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BCD Hike in Iron & Steel-Tough Amendment

Central Excise - By: - Pradeep Jain - Dated:- 18-8-2015 - Introduction:- This article is an attempt to analyse the amendment made in the rates of basic customs duty applicable for various Iron & Steel Products vide Notification no. 45/2015-Customs dated 12.08.2015. This notification seeks to amend the exemption notification no. 12/2012-Cus dated 17.03.2012 which prescribes exemption from the levy of Basic Customs Duty (BCD) and the Countervailing Duty (CVD) levied under section 3(1) of the C .....

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nt of this kind. The rate of basic customs duty was recently amended for iron and steel items vide notification no. 39/2015-Customs dated 16.06.2015 in similar fashion. The history of the amendments made in the entries pertaining to chapter 72 is discussed as follows:- SERIALS OF CHAPTER 72 AS APPEARING IN NOTIFICATION NO. 12/2012-CUS DATED 17.03.2012 AS ON 01.03.2015:- SERIAL NO. CHAPTER SUB-HEADING DESCRIPTION OF GOODS STANDARD RATE ADDITIONAL DUTY RATE CONDITION NO. 329A. 72 All goods 10% - 3 .....

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after, the government again made changes in the above cited serial number 330 and 334 of chapter 72 vide Notification no. 39/2015-Cus dated 16.06.2015 which are re-produced for the sake of convenient reference as follows:- In the said notification, in the Table,- (i) against S. No. 330, for the entry in column (2), the entry 72 (except 7202 60 00, 7208, 7209, 7210, 7211, 7212, 7225 3090, 7225 4019, 7225 50 or 7225 9900) shall be substituted; (ii) against S. No. 334, for the entry in column (2), .....

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Therefore, the substituted entries after placing them in the said notification including the unchanged entries are tabulated as follows (the substituted portion being highlighted for the sake of easy identification):- SERIAL NO. CHAPTER SUB-HEADING DESCRIPTION OF GOODS STANDARD RATE ADDITIONAL DUTY RATE CONDITION NO. 329A. 72 All goods 10% - 330. 72(except 72026000, 7208, 7209, 7210, 7211, 7212, 72253090, 72254019, 722550, or 72259900) All goods other than the following:- Goods mentioned against .....

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Subsequently, the government has once again made changes in the exemption pertaining to chapter 72 and the changes are being made in entries 329A, 330 and 334 of chapter 72 vide Notification no. 45/2015-Cus dated 12.08.2015. Apart from making amendment in the existing entries, two new serial numbers 333A and 333B have also been inserted. The mechanism by which the said amendment has been made is again very confusing and tricky which cannot be understood by barely reading the notification as such .....

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All goods other than the following:- Goods mentioned against S. Nos. [331, 332, 333, 333A, 333B and 334] Seconds and defectives of goods falling under Chapter 72 5% 331 7202 60 00 Ferro-nickel 2.5% 332 7204 Melting scrap of iron or steel (other than stainless steel) 2.5% 333 7204 21 Scrap of stainless steel, for the purpose of melting 2.5% 333A 7206, 7207, 7213, 7214, 7215, 7216, 7217, 7221, 7222, 7223, 7225 (except 72251100, 72253090, 72254019, 722550, or 72259900), 7226 (except 72261100), 722 .....

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he rate of duty for various items covered by chapter 72 is very tricky and can be analysed only by placing the substituted entries in the notification and comparing the same with the earlier notification. The government could have simply mentioned the rate of BCD for various products but instead it chose the mechanism of complicating it. The comparative analysis of the change in rate of customs duty is as follows:- SERIAL NO. CHAPTER SUB-HEADING DESCRIPTION OF GOODS EARLIER RATE OF CUSTOMS DUTY .....

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7209, 7210, 7211, 7212, 72253090, 72254019, 722550, 72259900 All goods 10% 12.5% 334 7219, 7220 All goods other than seconds and defectives 7.5% 7.5% Analysis of the amendment:- On analysing the above amendment, it is found that the rate of basic customs duty has been increased from 7.5% to 10% for certain iron and steel goods and from 10% to 12.5% for other iron and steel goods. Apart from the superficial enhancement in the rate of basic customs duty, following are the conclusions that can be .....

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nclusion of the sub-headings pertaining to serial no. 333B have lead to redundancy and unwarranted specification that is only increasing the length of the serial entry. This could have been avoided and the amendment could have been made compressed and in easy format. It is worth noting that the erstwhile entry no. 334 (as amended by notification no. 39/2015-Customs dated 16.06.2015 has been split up to form a new entry 333A except two chapter sub-headings, i.e. 7219 and 7220 that are continue to .....

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72 to have rate of BCD as 10%. With this amendment, these products have been shifted to form a new entry with enhanced rate of 12.5%. If we analyse the trend of imposing BCD on products covered by chapter sub-heading no. 7208, 7209, 7210, 7211, 7212, 72253090, 72254019, 7225 50 or 7225 99 00, we find that they were firstly covered under serial no. 334 which prescribed 7.5% BCD. Thereafter, these products were shuffled and covered by the exception to serial no. 330 thereby falling under serial n .....

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customs duty rate of 10% for all goods of chapter 72 except goods falling under serial no. 333B. Similarly, the entry no. 330 prescribes basic customs duty rate of 5% for all the goods under chapter 72 except goods covered by serial no. 331, 332, 333, 333A, 333B and 334. However, what about the goods which are covered by exceptions to the serial number 333A?The exceptions mentioned in the entry no. 333A indicate that chapter sub-headings 72251100, 72253090, 72254019, 722550, 72259900 and 7226110 .....

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asic customs duty rate of 10% or by entry no. 330 prescribing basic customs duty rate of 5%. Accordingly, every prudent assessee will classify the goods of chapter sub-headings 72251100 and 72261100 under entry 329A prescribing lower basic customs duty because when two benefits are available to an assessee, it is at the option of the assessee to opt for either one of the benefit of his own choice. This position of law has been time and again reiterated by the Hon ble Supreme Court in the followi .....

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nst 329A. This amendment also seeks to nullify the amendment made by Budget 2015-16 wherein the customs duty was increased from the erstwhile rate of 10% to 15%. It is pertinent to note here that the entry no. 329A inserted vide notification no. 10/2015-Cus dated 01.03.2015 prior to present amendment covered all the goods of chapter 72 without any exception thereby meaning that the exceptions to the specific entries to the notification and the goods not mentioned in the notification were ultimat .....

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