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TMI BlogFinance Bill, 2017. To prescribe effective rates of duty and to carry out changes in the Rules made under the respective ActsX X X X Extracts X X X X X X X X Extracts X X X X ..... therwise stated, all changes in rates of duty take effect from the midnight of 1st February/2nd February, 2017. A declaration has been made under the Provisional Collection of Taxes Act, 1931 in respect of clauses 109 (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 achie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill, 2017 refers. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, this change will come into force with immediate effect. 2) Export duty is being imposed at an effective rate of 15% on '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpted on Catalyst [3815 90 00] and Resin [3909 40 90] for use in the manufacture of cast components of WOEG, subject to actual user condition. Exemption from SAD will be valid till 30th June, 2017. Notification No. 21/2012-Customs, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms, dated 2nd February, 2017 refers. Chapter 76 to 83: No change Chapter 84 and 85: 1) Basic Customs duty on Reverse Osmosis (RO) membrane element for household type filters falling under tariff item 8421 99 00 is being increased from 7.5% to 10%. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption, which are no longer required for the said purpose, to be disposed of on payment of applicable customs duties, on the depreciated value calculated as per straight line method (subject to depreciated value not being less than 30% of the original value) 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 prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Basic Excise Duty leviable under the First Schedule to the Central 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001. 5) The excise duty payable per machine per month under the Compounded Levy Scheme applicable to these products is being modified accordingly. Notification No. 16/2010-Central Excise, dated the 27th February, 2010 as amended by notification No.7/2017-Central Excise dated 02.02.2017, notification No. 42/2008-Central Excise, dated the 01.07.2008 as amended 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise, dated 17th March, 2012 as amended vide Notification No.6/2017- Central Excise, dated 2nd February, 2017 refers. 2) Excise duty is being reduced from 12.5% to 6% on parts/raw material for use in the manufacture of solar tempered glass, for use in (a) solar photovoltaic cells or modules; (b) solar power generating equipment or systems, (c) flat plate solar collectors, or (d) solar photovoltaic module 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 dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual user condition were exempted from central excise / CV duty Vide Notification No.35/2016Central Excise, dated 28th November, 2016. These exemptions which are valid till 31st March 2017 are being extended up to 30.06.2017. Chapter 86: No change Chapter 87: 1) Excise duty on Motor Vehicles falling under tariff items 8702 90 21, 8702 90 22, 8702 90 28 and 8702 90 29 is being reduced from 27% to 12.5% retrospectively 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003Customs dated 31.03.2003. However, as per a proviso [the second proviso to para 6 in case of Notification No. 22/2003-CE and first proviso to para 3 in case of Notification No. 52/2003Customs], if the goods produced or manufactured by EOUs and cleared to DTA if imported are either non-excisable or leviable to Nil basic customs duty [BCD] and additional duty of customs [CVD], then EOUs cannot avail the exemptions under these notifications 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rationalize the requirement of documents for verification of self assessment. [90] 4. Sub-section (2) of section 27 is being amended so as to keep outside the ambit of unjust enrichment, the refund of duty paid in excess by the importer before an order permitting clearance of goods for home consumption is made, where-such excess payment is evident from the bill of entry in the case of self-assessed bill of entry or the duty actually payable is reflected 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d so as to make it mandatory to file the bill of entry before the end of the next day following the day (excluding holidays) on which the vessel or aircraft or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing and to provide for imposition of such charges for late presentation of the bill of entry as may be prescribed. [99] 13. Sub-section (2) of section 47 is being amended so as to provide 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 manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Commodity From To 1. Cashew nut, roasted, salted or roasted and salted 30% 45% 2. RO membrane element for household type filters 7.5% 10% 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. IV. AMENDMENT IN THE SECOND SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975 [Clause 110 of the Finance Bill, 2017] S. No. Amendment Amendments affecting rates of Export duty Rate of Duty From To Ores and concentrates 1. Other 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, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. * RETROSPECTIVE AMENDMENT S.No. Amendment Clause of the Finance Bill, 2017 1. To retrospectively [that is with effect from 01.01.2017] specify a tariff rate of excise duty of 12.5% [as against present tariff rate of 27%] on motor vehicles for transport of more than 13 persons falling under tariff items 8702 90 21 to 8702 90 29 of the First Schedule to the Central Excise Tariff Act, 1985. [119] * AMENDMENTS IN THE SEVENTH SCHEDULE TO THE FINANCE ACT, 2005 [Clause 146 of the Finance Bill, 2017] 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 tho ..... 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