Budget 2017: Legislative changes proposed in Excise & Custom Duty

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Article Discusses the following-

Amendments in The Customs Act, 1962:
Amendment in The Customs Tariff Act, 1975
Amendment in The First Schedule To Customs Tariff Act, 1975
Amendment in The Second Schedule To The Customs Tariff Act, 1975 [Clause 110 Of The Finance Bill, 2017]
Other Proposals Involving Changes In BCD, CVD, SAD And Export Duty Rates
Amendments in The Central Excise Act, 1944:
Amendments in The First Schedule To The Central Excise Tariff Act, 1985 [Clause 118 Of The Finance Bill, 2017
Retrospective Amendment in Excise Duty Provisions
Amendments in The Seventh Schedule To The Finance Act, 2005 [Clause 146 Of The Finance Bill, 2017]
Amendments in The Central Excise Rules, 2002 And The Cenvat Credit Rules, 2004
Other Proposals Involving Changes In Excise Duty Rates

A. CUSTOMS:

I. AMENDMENTS IN THE CUSTOMS ACT, 1962:

S. No.	Amendment	Clause of the Finance Bill, 2017
1.	(a) Section 2 is being amended to:(a) insert clause (3A) to define a beneficial owner as any person on whose behalf the goods are being imported or exported or who exercises effective control over the goods being imported or exported. (b) include Foreign Post Office and International Courier Terminal in the definition of a Customs Station in clause (13); (c) omit certain words in clause (13) to align with the proposed omission of Section 82; (d) provide that the existing definition of exporter in clause (20) includes the beneficial owner; (e) provide that the existing definition of importer in clause (26) includes the beneficial owner; (f) insert clause (30B) so as to define passenger name record information; (g) define Foreign Post Office and International Courier Terminal.	[88]
2.	Section 7 is being amended to empower the Board to notify Foreign Post Offices and International Courier Terminals.	[89]
3.	Section 17 is being amended to 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-(i) such excess payment is evident from the bill of entry in the case of self-assessed bill of entry or (ii) 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 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 Act. It also seeks to provide for transferring 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 from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President.	[93]
7.	Section 28G relating to vacancies not to invalidate proceedings is being omitted.	[94]
8.	Sub-section (3) of section 28H is being amended so as to increase the application fee for seeking advance ruling from rupees two thousand five hundred to rupees ten thousand on the lines of the Income-tax Act.	[95]
9.	Sub-section (6) of section 28I is being amended so as to provide time of limit of six months by which Authority shall pronounce its ruling on the lines of the Income-tax Act.	[96]
10.	A new section 30A is being introduced so as to make it obligatory on the person-in-charge of a conveyance that enters India from any place outside India or any other person as may be specified by the Central Government by notification in the Official Gazette, to deliver to the proper officer the passenger and crew arrival manifest before arrival in the case of an aircraft or a vessel and upon arrival in the case of a vehicle; and passenger name record information of arriving passengers in such form, containing such particulars, in such manner and within such time as may be prescribed. The section also intends to provide for imposition of a penalty not exceeding fifty thousand rupees as may be prescribed, in the case of delay in delivering the information.	[97]
11.	A new section 41 A is being introduced so as to make it obligatory on the person-in-charge of a conveyance that departs from India to a place outside India or any other person as may be specified by the Central Government by notification in the Official Gazette, to deliver to the proper officer the passenger and crew departure manifest and passenger name record information of departing passengers before the departure of the conveyance in such form, containing such particulars, in such manner and within such time as may be prescribed. The section also intends to provide for a penalty not exceeding fifty thousand rupees as may be prescribed in the case of delay in delivering the information.	[98]
12.	Sub-section (3) of section 46 is being substituted 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 self- assessed 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 manner in which an entry may be made in respect of goods imported or to be exported by post.	[104]
18.	Section 127B is being amended so as to insert a new sub-section (5) therein to enable any person, other than applicant, referred to in sub- section (1) to make an application to the Settlement Commission.	[105]
19.	Sub-section (3) of section 127C is being 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), to rectify any error apparent on the face of record.	[106]
20.	Section 157 is being amended so as to empower Board to make regulations for specifying the form, particulars, manner and time of providing the passenger and crew manifest for arrival and departure and passenger name record information and penalty in the case of delay in delivering the information.	[107]

II. AMENDMENT IN THE CUSTOMS TARIFF ACT, 1975

S. No.	Amendment	Clause of the Finance Bill, 2017
1.	Clause (c) of sub-section (3) of section 9 is being substituted so as to withdraw the exemption to three categories of non-actionable subsidies specified therein from the scope of anti-subsidy investigations.	[108]

III. AMENDMENT IN THE FIRST SCHEDULE TO CUSTOMS TARIFF ACT, 1975

S. No.	Amendment	Clause of the Finance Bill, 2017
A.	Amendments not affecting rates of duty
1.	To:(i) Delete tariff items 1302 32 10 and 1302 32 20 and entries relating thereto and create new tariff items 1106 10 10 and 1106 10 90, in relation to Guar meal and its products to harmonize the Customs Tariff with HS Nomenclature. (ii) Create new tariff item 1511 90 30 for Refined bleached deodorised palm stearin”to harmonize Customs Tariff in accordance with WCO classification decision. (iii) Substitute tariff items 3823 11 11 to 3823 11 90 and entries relating thereto with tariff item 3823 11 00. (iv) Substitute tariff items 3904 10 10 to 3904 22 90 with tariff items 3904 10 10 to 3904 22 00 in relation to the PVC Resin.	[109(b)]
2.	To amend Chapter Note (4) of Chapter 98 so as to remove the non-applicability of headings 9803 and 9804 to goods imported through courier service. Also, to amend heading 9804 so as to extend the classification of personal imports by courier, sea, or land under this heading.	[109(b)]
B.	Amendments affecting rates of BCD	[109(a)]
		Rate of Duty
	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
1.	Ores and concentrates 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.

V. OTHER PROPOSALS INVOLVING CHANGES IN BCD, CVD, SAD AND EXPORT DUTY RATES

S. No.	Commodity	BCD/Excise/CV duty/SAD/Export Duty
A.	Ores and Concentrates	From	To
1.	Other aluminium ores, including laterite	Export Duty – Nil	Export Duty – 15%
B.	Mineral fuels and Mineral oils
2.	Liquefied Natural Gas	BCD – 5%	BCD – 2.5%
C.	Chemicals & Petrochemicals
3.	o-Xylene	BCD – 2.5%	BCD – Nil
4.	Medium Quality Terephthalic Acid (MTA) & Qualified Terephthalic Acid (QTA)	BCD – 7.5%	BCD – 5%
5.	2-Ethyl Anthraquinone [29146990] for use in manufacture of hydrogen peroxide, subject to actual user condition	BCD – 7.5%	BCD – 2.5%
6.	Clay 2 Powder (Alumax) for use in ceramic substrate for catalytic convertors, subject to actual user condition	BCD – 7.5%	BCD – 5%
7.	Vinyl Polyethylene Glycol (VPEG) for use in manufacture of Poly Carboxylate Ether, subject to actual user condition	BCD – 10%	BCD – 7.5%
D.	Textiles
8.	Nylon mono filament yarn for use in monofilament long line system for Tuna fishing, subject to certain specified conditions	BCD – 7.5%	BCD – 5%
E.	Finished Leather, Footwear and Other Leather Products
9.	Vegetable tanning extracts, namely Wattle extract and Myrobalan fruit extract	BCD – 7.5%	BCD – 2.5%
10.	Limit of duty free import of eligible items for manufacture of leather footwear or synthetic footwear or other leather products for use in the manufacture of said goods for export	3% of FOB value of said goods exported during the precedingfinancial year	5% of FOB value of said goods exported during the preceding financial year
F.	Metals
11.	Co-polymer coated MS tapes / stainless steel tapes for manufacture of telecommunication grade optical fibres or optical fibre cables, subject to actual user condition	BCD – Nil	BCD – 10%
12.	Nickel	BCD – 2.5%	BCD – Nil
13.	MgO coated cold rolled steel coils [7225 19 90] for use in manufacture of CRGO steel, subject to actual user condition	BCD – 10%	BCD – 5%
14.	Hot Rolled Coils [7208], when imported for use in manufacture of welded tubes and pipes falling under heading 7305 or 7306, subject to actual user condition	BCD – 12.5%	BCD – 10%
G.	Capital Goods
15.	Ball screws, linear motion guides and CNC systems for use in manufacture of all CNC machine tools, subject to actual user condition	Ball screws and liner motion guidesBCD – 7.5% CNC systems BCD – 10%	BCD – 2.5%
H.	Electronics / Hardware
16.	Populated Printed Circuit Boards (PCBs) for the manufacture of mobile phones, subject to actual user condition	SAD – Nil	SAD – 2%
I.	Renewable Energy
17.	Solar tempered glass for use in the manufacture of solar cells/panels/modules subject to actual user condition	BCD – 5%	BCD – Nil
18.	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	CVD – 12.5%	CVD – 6%
19.	Resin and catalyst for manufacture of cast components for Wind Operated Energy Generators [WOEG], subject to actual user condition	BCD – 7.5% CVD – 12.5% SAD – 4%	BCD – 5% CVD – Nil SAD – Nil
20.	All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes, subject to certain specified conditions	BCD – 10% / 7.5%CVD – 12.5%	BCD – 5% CVD – 6%
21.	All items of machinery required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen, subject to certain specified conditions	BCD – 10% / 7.5%CVD – 12.5%	BCD – 5% CVD – 6%
J.	Miscellaneous
22.	Membrane Sheet and Tricot / Spacer for use in manufacture of RO membrane element for household type filters, subject to actual user condition	CVD – 12.5%	CVD – 6%
23.	All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual user condition	Applicable BCD, CVD	BCD – 5% CVD – 6%
24.	All inputs for use in the manufacture of LED Driver and MCPCB for LED lights or fixtures, including LED lamps, subject to actual user condition	Applicable BCD	5%
25.	De-minimis customs duties exemption limit for goods imported through parcels, packets and letters	Duty payable not exceeding Rs.100 per consignment	CIF value not exceeding Rs.1000 per consignment
26.	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 BCD, CVD SAD	BCD – Nil CVD – Nil SAD – Nil
27.	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 BCD, CVD SAD	BCD – Nil CVD – Nil SAD – Nil
28	Silver medallion, silver coins having silver content not below 99.9%, semi- manufactured form of silver and articles of silver	CVD – Nil	CVD – 12.5%
29	Goods imported for petroleum and coal bed methane operations by availing of the benefit of notification No.12/2012- Customs, dated 17.03.2012 [S. No.357A] no longer required for the said purpose are being allowed to be disposed of on payment of applicable customs duties or excise duty, 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.

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, 1961.	[111]
2.	Section 23B relating to vacancies not to invalidate proceedings is being omitted.	[112]
3.	Sub-section (3) of section 23C is being amended so as to increase the application fee for seeking advance ruling from rupees two thousand five hundred to rupees ten thousand on the lines of the Income-tax Act.	[113]
4.	Sub-section (6) of section 23D is being amended so as to provide time of limit of six months by which Authority shall pronounce its ruling on the lines of the Income-tax Act.	[114]
5.	A new section 23-I is being inserted so as to provide for transferring 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 from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President.	[115]
6.	Section 32E is being 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.	[116]
7.	Sub-section (3) of section 32F is being 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), to rectify any error apparent on the face of record.	[117]

II. AMENDMENTS IN THE FIRST SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985 [Clause 118 of the Finance Bill, 2017]

S. No.	Amendment
	Amendments involving change in the rate of Basic Excise duty	Rate of Duty
	Commodity	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 per thousand, whichever is higher
2.	Cigarillos	12.5% or Rs.3755 per thousand, whichever is 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

The above amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

III. 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]

IV. 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 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.81 1 per thousand
7.	Chewing tobacco (including filter khaini)	10%	12%
8.	Jarda scented tobacco	10%	12%
9.	Pan Masala containing Tobacco (Gutkha)	10%	12%

The above amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

V. AMENDMENTS IN THE CENTRAL EXCISE RULES, 2002 AND THE CENVAT CREDIT RULES, 2004

S. No.	Amendment
1.	Sub-rule (2) is being inserted in rule 21 of Central Excise Rules, 2002 so as to provide for a time limit of three months [further extendable by 6 months] for granting remission of duty under the said rule 21 read with section 5 of the Central Excise Act, 1944. Notification No.5/2017-Central Excise (N.T.), dated 02.02.2017 refers.
2.	Sub-rule (4) is being inserted in rule 10 of CENVAT Credit Rules, 2004 so as to provide for a time limit of three months [further extendable by 6 months] for approval of requests regarding transfer of CENVAT credit on shifting, sale, merger, etc. of the factory. Notification No.4/2017-Central Excise (N.T.), dated 02.02.2017 refers.

VI. OTHER PROPOSALS INVOLVING CHANGES IN EXCISE DUTY RATES:

No.	Commodity	From	To
	Amendments involving change in the rate of Additional Excise duty under Finance Act, 2005
B.	Pan Masala
6.	Pan Masala	6%	9%
C	Tobacco and Tobacco Products
7.	Unmanufactured tobacco	4.2%	8.3%
	Amendments involving change in the rate of Basic Excise duty
8	Paper rolled biris – handmade	Rs.21 per thousand	Rs.28 per thousand
9	Paper rolled biris – machine made	Rs.21 per thousand	Rs.78 per thousand
D.	Renewable Energy
10	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%
11	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%
12	Resin and catalyst for manufacture of cast components for Wind Operated Energy Generators [WOEG], subject to actual user condition	12.5%	Nil
13	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%
14.	All items of machinery required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen	12.5%	6%
E.	Miscellaneous
15	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%
17	All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual user condition	Applicable duty	6%
18	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
19	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
20	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 d. 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

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