TMI BlogAmendments in Customs and Central Excise - Budget 2010-2011X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/2011-CE 1st March, 2011 Non-Tariff No.3/2011-CE (NT) to No.7/2011-CE (NT) 1st March, 2011 Unless otherwise stated, all changes in rates of duty take effect from the midnight of 28th February/1st March, 2011. A declaration has been made under the Provisional Collection of Taxes Act, 1931 in respect of clauses 57(a)(i), 57 (b) and 70(a)(i) of the Finance Bill, 2011 so that changes proposed therein take effect from the midnight of 28th February/1st March, 2011. The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2010. 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, 2011 but with effect from the date indicated in the relevant clause or Schedule. These dates may be carefully noted. 2. The important changes in respect of Customs and Central excise duty are discussed below. I. CENTRAL EXCISE 3 Rate structure for goods, other than petroleum: 3.1 The standard rate of Central Excise duty for non-POL products has been maintained at 10%. The merit rate of excise duty (CENVAT) for non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alling under Chapters 61, 62 and 63 (heading nos.63.01 to 63.08) of the Central Excise Tariff except those falling under heading nos.63.09 and 63.10 when they bear or are sold under a brand name. Hitherto, ready-made garments and made-up articles were exempt from Central Excise duty on the condition that no credit of duty on inputs is taken by the manufacturer in terms of notification no.30/2004-CE dated 9th July, 2004. If credit were taken, the applicable rate was 4% for goods of cotton, not containing any other textile material and 10% for others under notification no.29/2004-CE also dated 9th July, 2004. These notifications are being amended so that they apply only to those goods of Chapters 61, 62 and 63 not bearing a brand name or not sold under a brand name. For such goods, therefore, the optional duty regime would continue. In the case of ready-made garments and made-up articles bearing a brand name or sold under a brand name, no such option would be available and a duty of 10% would be payable regardless of the composition of the item/article. 3.5 Note 12 of Chapter 61 and Note 11 of Chapter 62 already prescribe that certain processes such as affixing a brand name on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sm (S.No.34 (i) of notification no.6/2006-CE). For factory-built ambulances i.e. vehicles duly fitted with all fitments, furniture and accessories necessary for an ambulance, this concessional rate of 10% is being prescribed without any condition so that it may be claimed at the time of their clearance from the factory. 3.8 A similar refund-based concession was hitherto available to motor vehicles of heading 87.03 with a capacity of 7 persons including the driver which are registered for use solely as taxis after clearance(S.No.34 (ii) of notification no.6/2006-CE). Two changes are being carried out in this exemption: (i) the condition regarding capacity of the vehicle is being modified so that the concession is available to vehicles with capacity upto 13 persons including the driver; (ii) instead of a concessional rate of 10% ad valorem, the manufacturer of such vehicles would be entitled to a concessional rate equivalent to 80% of the excise duty paid on such vehicle at the time of clearance. Thus, if a vehicle attracts a normal duty of 10%, the manufacturer would be entitled to a refund of the amount representing 2% i.e. one-fifth of the total duty if the vehicle is subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit of the duty paid on input and input services is taken. For ease of reference, this rate is being prescribed through a common notification no. 1/2011-CE dated 1st March, 2011. The statutory/ tariff rate for those items that hitherto attracted a Nil rate (by tariff) has been fixed at 5% ad valorem. Bill entries contained in the Tenth Schedule to the Finance Bill, 2011 may be referred to for this purpose. For the remaining items in whose case the statutory/tariff rate is not Nil, a general effective rate of 5% is being prescribed (without any condition) through notification no. 2/2011-CE dated 1st March, 2011. This would enable those manufacturers who wish to avail of Cenvat credit to pay a concessional duty of 5%. 4.2 In the case of jewellery of gold, silver or other precious metals as well as articles of these metals falling under heading no. 7114, the levy would apply only to goods either bearing a brand name or sold under a brand name. Full exemption from excise duty is being retained for unbranded products of this class. 4.3 The following amendments have been made in the Cenvat Credit Rules, 2004 for the implementation of the 1% scheme: (a) The definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandis and warehouses for the storage of food grains and sugar . Goods required for the expansion of an existing mega/ ultra mega power project subject to specified conditions . Specified parts of sewing machines (other than those with inbuilt motors) . Parts of power tillers when cleared to another factory of the same manufacturer for manufacture of power tillers . Cotton stalk particle board . Enzymatic preparations for pre-tanning of leather . Colour, unexposed cinematographic film in jumbo rolls of 400 feet and 1000 feet . Pipe fittings required for a water supply project 5.2 Concessional duty of 1% is being provided for the following: . Sanitary napkins, baby and clinical diapers and adult diapers . Water filters using pressurized tap water but no electricity and their replaceable kits 5.3 Excise duty is being reduced from 10% to 5% on: . Kits for the conversion of fossil fuel vehicles into hybrid vehicles and parts of such kits . Grease proof paper and glassine paper 6. Important Legislative Amendments: 6.1 The provisions of sections 11A relating to the recovery of duty not levied, short levied, not paid, short pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeding the month in which the duty ought to have been paid under the Act or from the date of erroneous refund. The provisions of the existing section 11AA are proposed to be omitted. 6.3 Pending enactment of the Finance Bill, 2011, the rates of interest are being revised with effect from the 1st of April, 2011 to a uniform rate of 18 per cent per annum under the existing provisions of sections 11AA and 11AB. 6.4 Section 11E is being inserted in the Central Excise Act to create a first charge on the property of a defaulter for recovery of Central Excise dues subject to the provisions of the Companies Act, Recovery of Debt due to Bank and Financial Institution Act, 1993 and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. This implies that after the dues, if any, owing under these provisions, dues under the Central Excise Act shall have a first charge. 6.5 The provisions of section 12 of the Central Excise Act enable the Central Govt. to borrow the machinery provisions of the Customs Act with suitable modifications and alterations in respect of duties imposed by section 3. These are being amended to include a refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (CETA) is also being amended to incorporate the latest editorial changes in the Harmonized System of Nomenclature (HSN). These changes will come into effect from 01.01.2012. 6.11 Parts, components and assemblies of vehicles falling under chapter 87 excluding vehicles of headings 8712, 8713, 8715 and 8716 were notified under section 4A of the Central Excise Act with effect from 27.02.2010. Subsequently, parts, components and assemblies of certain vehicles falling under chapter 84 were also notified under these provisions with effect from 29.04.2010. However, these goods were not simultaneously included in the Third Schedule to the CETA. These are now being included in the Third Schedule retrospectively w.e.f. 27.02.2010 and 29.04.2010 respectively. 6.12 Amendments are being made in the Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 to remove sugar and textile and textile products from its purview. This would enable the State Governments to levy VAT on these items. 6.13 According to Note 5 the repacking of perfumes from bulk packs to retail packs, labeling or re-labeling of containers is a process amounting to manufacture. In the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of electricity or steam for captive use also constitute inputs. As for exclusions, any goods used for the construction of a building or a civil structure or laying of foundation or making of structure for support of capital goods have been excluded. Another feature of the new definition is that goods used primarily for personal use or consumption of any employee including food articles etc. have been expressly excluded. (b) The definition of input service. has also been rationalized to impart clarity and to achieve congruence between goods and services so that the services related to any goods excluded from the definition of inputs. are also excluded from the definition of input services.. To give an example, goods used for construction have been excluded from inputs while construction services, works contract service, and other specified services in so far as they are used for construction have been kept out of the purview of input services. (c) In the case of capital goods, there is no material change in the definition. Credit of duty paid on capital goods used outside the factory for generation of electricity for captive use within the factory has been permitted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Civil Aviation Requirements. 9.2 Exemption from education cess and secondary and higher education cess presently available to aircrafts is being withdrawn. IT Software 10. With effect from 21.12.2010 packaged or canned software falling under chapter 85 has been notified under section 4A of the Central Excise Act. Accordingly, the value of such software for the purposes of charging CVD is required to be determined on the basis of the retail sale price (RSP) affixed on the package under the Standards of Weights and Measures Act, 1976. It has been represented by the trade that in certain situations packaged software is not required to bear the RSP when imported and difficulties are being experienced in the assessment of such software to CVD. In order to resolve the issue, packaged software which is not required to bear RSP is being exempted from so much of the additional duty of customs as is equivalent to the duty payable on the portion of the value which represents the consideration paid or payable for transfer of the right of its use. Such software would therefore be required to pay CVD only on that portion of value representing the value of the medium on which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vate galleries that allow unrestricted access to general public, subject to the fulfillment of certain conditions. 13.3 In order to resolve ongoing disputes, certain clarificatory amendments have been made in exemption notifications/entries. Specifications have been prescribed for coking coal which is fully exempt from customs duty under S. No. 68 of notification No. 21/2002 dated 1st March, 2002 so that it may be distinguished from non-coking coal which attracts a duty of 5%. Similarly, an Explanation has been added to the entry at S. Nos 344 and 345 of the same notification to define a Completely Knocked Down. (CKD) unit of a vehicle to exclude a unit containing a pre-assembled engine, gearbox or transmission mechanism as well as a body assembly on which a sub-assembly of assembled engine, gearbox or transmission mechanism is installed. The Explanation to Notification No. 14/2004 Customs dated 8Th January,2004 has been amended to clarify that a water supply project includes water pumping station and water storage facility. A similar amendment has been carried out in entry 26A of Notification No. 42/1996-Customs dated the 23rd July, 1997. 13.4 As a trade facilitation meas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Where it is found that the self-assessment is not in order, the customs officer is required to reassess the bill of entry and to issue a speaking order for the same unless the importer agrees with the reassessment. Barring cases where a speaking order is issued on reassessment, powers have also been assigned to customs officers to conduct audit either in their own office or at the premises of importer or exporter. (iii) Consequential amendments are being proposed in section 18 relating to provisional assessment. It is being provided that the importer may make a request for assessment of goods by the officer when he is not in a position to self-assess. The provisions of section 19 are also being amended to prescribe that the finalization of provisional assessment may be carried out by the proper officer. Other consequential amendments include amendments in section 46 and 50 to make the electronic filing of bills of entry/shipping bills the norm. Power is also being conferred on the Commissioner of Customs to permit filing in any other manner when electronic filing is infeasible. Section 157 is being amended to empower the Board to issue regulations for specifying the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner within six months. 14.10 Special provision is being made vide clause 54 of the Finance Bill, 2011 read with the Third Schedule to retrospectively provide a concessional basic customs duty of 30% to fresh garlic imported by National Consumer Cooperative Federation and Madhya Pradesh State Cooperative Marketing Federation under import licenses issued by the Central Government and cleared after 15.1.2003. This provision would come into force on the date of enactment of the Finance Bill, 2011. Pending cases of these importers pertaining to the period mentioned above may be identified and disposed off accordingly. 14.11 Special provision is being made vide clause 58 of the Finance Bill, 2011 read with the Seventh Schedule to impose definitive safeguard duty retrospectively on imports of caustic soda lye imported into India during the period from 04.12.2009 to 03.03.2010. This would validate the imposition of provisional safeguard duty on this product during the same period. This provision would come into force on the enactment of the Finance Bill. 14.12 Notification Nos.92/2004-Customs dated 10th September, 2004, 41/2005-Customs dated 9th May, 2004, 90/2006-Customs dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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