CA Bimal Jain

CA Bimal Jain

Article discusses Legislative changes vide union budget 2017 regarding Authority for Advance Ruling/ Settlement of Cases, Amendments involving change in the duty rates, applicability of Section 5A of the Excise Act in respect of inputs imported or exported by EOU, Amendment in the Central Excise Rules, 2002, Changes in duty rates regarding commodity falling under ‘Renewable Energy’ etc.

Changes in Customs and Central Excise law and rates of duty have been proposed through the Finance Bill, 2017. In order to prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts, the following notifications are being issued:

CUSTOMS Notification Nos. Date
Tariff No.3/2017-Customs to No.6/2017-Customs  02.02.2017
CENTRAL EXCISE
Tariff No.3/2017-Central Excise to No.7/2017- Central Excise 02.02.2017
Non-Tariff No.2/2017-Central Excise (N.T.) to No.5/2017-Central Excise (N.T.) 02.02.2017

Unless otherwise 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 1stFebruary / 2ndFebruary, 2017. The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2017.

UNDER EXCISE:

⇒ Amendments in the Central Excise Act, 1944 (“the Excise Act”):

A. Legislative changes regarding Authority for Advance Ruling:

♦ Changes in Section 23A of the Excise Act:

Section 23A of the Excise Act contains various definitions for Advance Ruling. Clause (e) of Section 23A has been amended so as to substitute the definition of “Authority” to mean the Authority for Advance Ruling as constituted under Section 28E of the Customs Act, 1962.

Section 28E of the Customs Act, 1962, has also been 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.

♦  Changes in Section 23B of the Excise Act:

Section 23B of the Excise Act provides that no proceeding before, or pronouncement of advance ruling by, the Authority shall be questioned or shall be invalid on the ground merely of the existence of any vacancy or defect in the constitution of the Authority.

Section 23B relating to vacancies not to invalidate proceedings has been omitted.

♦ Changes in Section 23C of the Excise Act:

Section 23C of the Excise Act contains provisions regarding application for Advance Ruling.

Sub-section (3) of Section 23C has been amended so as to increase the application fee for seeking advance ruling from Rs. 2,500/- to Rs. 10,000/- on the lines of the Income Tax Act, 1961.

♦ Changes in Section 23D of the Excise Act:

Section 23D of the Excise Act contains the procedure of Advance Ruling after receipt of application.

Sub-section (6) of Section 23D has been amended so as to extend the existing time limit of 90 days to 6 months by which time the Authority shall pronounce its ruling, on the lines of the Income Tax Act, 1961.

♦ Insertion of New Section 23-I after Section 23H of the Excise Act:

A new Section 23-I, providing transition provisions, has been inserted, after Section 23H, so as to provide for transferring of the pending applications before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) to the Authority constituted under Section 245-O of the Income Tax Act, 1961, from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President.

B. Legislative changes regarding Settlement of Cases:

♦ Changes in Section 32E of the Excise Act:

Section 32E of the Excise Act contains the provisions regarding application for settlement of cases.

Section 32E has been amended so as to insert a new sub-section (5) therein to enable any person, other than assessee, referred to in sub-section (1) to make an application to the Settlement Commission.

♦ Changes in Section 32F of the Excise Act:

Section 32F of the Excise Act contains the provisions regarding procedure on receipt of an application for settlement of cases

Sub-section (3) of Section 32F has been amended so as to substitute certain words therein. It further seeks to insert a new sub-section (5A) therein to enable the Settlement Commission to amend the order passed by it under sub-section (5), torectify any error apparent on the face of record.

⇒ Amendments in the First Schedule to the Central Excise Tariff Act, 1985:

A. Amendments involving change in the duty rates which will come into effect immediately:

S. No. Commodity Rate of duty
From To
A. Tobacco and Tobacco Products
1. Cigar and cheroots 12.5% or Rs.3755 per thousand, whichever is higher 12.5% or Rs.4006 perthousand, whichever is higher
2. Cigarillos 12.5% or Rs.3755 per thousand,whicheveris higher 12.5% or Rs.4006 per thousand, whichever is higher
3. Cigarettes of tobacco substitutes Rs.3755 per thousand Rs.4006 per thousand
4. Cigarillos of tobacco substitutes 12.5% or Rs.3755 per thousand, whichever is higher 12.5% or Rs.4006 per thousand, whichever is higher
5. Others of tobacco substitutes 12.5% or Rs.3755 per thousand, whichever is higher 12.5% or Rs.4006 per thousand, whichever is higher

B. Amendments involving change in the duty rates – Other:

S. No. Commodity Rate of duty
From To
A. Tobacco and Tobacco Products
1. Paper rolled biris – Handmade Rs.21 per thousand Rs.28 per thousand
2. Paper rolled biris – Machine made Rs.21 perthousand Rs.78 per thousand

 C. Retrospective Amendment involving change in the duty rates:

Amendment has been made to retrospectively [i.e. 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 theFirst Schedule to the Central Excise Tariff Act, 1985.

⇒ Amendments in the Seventh Schedule tothe Finance Act, 2005:

A. Amendments involving change in the duty rates which will come into effect immediately:

S. No. Commodity Rate of duty
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 thousand
5. Filter Cigarettes of length exceeding 70mm but not exceeding 75mm Rs.370 per thousand Rs.541 per thousand
6. Other Cigarettes Rs.560 per thousand Rs.811 per thousand
7. Chewing tobacco (including filter khaini) 10% 12%
8. Jarda scented tobacco 10% 12%
9. Pan Masala containing Tobacco (Gutkha) 10% 12%

 B. Amendments involving change in the duty rates – Other:

S. No. Commodity Rate of duty
From To
A. Pan Masala 6% 9%
B. Tobacco and Tobacco Products
1. Unmanufactured tobacco 4.2% 8.3%

♦ Amendment in the Central Excise Rules, 2002:

  • Rule 21 ⇒ Time limit for granting remission of duty has been prescribed:

Rule 21 of the Central Excise Rules, 2002 contains the provision regarding remission of duty.

Sub-rule (2) has been inserted in Rule 21 of the Central Excise Rules, 2002 so as to provide for a time limit of three (3) months [further extendable by 6 months] for granting remission of duty.

♦  Changes in duty rates regarding commodity falling under ‘Renewable Energy’:

S. No. Commodity Rate of duty
From To
1. Solar tempered glass for use in solar photovoltaic cells/ modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition Nil 6%
2. Parts/raw materials for manufacture of solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition 12.5% 6%
3. Resin and catalyst for manufacture of cast components for Wind Operated Energy Generators [WOEG], subject to actual user condition 12.5% Nil
4. All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes 12.5% 6%
5. All items of machinery required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen 12.5% 6%

♦ Clarification regarding applicability of Section 5A of the Excise Act in respect of inputs imported or exported by EOU

Section 5A of the Excise Act provides that unless specifically provided in a notification, no exemption therein shall apply toexcisable goods which are produced or manufactured by an Export Oriented Units (“EOU”)and cleared to the Domestic Tariff Area (“DTA”).

It has been clarified thatnon-applicability of exemptions under notifications issued under Section 5A is only in respect of excisable goods produced or manufactured by an EOU and cleared to DTA and not in respect of inputs/raw materials procured by them domestically and utilised for production/manufacture of goods which are cleared by them to DTA.

Thus, EOU will also be eligible to import orprocure raw materials/inputs at other concessional/Nil rate of Basic Customs Duty (“BCD”), Excise duty/Additional Duty of Customs (“CVD”) or Special Additional Duty (“SAD”), as the case may be, provided they fulfill all conditions for being eligible to such concessional or Nilduty. For these purposes, if an EOU is already registered with the jurisdictional Central ExciseAuthority, it will not be required to take any fresh registration under the Customs (Import ofGoods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 or theCentral Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisableand Other Goods) Rules, 2016, as the case may be. Further, there will be no need for an EOU toseparately comply with the Central Excise (Removal of Goods at Concessional Rate of Duty forManufacture of Excisable Goods) Rules, 2016 for availing the CVD exemption, if the procedureunder the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of ExcisableGoods) Rule, 2016 is followed by it for availing exemption / concession from BCD on importsof inputs/raw materials.

♦ Miscellaneous:

S. No. Commodity Rate of duty
From To
1. Membrane Sheet and Tricot / Spacer for use in manufacture of RO membrane element for household type filters, subject to actual user condition 12.5% 6%
2. All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual user condition Applicable duty 6%
3. Miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner Applicable duty Nil
4. Parts and components for manufacture of miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner, subject to actual user condition Applicable duty Nil
5. (a)     Waste and scrap of precious metals or metals clad with precious metals arising in course of manufacture of goods falling in Chapter 71

(b)    Strips, wires, sheets, plates and foils of silver c. Articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire

(c)     Silver coin of purity 99.9% and above, bearing a brand name when manufactured from silver on which appropriate duty of customs or excise has been paid

Nil Nil, subject to the condition that no credit of duty paid on inputs or input services or capital goods has been availed by manufacturer of such goods

 (Author can be reached at Email: bimaljain@hotmail.com)

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Category : Excise Duty (4002)
Type : Articles (12940) Featured (4080)
Tags : Budget (1472) Budget 2017 (348) CA Bimal Jain (650)

One response to “Union Budget 2017: Key Changes in Excise Duty”

  1. K. RAGHUNATH says:

    We need, IMPORTS, EXPORTS, CUSTOMS, CENTRAL EXCISE, SERVICE TAX, EOU,ETC.,detailed duty structure, notifications, circulars, tariff / chapter-wise,

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