Amendments In Central Excise Act, 1944 And Amendments In Central Excise Tariff Act, 1985 as prescribed by Union Budget 2012-13 Presented by the Finance Minister Pranab Mukherjee.

AMENDMENTS IN CENTRAL EXCISE ACT, 1944:

1) Section 4 deals with the determination of value of excisable goods chargeable to duty on ad valorem basis. It is being amended to incorporate the definition of “inter-connected undertakings” contained in Monopolies and Restrictive Trade Practices Act, 1969 as the latter has been repealed. [ Clause 129]

2) Section 9 provides that cases of evasion in which the duty leviable exceeds Rupees one lakh shall be punishable with a term of imprisonment extending to seven years and with fine. The section is being amended to substitute this amount with Rupees thirty lakh. [Clause 130]

3) Section 9A is being amended to provide that all offences under the Act, except an offence punishable with imprisonment of three years or more under section 9, shall be non-cognizable. [Clause 131]

4) Section 11A is being amended to exclude the period of stay in computing the period of one year or five years, as the case may be, for issuance of show cause notice where service of notice is stayed by an order of a court or tribunal. [Clause 132]

5) Section 11AC provides for reduced penalty if the duty along with interest is paid within a 30 days of the communication of the order. It is being amended to make available the benefit of reduced penalty only if the reduced penalty is also paid within the specified period of thirty days. [Clause 133]

6) Section 12F relating to search and seizure is being amended to align the provisions with Customs Act. [Clause 134]

7) Section 13 dealing with the power to arrest is being substituted to align the provisions with Customs Act and also to provide that offences punishable with imprisonment of three years or more under section 9 shall be cognizable. [Clause 135]

8.) Section 13A is being inserted to provide that bail in the case of offences punishable with a term of imprisonment of three years or more under section 9 shall not be granted by a Court or Magistrate without an opportunity being given to the Public Prosecutor to present his case. It also provides that in the case of minors, infirm and women the Magistrate may grant bail. It also excludes the jurisdiction of police officers to initiate investigation of offences under the Central Excise Act, unless authorized in this behalf by the Central Government by a special or general order. [ Clause 135]

9) Section 18 is being substituted to provide that save as provided under the Central Excise Act, searches shall be carried out as per the procedure laid down in the Code of Criminal Procedure. [Clause 136]

10) Section 19 dealing with disposal of persons arrested is being omitted as a consequential change. [Clause 137]

11) Section 20 is being amended to carry out consequential changes in view of omission of section 19. [Clause 138]

12) Notification No.1/201 0-CE dated 6th February, 2010 provides exemption from Central Excise duty to goods cleared from new units or units that have undertaken substantial expansion in the State of Jammu and Kashmir. It is being amended retrospectively from the date of issue of the said notification to provide that for units undertaking substantial expansion in terms of the notification, the exemption period of ten years would be computed from the date of commercial production from the expanded capacity. This would clarify the policy intent. [Clause 139]

13) The Third Schedule of the Central Excise Act relating to the deeming of certain processes as amounting to “manufacture” is being amended to include cigarettes. Accordingly, the packing, or repacking in a unit container, labeling or relabeling of containers including the declaration or alteration of Retail Sale Price on it or adoption of any treatment to render cigarettes marketable shall be processes amounting to manufacture. [Clause 140]

Changes at para 13) above would come into force immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

AMENDMENTS IN CENTRAL EXCISE TARIFF ACT, 1985:

1) The First Schedule to the Central Excise Tariff is being amended so as to,—

A. revise the statutory/tariff rates applicable to all excisable goods, that is, 12% for all non-petroleum goods other than exempted goods, goods attracting merit rate or higher duty rates. For petroleum goods, the ad valorem rate or ad valorem component (where the rates are mixed) is being revised to 14%

B. enhance the rate of excise duty from 5% to 6% on certain goods and from 22% to 24% and from “22%+ Rs.15000 per vehicle” to 27% on certain categories of automobiles. The composite rate applicable to automobile chassis is being converted into an ad valorem rate and is being fixed at 15% or 25%.

C. enhance the rate of excise duty on cigarettes (both filter and non-filter) of length exceeding 65 milimetres by adding an ad valorem rate of 10% to the existing specific rates of duty.

D. enhance the excise duty on cigars, cheroots and cigarillos to “12% or Rs.1370 per thousand, whichever is higher”.

E. carry out the following changes:

(i) omit the words “or polishing” in Note 6 of Chapter 25 so as to remove doubts about the correct classification of polished marble;

(ii) revise the description of tariff items 2611 10 to 2611 90 covering iron ore and concentrates based on Fe content;

(iii) insert a note in chapter 48 to provide that notwithstanding anything contained in Note 12, if the paper and paper products of heading 4811, 4816 or 4820 are printed with any character, name, logo, motif or format they shall remain classified under Chapter 48 as long as such products are intended to be used for further printing, to avoid classification disputes;

(iv) insert a note in Chapter 71 to provide that for the purposes of headings 7113 and 7114, the process of affixing or embossing trade name or brand name on articles of jewellery or on articles of goldsmiths’ or silversmiths’ wares of precious metal or of metal clad with precious metal, shall amount to “manufacture”;

(v) insert a note in Chapter 72 to provide that the process of oiling and pickling in respect of goods of heading 7208 shall amount to “manufacture”;

(vi) insert a note in Chapter 76 to provide that the process of cutting, slitting and printing of aluminium foils shall amount to “manufacture”;

(vii) insert a note in Chapter 85 to provide that the processes of matching, batching and charging of Lithium ion batteries or the making of battery packs shall amount to “manufacture”;

(viii) align the entries relating to copper scrap, brass scrap, nickel scrap, aluminium scrap, lead scrap and zinc scrap with the revised ISRI classification.

F. insert a note in chapter 54 to provide that notwithstanding anything contained in Note 1, man-made fibre such as polyester staple fibre and polyester filament yarn manufactured from plastic and plastic waste including waste polyethylene terephthalate bottles shall be classified as textile material under Chapter 54 or Chapter 55, as the case may be. This amendment is being carried out with retrospective effect from 29.06.201 0. Duty in respect of clearances already made is to be recovered from the manufacturers of these goods within one month of the date of enactment of the Finance Bill, 2012 failing which interest at the rate of 24% is payable. Simultaneously, the manufacturers are being permitted to take into account credit of duty paid on inputs, input services and capital goods. [Clauses 141 and 142]

Changes involving increase in rates of duty would come into force immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

MISCELLANEOUS

1) The rate of cess leviable on indigenous petroleum crude oil under the Oil Industry (Development) Act, 1974 is being increased from Rs.2500 per metric tonne to Rs.4500 per metric tonne. [Clause 151]

2) The Seventh Schedule to the Finance Act, 2001 dealing with National Calamity Contingent Duty is being amended to incorporate the revision in length in certain duty slabs of cigarettes as a consequential change to amendments in the First Schedule to the Central Excise Tariff Act. [Clause 152]

3) The Seventh Schedule to the Finance Act, 2005 dealing with Additional Excise Duty (commonly known as the Health Cess) is being amended to incorporate the revision in length in certain duty slabs of cigarettes as a consequential change to amendments in the First Schedule to the Central Excise Tariff Act. [Clause 154]

4) Section 73 of the Finance Act, 2010 carried out retrospective amendments to certain provisions of the CENVAT Credit Rules so as to allow apportionment of credit on proportionate basis where common inputs or input services were used for the manufacture of exempted and dutiable goods. This section is being amended with retrospective effect to substitute the words “inputs” with “ inputs or input service” so that the benefit of proportional credit reversal also applies to common input services. [Clause 155]

5) Section 73 of the Finance Act, 2011 is being amended to replace the reference to “Central Excise Tariff Act, 1985” with “Central Excise Act, 1944”. The amendment is also being given retrospective effect from 08.04.2011. [Clause 156]

The changes at 1) above will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Note:      (a)      “Customs Duty” means the customs duty levied under the Customs Act, 1962.

(b)            “CVD” means the Additional Duty of Customs levied under sub-section (1) of section 3 of the Customs Tariff Act, 1975.

(c)             “SAD” means the Special Additional Duty of Customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975.

(d)            “Export duty” means duty of customs leviable on goods specified in the Second Schedule to the Customs Tariff Act, 1975.

(e)            Clause nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2012.

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