption notifications which prescribe concessional [including Nil] duty rates on specified goods [inputs/raw materials etc.] for use in manufacture of specified goods, subject to conditions prescribed. In this context, it has been stated that EOUs are not able to avail benefit of such exemptions on inputs imported or procured domestically by them. 5. The matter has been examined. As mentioned in para 2 above, non-applicability of exemptions under notifications issued under section 5A of the Central Excise Act, 1944 is only in respect of excisable goods produced or manufactured by an EOU and cleared to DTA and not in respect of inputs/raw materials procured by them domestically and utilised for production/manufacture of goods which are cleared by them to DTA. 6. In view of the above, it is hereby clarified that EOUs will also be eligible to import or procure raw materials/inputs at other concessional/Nil rate of BCD, excise duty/CVD or SAD, as the case may be, provided they fulfill all conditions for being eligible to .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... cted in the reassessed bill of entry in the case of reassessment. [91] 5. Clause (e) of section 28E is being amended so as to substitute the definition of “Authority” to mean the Authority for Advance Ruling as constituted under section 245-O of the Income-tax Act, 1961. [92] 6. Section 28F is being amended so as to provide that the Authority for Advance Rulings constituted under section 245-O of the Income-tax Act shall be the Authority for giving advance rulings for the purposes of the [93] Customs Act. It further seeks to provide that the Member of the Indian Revenue Service (Customs and Central Excise), who is qualified to be a Member of the Board, shall be the revenue Member of the Authority for the purposes of Customs Act. It also seeks to provide for transferring the pending applications before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) to the Authority constituted under section 245-O of the Income-tax Act from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President. 7. Section 28G relating to vacancies not to invalidate proceedings is being omitted. [94] 8. Sub .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... ide the manner of payment of duty and interest thereon in the case of selfassessed bills of entry or, as the case may be, assessed, reassessed or provisionally assessed bills of entry. [100] 14. Section 49 is being amended to extend the facility of storage under section 49 to imported goods entered for warehousing before their removal. [101] 15. Section 69 relating to clearance of warehoused goods for exportation is being amended to align it with the proposed omission of section 82. [102] 16. Section 82 relating to label or declaration accompanying goods to be treated as entry is being omitted. [103] 17. Section 84 is being amended to empower the Board to make regulations to provide for the form and manner in which an entry may be made in respect of goods imported or to be exported by post. [104] 18. Section 127B is being amended so as to insert a new sub-section (5) therein to enable any person, other than applicant, referred to in subsection (1) to make an application to the Settlement Commission. [105] 19. Sub-section (3) of section 127C is being amended so as to substitute certain words therein. It further seeks to insert a new sub-section (5A) therein to enable the Settlement .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... aluminium ores and concentrates Nil 30% The above amendment increasing the export duty rate will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. B. EXCISE Note: “Basic Excise Duty” means the excise duty set forth in the First Schedule to the Central Excise Tariff Act, 1985. I. AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944: S. No. Amendment Clause of the Finance Bill, 2017 1. Clause (e) of section 23A is being amended so as to substitute the definition of “Authority” to mean the Authority for Advance Ruling as constituted under section 245-O of the Income-tax Act, 1961. [111] 2. Section 23B relating to vacancies not to invalidate proceedings is being omitted. [112] 3. Sub-section (3) of section 23C is being amended so as to increase the application fee for seeking advance ruling from rupees two thousand five hundred to rupees ten thousand on the lines of the Income-tax Act. [113] 4. Sub-section (6) of section 23D is being amended so as to provide time of limit of six months by which Authority shall pronounce its ruling on the lines of the Income-tax Act. [114] 5. A new section 23-I is being inserted so as .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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..... 7] S.No. Amendment Amendments involving change in the rate of Additional Excise duty Rate of duty Commodity From To A. Tobacco and Tobacco Products 1. Non-filter Cigarettes of length not exceeding 65mm Rs.215 per thousand Rs.311 per thousand 2. Non-filter Cigarettes of length exceeding 65mm but not exceeding 70mm Rs.370 per thousand Rs.541 per thousand 3. Filter Cigarettes of length not exceeding 65mm Rs.215 per thousand Rs.311 per thousand 4. Filter Cigarettes of length exceeding 65mm but not exceeding 70mm Rs.260 per thousand Rs.386 per thousand 5. Filter Cigarettes of length exceeding 70mm but not exceeding 75mm Rs.370 per thousand Rs.541 per thousand 6. Other Cigarettes Rs.560 per thousand Rs.811 per thousand 7. Chewing tobacco (including filter khaini) 10% 12% 8. Jarda scented tobacco 10% 12% 9. Pan Masala containing Tobacco (Gutkha) 10% 12% The above amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. V. AMENDMENTS IN THE CENTRAL EXCISE RULES, 2002 AND THE CENVAT CREDIT RULES, 2004 S.No. Amendment 1. Sub-rule (2) is being inserted in rule 21 of Central Excise Rules, 2002 .....

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Finance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts. - Central Excise

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