TaxTMI 
TaxTMI 
Changes in Customs and Central Excise law and rates of duty - Budget 2014-15
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....ISE Tariff No.8/2014-CE to No.20/2014-CE 11th July, 2014 Non-Tariff No.17/2014-CE (NT) to No.22/2014-CE (NT) 11th July, 2014 Unless otherwise stated, all changes in rates of duty take effect from the midnight of 10th/11th July, 2014. A declaration has been made under the Provisional Collection of Taxes Act, 1931 in respect of clauses 86, 87 [(1) and (9)(ii)], 104, 105(1), 107, and 110 of the Finance (No.2) Bill, 2014 so that changes proposed therein also take effect from the midnight of 10th/11th July, 2014. The remaining legislative changes would come into effect only upon the enactment of the Finance (No.2) Bill, 2014. Retrospective amendments in the provisions of law or notification issued under the respective Acts shall have the force of law only upon the enactment of the Finance (No.2) Bill, 2014 but with effect from the date indicated in the relevant clause or Schedule. These dates may be carefully noted. 2. Important changes in respect of Customs and Central Excise duty and legislative changes are contained in the four Annexes appended to this letter. Annex I contains Chapter wise changes relating to Customs; Annex II contains Chap....
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....rvice Tax Director DPPR/ Logistics/Legal Affairs/ Data Management Annex I CUSTOMS Chapter 1 to 7: No change Chapter 8 1) Description of the product "sun dried dark seedless raisins" which attracts concessional Basic Customs Duty of 30% is being changed to "dark seedless raisins". S.No.29 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 refers. Chapter 9 to 14: No change Chapters 15, 29 and 38 1) Basic Customs Duty on fatty acids, crude palm stearin, RBD and other palm stearin and specified industrial grade crude oils is being reduced from 7.5% to Nil for manufacture of soaps and oelochemicals subject to actual user condition. Basic Customs Duty is also being reduced on crude glycerine from 12.5% to 7.5% in general and from 12.5% to Nil for manufacture of soaps subject to actual user condition. S.Nos.51 and 73 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 and new S.Nos.73A, 187B and 230A of notification No.12/2014-Customs, dated 11th July, 2014 refer. Chapter 16 to 21: No change Chapter 22: ....
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....ncreased from Nil to 2.5%. S.No.125 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 refers. 3) Basic Customs Duty on crude naphthalene is being reduced from 10% to 5%. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 [new S.No.126A] refers. 4) Basic Customs duty on reformate and other goods under sub-heading 2707 50 00 is being reduced from 10% to 2.5%. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 [new S.No.126B] refers. 5) Basic Customs Duty on coal tar pitch is being reduced from 10% to 5%. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 [new S.No.126C] refers. 6) Exemption from Basic Customs Duty and CVD is being granted on re-gasified LNG for supply to Pakistan. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 [new S.No.138C] refers. Condition 8B may be referred for det....
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....rity fibre, security threads and M-feature imported by Bank Note Paper Mill India Private Limited (BNPMIPL), Mysore. S.No.233 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 refers. Full exemption from BCD and CVD is also being provided for raw materials required for manufacture of security threads and security fibre subject to actual user condition. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated the 11th July 2014 [new S.No.233A] refers. 7) S.No.169 of notification No.10/2008-Customs, dated 15th January, 2008 [India-Singapore Comprehensive Economic Co-operation Agreement (CECA)] relating to tariff item 3903 19 90 is being omitted. As a result, Basic Customs Duty on Polystyrene (other than moulding powder) is being increased from 1.15% to 7.5%. Notification No.17/2014-Customs, dated the 11th July 2014 refers. Chapter 50: No change Chapter 51 and 52: 1) The list of specified goods required by handicraft exporters is being expanded so as to include wire rolls in the same for the purpose of granting the facility of duty free impor....
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....oms, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 refers. 3) The variation level and the parameter of measurement in respect of re-import of cut and polished diamonds after certification/grading from a foreign laboratory/agency are being increased as a trade facilitation measure. Henceforth, in the case of re-import of cut and polished diamonds, a variance not exceeding +_ 0.05mm in diameter for round shape diamonds and +_ 0.07mm in length and breadth for diamonds of other shapes shall be allowed. The allowable variance in weight remains unchanged. Notification No.9/2012-Customs, dated 9th March, 2012 as amended by notification No.16/2014-Customs, dated 11th July, 2014 refers. Chapter 72 1) Basic Customs Duty on stainless steel flat products (CTH 7219 and 7220) is being increased from 5% to 7.5%. S.No.334 of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 refers. Chapter 73 1) Basic Customs Duty is being reduced from 10% to 5% on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Notification No.12/20....
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....nded by notification No.12/2014-Customs, dated 11th July, 2014 [new S.No.432A] refers. 4) Basic Customs Duty is being exempted on specified parts of LCD and LED panels for TVs. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 [new S.No.432B] refers. 5) Basic Customs Duty is being reduced from 7.5% to NIL on E-Book readers. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 [new S.No.433A] refers. 6) Basic Customs Duty on battery waste and battery scrap is being reduced from 10% to 5%. Notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Customs, dated 11th July, 2014 [new S.No.433B] refers. 7) Basic Customs Duty on specified telecommunication products not covered under the ITA (Information Technology Agreement) is being increased from NIL to 10%. Clause 87 of the Finance (No.2) Bill, 2014 refers. Notification No.24/2005-Customs, dated 1st March, 2005 is being amended vide notification No.11/2014-Customs, dated 11th July, 2014 so as to exclude these specified tariff items, which will....
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....ments concerned are being notified as sponsoring authority for Metro Rail Projects covered under the Project Import Regulations, 1986. Notification No.23/86-Customs, dated 3rd April, 1986 as amended vide notification No.25/2014-Customs, dated 11th July, 2014 refers. Miscellaneous: 1) Full exemption from customs duty is being provided on specified HIV/AIDS drugs and diagnostic kits imported under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM). Notification No.23/2014-Customs, dated the 11th July 2014 refers. 2) Full exemption from Basic Customs Duty is being provided to goods imported by National Technical Research Organisation (NTRO). Notification No.39/96-Customs, dated 23rd July, 1996 as amended by notification No.20/2014-Customs, dated 11th July, 2014 refers. 3) Plants & Equipment imported prior to 2008 for use in projects financed by the UN or an international organization, which hitherto could not be transferred / sold / re-exported out of the project site, are now being allowed to be transferred / sold / re-exported from the project site subject to the conditions specified therein. Notification No.84/97-Custo....
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....arettes of length exceeding 85 mm are being merged into a single tariff item i.e. others [2402 20 90]. Accordingly, tariff item 2402 20 60 and the entries relating thereto are being omitted from the Seventh Schedule to the Finance Act, 2001 and from the Seventh Schedule to the Finance Act, 2005. By virtue of an entry in the Provisional Collection of Taxes Act, 1931, these changes will come into force with immediate effect. The changes in total excise duty rates are summarized below. TARIFF ITEM DESCRIPTION (length in mm) Rs. per 1000 sticks (Existing Rate) Rs. per 1000 sticks (New Rate) 24022010 Non filter not exceeding 65 669 1150 24022020 Non-filter exceeding 65 but not exceeding 70 2027 2250 24022030 Filter not exceeding 65 669 1150 24022040 Filter exceeding 65 but not exceeding 70 1409 1650 24022050 Filter exceeding 70 but not exceeding 75 2027 2250 24022060 Filter exceeding 75 but not exceeding 85 2725 Tariff item Omitted 24022090 Other 3290 3290 3) Basic Excise Duty is being increased from 12% to 16% on pan masala, from 50% to 55% on unmanufactured tobacco and from 6....
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....e Finance (No.2) Bill, 2014 refers. The exemption shall continue w.e.f. 11.07.2014 vide S.No.81 of Notification 12/2012-Central Excise, dated 17th March, 2012 as amended vide Notification No.12/2014-Central Excise dated 11th July, 2014 refers. Chapter 30 to 33: No Change Chapter 34 -39: 1) Full exemption from excise duty is being provided to specified raw materials used in the manufacture of backsheet and EVA sheet for manufacture of solar photovoltaic cells or modules. Notification No.12/2012- Central Excise as amended vide Notification No.12/2014-Central Excise dated 11th July, 2014 [new S.No.133A] refers. 2) Semi-mechanized units manufacturing safety matches, which attract concessional excise duty of 6%, are being allowed to carry out the processes of „Pasting of labels‟ and „Packing‟ with the aid of power. S.No.142 of notification No.12/2012-Central Excise, dated 17th March, 2012 as amended vide Notification No.12/2014-Central Excise dated 11th July, 2014 refers. 3) Full exemption from excise duty is being provided to DDT manufactured by Hindustan Insecticides Limited for supply to the National Vector Borne Diseases Control Programme (NVBD....
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....ospectively w.e.f. 29.06.2010 to 07.05.2012. Clause 102 of the Finance (No.2) Bill, 2014 refers. Intermediate product „Tow‟ arising during the course of manufacture of such PSF/PFY is being exempted retrospectively w.e.f. 29.06.2010 to 10.07.2014 so as to provide relief to the manufacturers of such PSF/PFY. Clauses 102 and 103 of the Finance (No.2) Bill, 2014 refer. 5) Excise duty at the rate of 2% (without CENVAT) or 6% (with CENVAT) is being imposed on Polyester Staple Fiber and Polyester Filament Yarn manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles w.e.f. 11th July, 2014. Notification No.1/2011- Central Excise, dated 1st March, 2011 as amended vide notification No.8/2014-Central Excise, dated the 11th July 2014 [new S.No.70A] and S.No.172A of notification No.12/2012-Central Excise, dated 17th March, 2012 as amended vide notification No.12/2014-Central Excise dated 11th July, 2014 refer. Chapter 56-63: No Change Chapter 64: 1) Excise duty is being reduced from 12% to 6% on footwear of retail price exceeding Rs. 500 per pair but not exceeding Rs. 1,000 per pair. Footwear of retail price upto....
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....roduction projects. Notification No.15/2010- Central Excise, dated 27th February, 2010 as amended vide notification No.15/2014-Central Excise dated 11th July, 2014 refers. 3) Full exemption from excise duty is being provided on machinery, equipments, etc. required for initial setting up of compressed biogas plant (Bio-CNG). Notification No.33/2005- Central Excise, dated 8th September, 2005 as amended vide notification No.14/2014-Central Excise dated 11th July, 2014 refers. 4) Excise duty on hand operated sewing machine (2% without CENVAT / 6% with CENVAT) is being rationalized by levying concessional excise duty on sewing machines other than those operated with electric motors (whether in-built or attachable to the body). S.No.97 of notification No.1/2011- Central Excise, dated 1st March, 2011 as amended vide notification No.8/2014-Customs, dated the 11th July 2014 and S.No.58 of notification No.2/2011- Central Excise, dated 1st March, 2011 as amended vide notification No.9/2014-Customs, dated the 11th July 2014 refer. Chapter 85: 1) Excise duty on Metal Core PCB and LED driver for use in the manufacture of LED lights and fixtures and LED lamps is being reduced from 12%....
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....rporation to avail of Nil excise duty benefit in respect of their Phase-1 and Phase-2 projects instead of Director (Rolling Stock, Electrical & Signalling) at present. S.No.333 (ii) of notification No.12/2012-Customs, dated 17th March, 2012 as amended by notification No.12/2014-Central Excise, dated 11th July, 2014 refers. Condition 48 contains the change. 4) Full exemption from excise duty is being provided on specified HIV/AIDS drugs and diagnostic kits supplied under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM). Notification No.13/2014-Central Excise dated 11th July, 2014 refers. 5) Full exemption from Excise Duty is being provided to goods supplied to National Technical Research Organisation (NTRO). Notification No.64/95-Central Excise, dated 16th March, 1995 as amended vide notification No.10/2014-Central Excise dated 11th July, 2014 refers. 6) Plants & Equipment supplied prior to 2008 for use in projects financed by the UN or an international organization, which hitherto could not be transferred / sold out of the project site, are now being allowed to be transferred / sold from the project site subject to the ....
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....fication No.12/2012-Customs, dated 17.03.2012 [Sl.No.368] can be sold within 5 years of importation on payment of customs duty on depreciated value and whether individual constituents of the consortium whose names appear in the contract may import goods under the notification. It is reiterated that road construction machinery imported duty free can be sold within 5 years of importation subject to payment of customs duty on depreciated value subject to the conditions specified therein and that individual constituents of the consortium whose names appear in the contract can import goods under the said notification. 3) Under S.No.7 of notification No. 39/96-Cus dated 23.7.1996, paints, consumables, metallic and non-metallic materials etc. in any form and articles thereof conforming to aeronautical specification accompanied with certificate of conformance / release note / airworthiness certificate for development are exempt from BCD and CVD subject to conditions specified thereon. Representations have been received regarding the scope of the said exemption. It is clarified that the exemption is available to all materials in any form and articles thereof, subject to the overall condi....
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....toms Tariff Act when imported into India". A doubt has been raised whether the excise duty exemption under this notification is available to sub-contractors who supply goods to the main contractor who has won the ICB contract. It is clarified that the said exemption is also available to sub-contractors for manufacture and supply of goods for or on behalf of the main contractor (who has won the bid for the project through ICB) for execution of the said project, subject to compliance of conditions specified, if any. **** Annex IV LEGISLATIVE CHANGES Amendments in the Customs Act, 1962 1) The Customs Act, 1962 is being amended so as to provide that a reference in that Act to a Chief Commissioner of Customs or a Commissioner of Customs may also include a reference to the Principal Chief Commissioner of Customs or the Principal Commissioner of Customs, as the case may be. It also seeks to provide for consequential amendments in the Act. 2) Section 3 is being amended so as to provide for inclusion of the Principal Chief Commissioner of Customs and Principal Commissioner of Customs in the class of officers of customs. 3) Section 15(1) is being amended to provide for d....
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....f Customs. 14) Section 129E is being substituted with a new section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage and another 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs. 10 crore. 15) Section 131BA is being amended so as to enable the Commissioner (Appeal) to take into consideration the fact that a particular order being cited as a precedent decision on the issue has not been appealed against for reasons of low amount. Amendments in the Customs Tariff Act, 1975 1) Section 8B of the Customs Tariff Act, 1975 is being amended so as to provide for levy of safeguard duty on inputs/raw materials imported by an EOU and cleared into DTA as such or are used in the manufacture of final products & cleared into DTA. This change will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. Clause 86 of the Finance (No.2) Bill, 2014 refers. Amendment in the First Schedu....
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....(2) since the same is redundant. 8) Section 32O(1) is being amended so as to insert an Explanation that the concealment of particulars of duty liability relates to such concealment made from the officer of central excise and not from the Settlement Commission. 9) Section 35B(1) is being amended so as to increase the discretionary powers of the Tribunal to refuse admission of appeal from the existing Rs. 50,000 to Rs. 2 lakh. 10) Section 35B(1B) is being amended to substitute the words "by notification in the official gazette" with the words "by order" so as to enable the Board to constitute a Review Committee by way of an order instead of by way of a notification. 11) Section 35C(2A) is being amended to omit the first, second and third proviso in view of substitution of section 35F with a new section. 12) Section 35E is being amended to insert a proviso in sub-section (3) to vest the Board with powers to condone delay for a period upto 30 days for review by the Committee of Chief Commissioners of the orders in original passed by the Commissioner of Central Excise. 13) Section 35F is being substituted with a new section to prescribe a mandatory fixed pre-deposit of....
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....105 of the Finance (No.2) Bill, 2014 refers. Amendments in the CENVAT Credit Rules, 2004: 1) Rule 12A is being amended so as to disallow transfer of credit by a large taxpayer from one unit to another. 2) A new sub-rule (qa) is being inserted in Rule 2 to introduce the definition of „place of removal‟. 3) Rule 4(1) (for input credit) and Rule 4(7) (for input service credit) are being amended in order to fix a time limit of six months for availment of the CENVAT Credit. Notification No.23/2004-Central Excise (NT) dated 10th September, 2004 as amended vide notification No.21/2014-Central Excise dated 11th July, 2014 refers. Amendments in the Central Excise Rules, 2002: 1) E-payment is being made mandatory for all assessees subject to certain exceptions. 2) Sub-rule (3A) of rule 8 is being substituted to provide that in case of default in payment of duty, the assessee shall on his own pay a penalty of 1% per month on the amount of duty not paid for each month or part thereof. Notification No.4/2002-Central Excise (NT) dated 1st March, 2002 as amended vide notification No.19/2014-Central Excise dated 11th July, 2014 refers. Amendments in the Ce....