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Finance Bill 2016 - Changes in Customs and Central Excise law and rates of duty

Finance Bill, 2016 - Changes in Customs and Central Excise law and rates of duty - Central Excise - D.O.F.No.334/8/2016-TRU - Dated:- 29-2-2016 - Government of India Ministry of Finance Department of Revenue Tax Research Unit **** Alok Shukla Joint Secretary (TRU-I) Tel: 23092687 Fax: 23092031 Email: alok.shukla@nic.in D.O.F.No.334/8/2016-TRU New Delhi, the 29th February, 2016. Dear Principal Chief Commissioner / Chief Commissioner / Principal Commissioner, The Finance Minister has introduced th .....

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.T.) 1st March, 2016 CENTRAL EXCISE Tariff No.5/2016-Central Excise to No.18/2016-Central Excise 1st March, 2016 Non-Tariff No. 5/2016-Central Excise (N.T.) to No. 21/2016-Central Excise (N.T.) 1st March, 2016 MISCELLANEOUS Clean Energy Cess No.1 and No. 2/2016-Clean Energy Cess 1st March, 2016 Infrastructure Cess No.1/2016-Infrastructure Cess 1st March, 2016 Unless otherwise stated, all changes in rates of duty take effect from the midnight of 29th February / 1st March, 2016. A declaration has .....

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d 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 the clarifications being issued on certain matters relating to Customs and Central Excise. 4) Annex IV provides a bird‟s eye view of legislative changes proposed in the Finance Bill, 2016. 2.1 The Annexes provide a summary of the changes made and should not be used in any quasi-judicial or ju .....

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in the Central Excise side, which I would like to bring to your special attention: 3.1.1 Excise duty of 2% (without CENVAT credit) or 12.5% (with CENVAT credit) is being levied on readymade garments and made up articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff except those falling under 6309 and 6310 of retail sale price (RSP) of ₹ 1000 and above when they bear or are sold under a brand name. This optional levy would apply t .....

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composition, as the case may be, shall continue. The tariff value for readymade garments and made up articles of textile is also being increased from 30% to 60% which shall apply to all goods mentioned in the notification No.20/2001-CentralExcise (N.T.) dated 30.04.2001. It may be noted that the new levy is similar to the levy of mandatory excise duty of 10% on readymade garments and made up articles of textiles [goods falling under Chapters 61, 62 and 63 (heading Nos. 63.01 to 63.08)] when they .....

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issued vide Budget letter F.No.334/3/2011-TRU dated 28.02.2011, Instruction D.O. F.No.334/3/2011-TRU, dated 04.03.2011 and Instruction D.O. F.No. B-1/3/2011-TRU, dated 25.03.2011. The said instructions shall apply mutatis mutandis to the new levy. Salient features of these instructions [suitably modified for the proposed optional levy, as underlined] are as under: (i) The levy shall not apply to retail tailoring establishments that stitch garments in a customized manner to the size and style sp .....

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2001 and Para 1, clause (vi) of notification No.36/2001-C.E. (N.T.), dated 26.06.2001 refers. (iii) However, the brand name owner will be given the option to authorise his job-worker to pay the duty leviable on the goods. If such an authorisation is given, then the job-worker would have to obtain registration. Proviso to rule 4 (1A) of the Central Excise Rules, 2001 and proviso to Para 1, clause (vi) of notification No.36/2001-C.E. (N.T.), dated 26.06.2001 refers. (iv) A unit which manufactures .....

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d on such goods when they are cleared in the course of sale from the factory of a manufacturer to the brand owner, then no excise duty would be payable by such a manufacturers since the RSP of such goods is not disclosed to them by the brand owner. However, since the process of labeling or re-labelling constitutes a process of manufacture , duty on the tariff value (based on the RSP) would be payable as and when the brand owner labels the goods with the RSP of ₹ 1000 or above and clears th .....

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mended suitably. (viii) The eligibility for availing of the SSI exemption in 2015-16 for the month of March 2016 is that the value of clearances for home consumption from one or more manufacturer from one or more unit should not have exceeded ₹ 4 crore in the financial year 2014-15. The computation for this purpose shall be done in accordance with the provisions of Para 3A of notification No. 8/2003-C.E. For this purpose, a certificate from a Chartered Accountant based on the books of acco .....

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VAT Credit, Rules, 2004, if he so desires. No stock declaration, will, however, be required to be made to the jurisdictional central excise authorities. (x) Full exemption from Central Excise duty will be available to duty-paid goods returned to the manufacturer during a financial year up to an aggregate ceiling not exceeding 10% of the value of clearances for home consumption made in the preceding financial year. The manufacturer would be required to observe the following procedure for this pur .....

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been provided since it is a common practice in this industry that the duty-paid stock cleared to the wholesale dealer/retailer on consignment basis that remains unsold is returned to the manufacturer either at the end of the season or from time to time. Such returned goods are cleared either as such or after re-finishing‟ operations to another wholesaler or retailer for sale (often at reduced prices). The re-finishing operations could involve cleaning, ironing, re-folding, repacking or re .....

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ll be eligible for exemption from excise duty on first clearances upto ₹ 6 Crore during a financial year, if his aggregate domestic clearances during preceding financial year were less than ₹ 12 crore. In other words, jewellery manufacturer having aggregate value of clearances in a financial year exceeding ₹ 12 crore, will not be eligible for this threshold exemption in the subsequent financial year. Necessary amendments have been made in notification No.8/2003-Central Excise, .....

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. For this purpose, a certificate from a Chartered Accountant, based on the books of accounts for 2014-15, shall suffice. 3.2.3 Similarly, for determining the eligibility for availing of the SSI exemption from 2016-17 onwards, a certificate from a Chartered Accountant, based on the books of accounts for 2015-16, shall suffice. 3.2.4 Excisable goods which were produced on or before 29.02.2016 but lying in stock as on 29.02.2016 shall attract excise duty upon clearance. Jewellery manufacturer shal .....

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procedure and guidelines are being issued for strict compliance: i. Registration once applied for shall be granted within two working days, along with simplified registration procedure as prescribed under Notification No. 35/2001-CE. ii. Further, the requirement of post registration physical verification of the premises has been also done away with in this case. Necessary amendments have been made to Notification No. 35/2001-CE for this purpose. iii. Moreover, documents being maintained by the j .....

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issued under Rule 9 (2) of the Central Excise Rules, 2002. vi. Also, jewellery manufacturers will be eligible for a simplified return applicable for optional excise duty of 1%/2% without CENVAT credit under notification No.1/2011-CE, under Rule 12 of the Central Excise Rules, 2002. vii. Rule 12AA of the Central Excise Rules, 2002 provides that in case of goods falling under chapter heading 7113, every person (not being an EOU or SEZ unit) who gets jewellery made from any other person, and suppl .....

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d therefore, no physical visits shall be made to registered units in the normal course. 4. I would like to emphasise that the Board desires that all necessary steps shall be taken to enable the new taxpayers to comply with these new levies without any difficulty. The thrust of these new levies shall be voluntary compliance. Therefore, visits to such units should not be made in the normal course. These instructions may be disseminated to the field formations for strict compliance. 5. Difficulties .....

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ments. However, given the scale of changes, inadvertent errors cannot be ruled out. I shall be grateful if the provisions of the Finance Bill and notifications are studied carefully and feedback on issues that may need clarification is provided urgently. 7. It may kindly be ensured that the changes are implemented in a smooth manner without causing any inconvenience to the taxpayers and other stakeholders. All possible efforts may be made to guide the taxpayers by holding interactive sessions/ s .....

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nister‟s Budget Speech, Explanatory Memorandum to the Bill, relevant notifications can be downloaded directly from www.indiabudget.nic.in as well as www.cbec.gov.in. 9. To conclude, my team and I would like to express my gratitude to you for the valuable suggestions, feedback and support and would look forward to your comments/ suggestions. With warm regards, Yours sincerely, (Alok Shukla) Joint Secretary (TRU-I) To, All Principal Chief Commissioners / Principal Directors General All Chief .....

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enatured ethyl alcohol (ethanol) [2207 20 00] is being reduced from 5% to 2.5% for manufacture of excisable goods, subject to actual user condition. Notification No.12/2012-Customs, dated 17th March, 2012, as amended by notification No.12/2016-Customs, dated the 1st March, 2016 [New S.No.96A] refers. Chapter 23 to 24: No change Chapter 25: 1) Basic Customs duty on Silica Sand [2505 10 11, 2505 10 12 and 2505 10 19] is being reduced from 5% to 2.5%. Notification No.12/2012-Customs, dated 17th Mar .....

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um ores and concentrates, all sorts [2610] is being reduced from 30% to Nil. Notification No. 27/2011-Customs, dated 01.03.2011 as amended by notification No. 15/2016-Customs, dated 01.03.2016 [new S. No.24BA refers] 3) Export duty on bauxite (natural), not calcined [2606 00 10] and bauxite (natural) calcined [2606 00 20] is being reduced from 20% to 15%. S.No.24A, 24B of notification No.27/2011-Customs, dated 01.03.2011 as amended by notification No.15/2016-Customs, dated 01.03.2016 refers. Cha .....

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New S.No.121D] refers. 3) Basic Customs Duty on all goods falling under 2707 is being rationalized at 2.5% BCD. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 [New S.No.121E] refers. 4) Basic Customs Duty on all goods falling under 2708 is being rationalized at 5% BCD. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 [New S.No.121F] ref .....

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oods falling under Chapter 31 for use as fertilizers. S.No.152 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 refers. 3) Basic Customs duty on aluminium oxide [2818 20 90] for use in the manufacture of Wash Coat (3824 90 90), for catalytic converters is being reduced from 7.5% to 5% subject to actual user condition. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Cus .....

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ling under 2901 and 2902 [except para-xylene (2902 43 00) which attracts Nil BCD (S.No.174) and styrene (2902 50 00) which attracts 2% BCD (S.No.175)] is being rationalized at 2.5%. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 [S.No.172A] refers. Consequently, S.No.173 is being amended and S.Nos.173A, 173B, 173C, 173D, 173E and 176 are being omitted. 2) Special Additional Duty (SAD) on orthoxylene [2902 41 00] fo .....

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n No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 [new S.No. 238A] refers. 2) Basic Customs duty on Super Absorbent Polymer (SAP) [3906 90 90] for manufacture of goods falling under heading 9619 [sanitary towels, tampons, napkins, diapers etc.] is being reduced from 7.5% to 5%, subject to actual user condition. S.No 242 of Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, date .....

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016 95 90, 4016 99 90. Chapter 41 to 43: No change Chapter 44: 1) Basic Customs duty on wood in chips or particles for manufacture of paper, paperboard and news print is being reduced from 5% to Nil subject to actual user condition. Since, there is no excise/CV duty on wood in chips or particles, this will also result in exemption from SAD on such wood chips/particles. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 .....

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l. List 32 of Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 refers. Chapter 49: 1) Exemption from Basic Customs duty on plans, drawings and designs is being withdrawn. Such goods will now attract 10% BCD. S. No. 275 of notification No.12/2012-Customs, dated 17th March, 2012 is being omitted by notification No. 12/2016-Customs, dated the 1st March, 2016. Chapter 50, 52, 54, 55 or any other chapter: 1) Basic Customs .....

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S.No.284A] refers. Chapter 51 and 53: No change Chapter 54 and 55: 1) Basic Customs Duty on specified fibres, filaments/yarns is being reduced from 5% to 2.5%. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March, 2016 [new S.No. 290A] of refers. Chapter 56 to 69: No change Chapter 70: 1) Exemption from Basic Customs Duty is being withdrawn on solar tempered glass/solar tempered (anti-reflective coated) glass for use in manufa .....

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305A and Condition No. 5] refer. 2) Basic customs duty exemption is being withdrawn on preform of silica [Chapter 70] for use in manufacture of telecommunication grade optical firbre/cables. It will now attract 10% BCD. S.No. 306 of Notification No.12/2012-Customs, dated 17th March, 2012 is omitted by notification No.12/2016- Customs dated 1st March, 2016 refers. Chapter 71: 1) Basic Customs duty on imitation jewellery [7113] is being increased from 10% to 15%. Clause 138 (i) of the Finance Bill .....

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ed 17th March, 2012 as amended by notification No.12 /2016-Customs, dated the 1st March, 2016 refers. Chapters 72 to 73: No Change. Chapter 74: 1) Basic Customs Duty on brass scrap [7402 00 22] is being reduced from 5% to 2.5%. notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12 /2016-Customs, dated the 1st March, 2016 [new S.No.335C] refers. Chapter 75: No change. Chapter 76: 1) Basic Customs duty on primary aluminium products [7601, 7603, 7604, 7605, 7606 a .....

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79: 1) Basic Customs duty on zinc alloys [7901 20] is being increased from 5% to 7.5%. Clause 138 (i) of the Finance Bill 2016 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these changes will come into force with immediate effect. Chapter 80 to 83: No change. Chapter 84 and 85: 1) Tariff rate of BCD is being increased from 7.5% to 10% on 206 specified tariff lines falling in Chapters 84 and 85. Clause 138 (i) of the Finance Bill 2016 refers. By virtue of d .....

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2/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2016-Customs, dated the 1st March 2016 refers. 2) Basic Customs duty on industrial solar water heater [8419 19 20] is being increased from 7.5% to 10%. Clause 138 (i) of the Finance Bill 2016 refers. Further, Basic Customs duty of 7.5% is being retained on other water heaters [with other than solar heating source] falling under 8419 19 20. 4) Basic customs duty is being exempted on specified raw materials for use in manufact .....

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ication No. 18/2016- Customs dated 1st March, 2016 refers. 6) Exemption from Special Additional Duty (SAD) is being withdrawn on populated printed circuit boards [PCBs] for manufacture of personal computers (laptop or desktop) including tablet computer. Such populated PCBs will now attract 4% SAD. S.No. 14A of Notification No.21/2012-Customs, dated 17th March, 2012 is being omitted by notification No. 16/2016- Customs dated 1st March, 2016 refers. All other goods for manufacture of personal comp .....

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st March, 2016 refers. Simultaneously, 2% concessional SAD of is being prescribed on populated PCBs for use in manufacture of mobile phone or tablet computer, subject to actual user condition. Notification No. 21/2012-Customs dated 17th March, 2012 as amended by notification No.16/2016- Customs dated 1st March, 2016[ new S.No. 85A] refers. 8) Basic Customs Duty and Special Additional Duty (SAD) are being exempted on machinery, electrical equipments, other instruments and their parts [except popu .....

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ial Additional Duty (SAD) are being exempted on machinery, electrical equipments, other instruments and their parts [except populated PCBs] falling under chapter 84, 85, 90 for assembly, testing, marking and packaging of semiconductor chips (ATMP), subject to actual user condition. Notification No. 12/2012-Customs dated 17th March, 2012 as amended by notification No. 12/2016- Customs dated 1st March, 2016 [new S.No.372B] refers. Notification No. 21/2012-Customs dated 17th March, 2012 as amended .....

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otification No. 19/2016-Customs dated 1st March, 2016 refers. 11) Further, SAD exemption on charger/Adapter, Battery and Wired Headsets/Speakers for use in manufacture of mobile handsets including cellular phone is being withdrawn. S.No. 14D of Notification No.21/2012-Customs, dated 17th March, 2012 as amended by notification No. 16/2016-Customs dated 1st March, 2016 refers. 12) Further, Basic Customs Duty and Excise Duty [and thus CVD] are being exempted on inputs and parts for manufacture of c .....

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, 2016 [new S. Nos. 431A to 431D] refers. 13) Basic Customs Duty and Excise Duty [and thus CVD] are being exempted on parts, components and accessories for use in the manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]. Further, Basic Customs Duty and Excise Duty [and thus CVD] are also being exe .....

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ation No. 12/2012-Customs on specified telecommunication equipment [Soft switches and Voice over Internet Protocol (VoIP) equipment namely VoIP phones, media gateways, gateway controllers and session border controllers, Optical Transport equipment; combination of one / more of Packet Optical Transport Product/Switch (POTP/POTS), Optical Transport Network(OTN) products, and IP Radios, Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (M .....

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pe counters, Tone arms and Electron guns. Items (4), (5), (7), (9), (10), (11) and (17) of List 21 of Notification No.12/2012-Customs, dated 17th March, 2012 as omitted vide notification No. 12/2016-Customs, dated 1st March, 2016 refers 16) Basic Customs Duty exemption on LCD (Liquid Crystal Display), LED (Light Emitting Diode) or OLED (Organic LED) panels is being restricted to imports for manufacture of TVs, subjected to actual user condition. S.No. 432 of Notification No.12/2012-Customs, date .....

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230B] refers. 18) Basic Customs Duty exemption on E-Readers [8543] is being withdrawn. They will now attract BCD of 7.5%. S.No.433A of notification No.12/2012-Customs, dated 17th March, 2012 as omitted by notification No. 12/2016-Customs, dated the 1st March 2016 refers. Also, Basic Customs duty on parts and raw material for manufacture of E-readers is being reduced to 5% subject to actual user condition. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2 .....

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g 8523] imported by National Remote Sensing Centre (NRSC), Hyderabad. Notification No. 12/2012-Customs, dated 17th March, 2012 as amended vide notification No. 12/2016- Customs, dated 1st March, 2016 [new S. No. 428B] refers. 21) Basic Custom Duty is being reduced from 2.5% to Nil on electrolysers, membranes and their parts required by caustic soda / potash unit based on membrane cell technology. S.No.417 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No. 1 .....

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e validity period of exemption granted to specified goods for the use in the manufacture of electrically operated vehicles and hybrid vehicles is being extended without time limit. Clauses (g) and (h) of proviso to notification No. 12/2012-Customs, as omitted by notification No. 12/2016-Customs, dated 1st March, 2016 refers. 3) The description Engine for HV(Atkinson cycle) appearing in S. No. 440 of notification No. 12/2012-Customs is being changed to Engine for xEV(hybrid electric vehicle) . No .....

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xcise dated 17.03.2012. Chapter 88: 1) Basic Customs duty on tools and tool kits for maintenance, repair, and overhauling of aircraft are being exempted. Further, the procedure for availment of the customs duties exemption under S.No.448 of notification No.12/2012-Customs, dated 17.03.2012 is being simplified. Moreover, the restriction of one year for utilization of duty free parts [as also the testing equipment, tools and tool kits] for maintenance, repair and overhaul of aircraft is being done .....

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however, will flow from the excise duty exemption under S.No. 305 of notification No.12/2012-Central Excise, dated 17.03.2012. S.No.448 of notification No.12/2012-Customs, dated 17.03.2012 as amended by notification No. 12/2016-Customs, dated 1st March, 2016 refers. 3) The existing condition of stay of foreign aircraft, for maintenance repair and overhaul, upto 60 days is being relaxed, so as to provide for stay up to 6 months of the foreign aircraft for maintenance, repair or overhaul, which c .....

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repaired or overhauled parts of aircraft under exchange / advance exchange as per Standard Exchange Scheme. This notification is being superceded by notification No. 23/2016 - Customs dated 1st March, 2016 so as to provide also for import of air craft parts for repair or overhaul and for export of repaired or overhauled parts of aircraft under said scheme. Chapter 89: No change. 1) The procedure for availment of exemption from Basic Customs Duty, CVD and SAD by ship repair units is being simpli .....

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new S. No. 305A, as inserted in notification No.12/2012-Central Excise, dated 17.03.2012, vide amending notification No. 12/2016-Central Excise, dated 01.03.2016. Chapter 90 1) Tariff rate of BCD is being increased from 7.5% to 10% on 5 specified tariff lines falling in Chapter 90. Clause 138 (i) of the Finance Bill refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these changes will come into force with immediate effect. However, the effective rates for 5 tar .....

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Further, Basic Customs duty of 10% is being retained for all goods other than natural rubber latex made balloons falling under tariff lines 9503 00 90, 9505 10 00 & 9505 90 90. Chapter 96 to 97: No change Chapter 98: 1) Concessional 5% BCD is being extended to cold chain including pre-cooling unit, packhouses, sorting and grading lines and ripening chambers‟ also. S.No. 41 of Notification No. 42/96-Customs, dated 23.07.1996 as amended vide notification No. 21/2016- Customs, dated 1st M .....

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ificial kidney is being exempted from BCD, excise / CVD, and SAD. CVD exemption will flow from excise exemption. Notification No.12/2012- Customs as amended by notification No. 12/2016 [new S. No. 418A] refers. 2) S.No.9, 9A, 10, 10A, of the notification No.39/96-Customs, dated 23.07.1996 are being omitted with effect from 01.04.2016. Consequently, with effect from 01.04.2016, direct imports by Government of India or State Governments [under S. Nos. 9 and 10] will attract customs duties at appli .....

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inal Fields Policy and the Coal Bed Methane Policy are being merged into a single new S.No.357A. Also, the list of specified goods is being unified into a single List 34 and the conditions are also being unified into a single Condition No. 40A. Further, the said exemption is being extended on imports of goods required for exploration & production of hydrocarbon activities undertaken under Petroleum Exploration Licenses (PEL) or Mining Leases (ML) issued or renewed before 1st April 1999 also. .....

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ng of project is being prescribed for availing customs and excise duty concessions as an alternative to the existing condition of production of valid power purchase agreement between the importer/producer of power and the purchaser, for the sale and purchase of electricity generated using non-conventional materials . Notification No.81/2005-Customs, dated 8th September, 2005 as amended by notification No. 22/2016-Customs, dated 1st March, 2016 refers. ***** ANNEX II EXCISE Chapter 1 to 20: No ch .....

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No.42/2008-Central Excise dated 01.07.2008 as amended by notification No.17/2016-Central Excise dated 01.03.2016 refer. Chapter 22: 1) Excise duty on waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured falling under Chapter sub-heading 2202 10 is being increased from 18% to 21%. Clause 143 (i) of the Finance Bill refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, this increase will come into force .....

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ral Excise Tariff Act, 1985 and the NCCD leviable under Seventh Schedule to the Finance Act, 2001. The changes in additional duty of excise rates on cigarettes are summarized below. Tariff Item Description (length in mm) Additional Duty of Excise (Rs. per 1000 sticks) Existing Rate New Rate 2402 20 10 Non filter not exceeding 65 70 215 2402 20 20 Non-filter exceeding 65 but not exceeding 70 110 370 2402 20 30 Filter not exceeding 65 70 215 2402 20 40 Filter exceeding 65 but not exceeding 70 70 2 .....

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, whichever is higher 2402 90 10 Cigarettes of tobacco substitutes Rs.3375 per thousand ₹ 3755 per thousand 2402 90 20 Cigarillos of tobacco substitutes 12.5% or ₹ 3375 per thousand, whichever is higher 12.5% or ₹ 3755 per thousand, whichever is higher 2402 90 90 Others of tobacco substitutes 12.5% or ₹ 3375 per thousand, whichever is higher 12.5% or ₹ 3755 per thousand, whichever is higher 3) The tariff rate of Basic Excise Duty on Paper rolled biris [whether handm .....

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g to a declaration under the Provisional Collection of Taxes Act, 1931. There is no change in NCCD and Health Cess rates. The changes in basic excise duty rates are summarized below. Accordingly, the duty leviable under the compounded levy scheme has also been modified. Further, the speed slabs and the deemed production and duty payable per month on chewing tobacco without lime tube / lime pouches and jarda scented tobacco are being aligned. Notification No. 11/2010 - Central Excise (N.T.) date .....

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cified goods is being amended so as to align the tariff lines under Chapter 24 with the First Schedule to the Central Excise Tariff Act, 1985. Relevant Clause of Finance Bill, 2016 refers. Also, notification No. 6/2005-Central Excise dated 01.03.2005 is being amended so as to align the tariff lines under Chapter 24 with the First Schedule to the Central Excise Tariff Act, 1985. Notification No. 6/2005-Central Excise dated 01.03.2005 as amended by notification No.18/2016-Central Excise, dated 01. .....

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e Basic Excise Duty rate on aviation turbine fuel [ATF] [2710 19 20] is being increased from 8% to 14%. However, ATF for supply to Scheduled Commuter Airlines [SCA] from the Regional Connectivity Scheme [RCS] airports shall attract 8%. The rate of 14% will operate through the tariff and the rate of 8% will operate through S. No. 77 of notification No.12/2012- Central Excise, dated 17th March, 2012 as amended by notification No.12/2016- Central Excise dated 1st March, 2016. 3) The Schedule Rate o .....

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ate of ₹ 400 per tonne will operate through the Schedule. Further, the Clean Energy Cess is being renamed as Clean Environment Cess. This change will come into force with effect from the date of enactment of the Finance Bill, 2016. 4) Clean Energy Cess on all goods produced or extracted as per traditional and customary rights enjoyed by local tribals without any license or lease in the State of Nagaland is being fully exempted. Notification No. 5/2010-Clean energy Cess, dated 22.06.2010 as .....

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ntral Excise dated 1st March, 2016 [New S. No. 109A] refers. Chapter 30: No change Chapter 31: 1) Basic Excise Duty on mixture of fertilizers, made by physical mixing of chemical fertilizers on which appropriate duty of excise has been paid, by Co-operative Societies, holding certificate of manufacture for mixture of fertilizers under the Fertilizer Control Order 1985, for supply to the members of such Co-operative Societies, is being fully exempted. Notification No. 12/2012- Central Excise, dat .....

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notification No. 12/2016-Central Excise (N.T.) dated 1st March, 2016 refers. The Third Schedule to the Central Excise Act, 1944 is also being amended so as to include therein all goods falling under heading 3401 and 3402. Clause 142(i) of the Finance Bill, 2016 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these changes will come into force with immediate effect. Chapter 35 to 37: No change Chapter 38: 1) Ready Mix Concrete [3824 50 10] manufactured at the .....

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dated 17th March, 2012 as amended by notification No. 12/2016- Central Excise dated 1st March, 2016 [new S.No.148AA] refers. Consequently, S. Nos. 148B, 148C and 148D are being omitted. Chapter 40: 1) Basic Excise Duty on rubber sheets & resin rubber sheets for soles and heels [4008 29 10] is being reduced from 12.5% to 6%. Notification No. 12/2012-Central Excise, dated 17th March, 2012 as amended by notification No. 12/2016-Central Excise, dated the 1st March, 2016 [new S. No 152A] refers. .....

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through tariff. Chapter 56 to 60: No change Chapter 61 to 63: 1) Basic Excise Duty of 2% (without CENVAT credit) or 12.5% (with CENVAT credit)‟ is being imposed on readymade garments and made up articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff, except those falling under 6309 00 00 and 6310, of retail sale price (RSP) of ₹ 1000 and above when they bear or are sold under a brand name. This optional levy would apply to s .....

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omposition, as the case may be, shall continue. S. No. 16 of Notification No. 30/2004-CE dated the 9th July, 2004 as amended by notification No. 15/2016-Central Excise dated the 1st March, 2016 and S. No. 7 of Notification No. 7/2012-Central Excise dated 17th March, 2012, as amended by notification No. 7/2016-Central Excise dated the 1st March, 2016 refer. The tariff value for readymade garments and made up articles of textiles is also being increased from 30% to 60% which shall apply to all goo .....

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16-Central Excise dated 01.03.2016 refers. Chapter 64: 1) Abatement rate from RSP, for all categories of footwear is being increased from 25% to 30%. S. No. 56 of Notification No. 49/2008-Central Excise (N.T.), dated 24th December, 2008 as amended by Notification No. 12/2016-Central Excise (N.T.), dated the 1st March, 2016 refers. Chapter 65 to 70: No change Chapter 71: 1) Basic Excise Duty of 1% (without Cenvat Credit) and 12.5% (with Cenvat Credit) is being imposed on Articles of Jewellery [ex .....

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imit of ₹ 12 crore in the preceding financial year. For the month of March, 2016, the SSI exemption for such articles of jewellery is being restricted to ₹ 50 lakh. Notification No. 8/2003-Central Excise, dated 1st March, 2003 as amended by notification No. 8/2016-Central Excise dated 1st March, 2016 refers. 3) Optional centralized registration is being extended to manufacturers of Articles of Jewellery [excluding articles of silver jewellery, other than studded with diamonds, ruby, .....

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s. 5) Basic Excise duty on Gold Bars manufactured from gold ore or concentrate; gold dore bar and silver dore bar is being increased from 9% to 9.5%. S. No. 189 of Notification No.12/2012- Central Excise, dated 17th March, 2012 as amended by notification No. 12/2016- Central Excise dated 1st March, 2016 refers. 6) Basic Excise duty on Gold bars and gold coins of purity not below 99.5%, produced during the process of copper smelting is being increased from 9% to 9.5%. S. No. 191 (i) of Notificati .....

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ilver coins of purity below 99.9%, produced during the process of copper smelting is being increased from 8% to 8.5%. S. No. 191 (ii) of Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended by Notification No. 12/2016- Central Excise dated 1st March, 2016 refers. 9) Basic Excise duty on silver produced during the process of zinc or lead smelting is being increased from 8% to 8.5%. S. No. 191A of Notification No. 12/2012- Central Excise, dated 17th March, 2012 as amended by .....

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016 [new S. No. 64A ] refers. The Third Schedule to the Central Excise Act, 1944 is also being amended so as to include therein all goods falling under Chapter heading 7607. Clause 142 (i) of the Finance Bill, 2016 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, these changes will come into force with immediate effect. 2) The excise duty structure on disposable aluminium foil containers‟ is being changed from 2% without CENVAT credit and 6% with CENVAT .....

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2012 as amended by Notification No. 12/2016-Central Excise dated 1st March, 2016 [New S. No. 235A] refers. 2) Accessories of goods falling under tariff item 8426 41 00, heading 8427, 8429 and sub-heading 8430 10 are being included for the purposes of RSP based assessment of excise duty. S. No. 109 of Notification No.49/2008-Central Excise (N.T.), dated 24th December, 2008 as amended vide notification No. 12/2016-Central Excise (N.T.), dated 1st March, 2016 and Clause 142 (i) of the Finance Bill .....

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12.2008, as amended by notification No. 12/2016-Central Excise (N.T.) dated 1st March, 2016 [new S. No. 87A] refers. The Third Schedule to the Central Excise Act, 1944 is also being amended so as to include therein such wrist wearable devices (commonly known as smart watches‟). Clause 142 (i) of the Finance Bill, 2016 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, this change will come into force with immediate effect. 4) Excise duty exemption is bein .....

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ellular phone, subject to actual user condition. Notification No. 12/2012-Central Excise, dated 17th March, 2012 as amended by notification No.12/2016-Central Excise dated 1st March, 2016 [new S.Nos.263B, 263D, 263F, 263H] refers. 6) Further, excise duty is being exempted on inputs and parts for use in manufacture of charger/adapter, battery and wired headsets/speakers of mobile handsets including cellular phone. Excise duty is also being exempted on inputs and sub-parts for use in manufacture o .....

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) Routers [ tariff item 8517 69 30] (ii) Broadband Modems [tariff item 8517 62 30] (iii) Set-top boxes for gaining access to internet [tariff item 8517 69 60] (iv) Reception apparatus for television but not designed to incorporate a video display[tariff item 8528 71 00] (v) Digital Video Recorder (DVR)/Network Video Recorder (NVR) [tariff item 8521 90 90] (vi) CCTV Camera/IP Camera [tariff item 8525 80 20] (vii) Lithium-ion batteries, other than those for mobile handsets including cellular phone .....

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IP camera, lithium ion battery [other than those for mobile handsets]. Further, Excise Duty is also being exempted on sub-parts for use in manufacture of parts, components and accessories of the aforesaid Consumer Premise Equipments. These exemptions are subject to actual user condition. Notification No.12/2012-Central Excise, dated 17th March, 2012 as amended vide notification No.12/2016-Central Excise dated 1st March, 2016 [new S. Nos.262B, 263K, 263M, 263O, 263Q, 263S, 263U] refer. Chapter 86 .....

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otification No.12/2016-Central Excise, dated 1st March, 2016 [new S. No. 272C] refers. Chapter 87: 1) The validity period of concessional excise duty of 6% granted to specified goods for the use in the manufacture of electrically operated vehicles and hybrid vehicles is being extended without time limit. First proviso to notification No. 12/2012-Central Excise, as omitted by notification No. 12/2016 dated 1st March, 2016 refers. 2) The description Engine for HV (Atkinson cycle) appearing in S. N .....

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31, this Cess will come into force with immediate effect. The effective rates of the Infrastructure Cess are being prescribed vide notification No. 1/2016-Infrastructure Cess dated 1st March, 2016, as under: a) Nil on : i. Three wheeled vehicles, ii. Electrically operated vehicles, iii. Hybrid vehicles, iv. Hydrogen vehicles based on fuel cell technology, v. Motor vehicles which after clearance have been registered for use solely as taxi (subject to prescribed conditions), vi. Cars for physicall .....

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ther, the Cenvat Credit Rules are being amended to provide that CENVAT credit cannot be utilised for payment of this Infrastructure Cess. Further, no credit of this Cess would be available under the Cenvat Credit Rules, 2004. Notification No.13/2016-Central Excise (N.T.) dated 01.03.2016 refers. 4) Accessories of certain vehicles falling under Chapter 87 are being included for RSP based assessment. S. No. 108 of Notification No.49/2008-Central Excise (N.T.), dated 24th December, 2008 as amended .....

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rther, the exemption under S.No.305 of notification No.12/2012-Central Excise, dated 17.03.2012, is being made subject to actual user condition, along with simplified procedure. Chapter 89: 1) Excise duty on Capital goods and spare thereof, raw materials, parts, material handling equipment and consumable for repairs of ocean-going vessels by a ship repair unit is being exempted subject to actual user condition. New S.No.305A of notification No.12/2012-Central Excise, dated 17.03.2012 as inserted .....

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g exempted from excise. Notification No.12/2012- Central Excise, dated 17.03.2012 as amended by notification No. 12/2016-Central Excise, dated 1st March, 2016 [new S. No. 315A] refers. 2) Excise duty exemption on remnant kerosene, presently available for manufacture of Linear alkyl Benzene [LAB] and heavy alkylate [HA] is being extended to N-paraffin arising in the course of manufacture of LAB and HA also. S.No.68 of notification No.12/2012- Central Excise, dated 17th March, 2012 as amended by n .....

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/2012-Central Excise, dated 17th March, 2012 as amended by notification No.12/2016-Central Excise dated 1st March, 2016 [New S. No.327A, List 9A] refers. 4) Basic Excise Duty on Carbon pultrusions, for manufacture of rotor blades and intermediates, parts and sub-parts of rotor blades for wind operated electricity generators, is being reduced from 12.5% to 6%, subject to actual user condition. Notification No.12/2012-Central Excise, dated 17th March, 2012 as amended vide notification No.12/2016-C .....

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ctual user condition. Consequently, notification No 62/91-CE dated 25.07.1991 is rescinded by notification No 13/2016-CE dated 01.03.2016. 6) The excise duty exemption under the existing area based exemptions for production of gold and silver from gold dore, silver dore or any other raw material is being prospectively withdrawn. Thus, a new industrial unit engaged in production of refined gold from gold dore, silver dore or any other raw material, which commences commercial production on or afte .....

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sh plant, machinery or capital goods, on or after 1st March, 2016, shall not be eligible for the said excise duty exemption. [Amending Notifications No.5/2016 -CE dated 1.03.2016 and No.6/2016 -CE dated 1.03.2016 refers] 7) In case of power generation project based on municipal and urban waste, valid agreement between importer with urban local body for processing of municipal solid waste for not less than ten years from the date of commissioning of project is being prescribed for availing custom .....

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tification No.8/2003-Central Excise dated 01.03.2003 is being amended so as to exclude value of clearances made for export to Nepal from the definition of clearances for home consumption‟ under the said notification. Notification No. 8/2003-Central Excise, dated 1st March, 2003 as amended by notification No. 8/2016-Central Excise dated 1st March, 2016 refers. ANNEX III CLARIFICATION CUSTOMS 1) Notification No.51/96-Customs dated 23.07.1996, inter alia, exempts specified goods from the whol .....

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bsequent sales of imported goods. In this context, it is clarified that since the imports under notification No.51/96-Customs, dated 23.07.1996 is ab initio exempt from SAD, there is no requirement to make a provision for refund of SAD in notification No.102/2007-Customs dated 14.09.2007. 2) Doubts have been raised as to whether any Power Project listed for exemption from BCD and CVD [under list 32A of S.No. 507 of notification No.12/2012-Customs] and awarded under International Competitive Bidd .....

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ollary, will also be exempted from excise duty under S. No. 336 of Notification No. 12/2012-CE subject to following conditions: i. if said project has been awarded based on International Competitive Bidding [ICB]; and ii. the conditions mentioned in S. No. 507 of Notification No 12/2012-Customs are fulfilled, even if such power project is included in List 10 [ S. No 337] or List 11 [S. No 338] of notification No 12/2012-CE. 3) S.No.138A of notification No.12/2012-Customs, dated 17.03.2012 exempt .....

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quantity by the SEZ unit for the purposes of authorized operations during the preceding month. In this context, references have been received regarding the scope of the phrase preceding month‟. In this regard, it is clarified that S.No.138A of notification No.12/2012-Customs dated 17.03.2012 seeks to exempt LNG with reference to the consumption of an equivalent quantity for authorized operations in the SEZ unit during any one of the preceding months against which no duty free import has b .....

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t concessional BCD was being denied on them. In this context, it is clarified that since Positive Thermal Coefficient (relays) were specifically covered by description in the said S. No. 399B of notification no. 12/2012-customs dated 17.03.2012, and therefore be eligible for the exemption for the past period. Prospectively, tariff item 8536 49 00 is being included in aforesaid S. No. 399B. [S.No. 399B of notification No. 12/2012-Customs as amended by Notification No. 12/2016-Customs refers] 5) R .....

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.03.1997 grants exemption from excise duty to scientific and technical instruments, apparatus, equipment (including computers) and accessories, parts and consumables, supplied to specified institutions, subject to certification by the Head of the Research Institution that the said goods are essential for research purposes and will be used for the stated purpose only, and will not be transferred or sold by the institution for a period of 5 years from the date of installation, and such institution .....

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on. 2) NCCD is presently leviable under section 136 of the Finance Act, 2001 on pan masala, tobacco products, crude petroleum, mobile phones and motor vehicles. Rule 3(1) of the CENVAT Credit Rules provides the duties [which includes BED and NCCD] in respect of which a manufacturer or a service provider is allowed to take input credit. Further, Rule 3(4) of the said Rules provides that the CENVAT credit may be utilized, inter alia, for payment, of any duty of excise. There is, however, one restr .....

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asic excise duty can be utilized for payment of NCCD on all goods, other than those falling under tariff items 8517 12 10 and 8517 12 90 [mobile phones]. However, with effect from 01.03.2016, the 5th proviso to rule 3(4) of the CENVAT Credit Rules, 2004 is being amended so as to provide that CENVAT credit of any duty specified in sub-rule (1) except NCCD cannot be utilized for payment of NCCD leviable under section 136 of the Finance Act, 2001 on any product. Notification No.13/2016-Central Exci .....

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le for excise duty exemption from such expanded capacity with effect from the date commencement of commercial production for a further period of 10 years. It is clarified that in absence of a provision to the contrary, the area based excise duty exemption presently available to the North Eastern States including Sikkim vide notification No.20/2007-CE dated 25.04.2007 [for which the sunset clause is 31.03.2017] will be available to an existing unit on second substantial expansion as well, provide .....

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e benefit of excise duty exemption is intended to be restricted to direct supplies by the contractor to the project. In this regard, it is clarified that the exemption from excise duty, under notification No.108/95-CE dated 28.08.1995 is also available to sub-contractors for manufacture and supply of goods for or on behalf of the main contractor (who has won the contract for the supply of goods to the projects financed by the UN or an international organization and approved by the Government of .....

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under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Circular No.672/63/2002-CX dated 23.10.2002, issued with regard to similar exemption under notification No. 6/2006-CE dated 23.10.2012, clarified that so long as the procedural requirements of the afore mentioned rules are complied with, the benefit of such exemption should not be denied solely on the ground that the person receiving the specified goods is not a manufacturer .....

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control of the department, as control over the other types of warehouses would be only record based. 2. Subsection (45) of Section 2 which defines warehousing station is being omitted. 3. Chapter heading of Chapter III is being amended to omit the word warehousing station . 4. Section 9 is being omitted. 5. Section 25 is being amended so as to omit the requirement of publishing and offering for sale any notification issued, by the Directorate of Publicity and Public Relations of CBEC. 6. Section .....

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ing substituted to provide for licensing by the Principal Commissioner or Commissioner, in place of Deputy/Assistant Commissioner, subject to such conditions as may be prescribed. 9. New section 58A is being inserted to provide for a new class of warehouses which require continued physical control and will be licensed for storing goods, as may be specified. 10. New section 58B is being inserted so as to regulate the process of cancellation of licences which is a necessary concomitant of licensin .....

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ed Undertakings, Units under Electronic Hardware Technology Parks, Software Technology Parks, Ship Building Yards and other units manufacturing under bond; empower Principal Commissioners and Commissioners to extend the warehousing period upto one year at a time. 14. Section 62 relating to physical control over warehoused goods is being omitted since the conditions for licensing different categories of warehouses and exercising control over the same are being provided under sections 57, 58 and 5 .....

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anufacturing facilities under Bond; and empower Principal Commissioner or Commissioner of Customs to licence such facilities. 18. Section 68 is being amended to omit rent and other charges on account of omission of section 63. 19. Section 69 is being amended to omit rent and other charges on account of omission of section 63. 20. Section 71 is being amended so as to substitute the word exportation with the word export to align with definition contained in sub section (18) of section 2. 21. Secti .....

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e and Duty Free Import Authorization Schemes are being amended retrospectively, to correct the reference to section 8 in such notifications to section 8B so as to clearly provide that exemption from safeguard duty under section 8B of the Customs Tariff Act, 1975 was/is available under these notifications on imports under Advance Licence and Duty Free Import Authorization Schemes. AMENDMENT IN THE CUSTOMS TARIFF ACT, 1975 S.No. Amendment 1. Section 8C [Power of Central Government to impose transi .....

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60:2000 to IS:1460:2005 for high speed diesel (HSD) and b) from IS:1460 to IS: 15770:2008 for light diesel oil (LDO); 2) Substitute Tariff line 5901 39 10 with description Warp pile fabrics, uncut in place of tariff line 5801 37 11 [with description Warp pile fabrics epingle‟ uncut velvet] and 5801 37 19 [with description Warp pile fabrics epingle‟ uncut other]; 3) Prescribe separate tariff lines for laboratory created or laboratory grown or manmade or cultured or synthetic diamonds; .....

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t of which: 7.5% 10% a) On 96 specified tariff lines, the effective rate is being increased from 7.5% to 10%. 7.5% 10% b) On remaining 115 tariff lines the effective rate will remain unchanged at 7.5%. 7.5% 7.5% The amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944: S.No. Amendment 1. Section 5A is being amended so as to omit the requirement of pu .....

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Schedule is being amended so as to: a) make some editorial changes, consequent to 2017 Harmonized System of Nomenclature. b) include therein: 1) All goods falling under heading 3401 and 3402; 2) Aluminium foils of a thickness not exceeding 0.2 mm; 3) Wrist wearable devices (commonly known as smart watches‟); and 4) Accessories of motor vehicle. The amendment at b) will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. AMENDMENTS IN TH .....

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sel oil (LDO) b) Substitute Tariff line 5901 39 10 with description Warp pile fabrics, uncut in place of tariff line 5801 37 11 [with description Warp pile fabrics epingle‟ uncut velvet] and 5801 37 19 [with description Warp pile fabrics epingle‟ uncut other]; c) Prescribe separate tariff lines for laboratory created or laboratory grown or manmade or cultured or synthetic diamonds; d) Delete Tariff line 8525 50 50, relating to Wireless microphone. B. Amendments involving change in th .....

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5 per thousand Rs.3755 per thousand 5. Cigarillos of tobacco substitutes 12.5% or ₹ 3375 per thousand, whichever is higher 12.5% or ₹ 3755 per thousand, whichever is higher 6. Others of tobacco substitutes 12.5% or ₹ 3375 per thousand, whichever is higher 12.5% or ₹ 3755 per thousand, whichever is higher 7. Gutkha, chewing tobacco (including filter khaini) and jarda scented tobacco 70% 81% 8. Unmanufactured tobacco 55% 64% Paper rolled biris [whether handmade or machine m .....

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produced crude oil, from ₹ 4500 PMT to 20% ad valorem. The amendment in the Act will be effective from the date of assent to the Finance Bill, 2016. Till the enactment of the Finance Bill, 2016, Notification prescribing 20% effective rate of OID Cess will be issued by Ministry of Petroleum & Natural Gas. 2) The Seventh Schedule to the Finance Act, 2005 is being amended so as to increase the excise duty across all lengths of non-filter and filter cigarettes as under: Cigarettes From Rs .....

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ss from ₹ 300 per tonne to ₹ 400 per tonne. The effective rate of Clean Energy Cess is being increased from ₹ 200 per tonne to ₹ 400 per tonne [Clause 232] 4) Infrastructure Cess is being levied on motor vehicles, of heading 8703, as under: b) Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc - 1% c) Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc - 2.5% d) Other higher .....

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utilized for payment of this Infrastructure Cess. [Clause 159] The increase in duty rates under 2), 3) and imposition of Cess at 4) above will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. RULES AND REGULATIONS UNDER THE CUSTOMS ACT, 1962 1) The existing Baggage Rules, 1998 are being substituted with the Baggage Rules, 2016, so as to simplify and rationalize multiple slabs of duty free allowance for various categories of passengers. The .....

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al registration is also being done away with. The new Rules will be effective from 01.04.2016. 3) Interest rates on delayed payment of Customs duty under section 28AA are being rationalized at 15%. 4) The Customs Baggage Declaration Regulations, 2013 is being amended so as to prescribe filing of Customs declaration only for those passengers who carry dutiable or prohibited goods. AMENDMENTS IN THE CENTRAL EXCISE RULES, 2002 AND THE CENVAT CREDIT RULES, 2004 1) The Central Excise Rules, 2002 are .....

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lable to a service tax assessees only, to manufacturers also. (c) provide that in cases where invoices are digitally signed, the manual attestation of copy of invoice, meant for transporter, is done away with. (d) provide that in case of finalization of provisional assessment, the interest will be chargeable from the original date of payment of duty. 2) The CENVAT Credit Rules, 2004 are being amended, so as to improve credit flow, reduce the compliance burden and associated litigations, particul .....

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