CA Bimal Jain

Finance Bill, 2015 enacted: Significant changes under Customs effective from May 14, 2015

The Hon’ble President has given assent to the Finance Bill, 2015 on Thursday, May 14, 2015. Accordingly, the Finance Bill, 2015 has now become Finance Act (No.20), 2015. We have already provided the changes in Service tax that are effective from May 14, 2015 and the changes that will become effective only from the date to be notified and Significant changes under Central Excise wef 14.05.2015 in our earlier newsletters.

Now, we are summarizing herewith changes under the Customs effective from May 14, 2015 for easy digest:

Changes under various Sections under the Customs Act, 1962 (“the Customs Act”)

♠ Section 28: Rationalization of penal provisions:

◊ Non-fraud cases: In cases not involving fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Customs Act or Rules with the intent to evade payment of duty, in the following manner:

a)  Proviso inserted in Section 28(2) of the Customs Act: No penalty leviable if duty amount and interest is paid within 30 days of issuance of SCN and proceedings in respect of such duty amount and interest shall be deemed to have been concluded;

◊ Fraud cases: In cases involving fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Customs Act or Rules with the intent to evade payment of duty, in the following manner:

a) Section 28(5) of the Customs Act amended to provide that reduced penalty equal to 15% (instead of 25% earlier) of the duty amount alleged in the SCN shall be levied if duty, interest and reduced penalty is paid within 30 days of issuance of SCN.

♠  Transition provision: Explanation 3 inserted to prescribe transition provision in the following manner:

a) In cases where SCN has been issued but no Adjudication Order has been issued before the date of enactment of the Finance Bill, 2015 (i.e. May 14, 2015), assesse shall be eligible to closure of proceedings on payment of duty and interest in non-fraud cases or on payment of duty, interest and 15% penalty in fraud cases, within 30 days from the date on which the Finance Bill, 2015 receives the assent of the President (i.e. May 14, 2015);

♠  Section 112: Penalty for improper importation of goods etc.

Section 112 is being amended so as to substitute sub-clause (ii) of clause (b) to provide that penalty for improper importation of the dutiable goods other than the prohibited goods would be higher of the following:

  1. Penalty not exceeding 10% of the duty sought to be evaded or
  2. Rs. 5,000/-

It is also being provided that if the duty as determined under Section 28(8) of the Customs Act and the interest payable thereon under Section 28AA thereof is paid within 30 days from the date of communication of the Order of the proper officer determining such duty, the amount of penalty liable to paid by such person under this Section shall be 25% of the penalty so determined.

♠  Section 114: Penalty for attempt to export goods improperly etc.

Section 114 is being amended so as to substitute clause (ii) to provide that penalty for improper exportation of the dutiable goods other than the prohibited goods would be higher of the following:

  1. Penalty not exceeding 10% of the duty sought to be evaded or
  2. Rs. 5,000/-

It is also being provided that if the duty as determined under Section 28(8) of the Customs Act and the interest payable thereon under Section 28AA thereof is paid within 30 days from the date of communication of the Order of the proper officer determining such duty, the amount of penalty liable to paid by such person under this Section shall be 25% of the penalty so determined.

Provisions relating to Settlement Commission has been amended to, inter alia, include amendment in the proviso to clause (b) of Section 127A to delete the reference to “in appeal or revision, as the case may be” so as to provide that when any proceeding is referred back, whether in appeal or revision or otherwise, by any Court, Appellate Tribunal or any other Authority to the Adjudicating Authority for a fresh adjudication or decision, then such case shall not be entitled for settlement.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons),  Email: bimaljain@hotmail.com)

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