Circular No. 22/2006-Cus
Government of India
Ministry of Finance
Department of Revenue
New Delhi,the 21st August, 2006
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise.
All Commissioners of Customs/Customs (Prev.)/Customs& Central Excise/ Central Excise
DG, CEIB, New Delhi
DG, Central Excise Intelligence/ DGRI/ DG (Export Promotion)/ DGI/ DG, NACEN/ DG (Systems & Data Management),
Chief Departmental Representative, Customs, Excise & Service Tax Appellate Tribunal, West Block-2, R.K. Puram, N. Delhi
Subject: Leviability of National Calamity Contingent Duty (NCCD) on crude oil imported under Advance Licence (Authorisation) and Duty Free Import Authorisation (DFIA) Schemes – reg.
I am directed to invite your attention to the above mentioned subject and to say that a doubt has been raised as to whether National Calamity Contingent Duty (NCCD) @ Rs. 50/- PMT is leviable in the case of import of crude petroleum oil under Advance Licence (Authorisation) Scheme and whether Education Cess @ 2% is leviable on such imports.
2. The matter has been examined by the Board. Under paragraph 4.1.4 of the Foreign Trade Policy (FTP) imports under Advance Licence (now Authorisation) Scheme are exempt from payment of basic customs duty, additional customs duty, education cess, anti-dumping duty and safeguard duty, if any. Imports under Duty Free Import Authorization (DFIA) Scheme are exempt from these duties in terms of paragraph 4.4.2 of the FTP. The notifications issued to operationalize these schemes (notification No. 93/2004-Customs, dated 10.09.2004 in case of advance licence scheme and notification no. 40/2006-Customs, dated 01.05.2006 in case of DFIA Scheme) also provide for exemption from the above said duties only. The National Calamity Contingent Duty (NCCD) of Customs is leviable on certain specified items under Section 134 of the Finance Act, 2003. Crude Petroleum Oil classified under tariff heading 27.09 attracts NCCD @ Rs. 50/MT. Both under the FTP and the customs notifications referred to above, there is no reference to NCCD. In the absence of any enabling provisionin the FTP and notifications providing for exemption from this duty, NCCD is leviable on imports under Advance Licence (Authorisation) and DFIA Schemes.
3. The Education Cess introduced in the Budget 2004-05 is leviable @ 2% of the aggregate duties of Customs except safeguard duty leviable under section 8B and 8C, countervailing duty under section 9 and anti-dumping duty under section 9A of the Customs Tariff Act, 1975 on all items imported into India. NCCD is levied and collected as a duty of Customs and, thereof, it follows that Education Cess is leviable on this duty.
4. Vide Board’s Circular No. 5/2005-Customs dated 31.01.2005 it was clarified that Education Cess @ 2% would not be leviable on imports against advance licences because, in a normal situation of import (other than crude petroleum oil) under Advance Licence Scheme all duties of Customs are exempt. However, there is no reason to conclude from this Circular that Education Cess is not to be paid when NCCD is payable. In fact it has been made clear in the Circular itself that when duty is payable (e.g under DFRC and EPCG Schemes) Education Cess is also payable and where duty is debitable (DEPB Scheme) Education Cess is also debitable. Therefore, it has to be concluded that if the NCCD or any other duty is payable under Advance Licence Scheme and DFIA Scheme, Education Cess is also payable on that duty.
5. It is, thus, clarified that NCCD at the applicable rate is leviable on crude petroleum oil imported under Advance Licence (Authorisation) and Duty Free Import Authorisation (DFIA) Schemes. As clarified above, Education Cess @ 2% is leviable on such imports.
6. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any in implementation of the Circular may be brought to the notice of the Board at an early date.
Receipt of this Circular may kindly be acknowledged.