Article Covers Amendment in Central Excise Duty Provisions vide Budget 2015-16 as presented by Union Finance Minister Mr. Arun Jaitley on 28.02.2015. It covers the changes in :-

1.Central Excise Act,1944

2. Central Excise Rules 2002

3. Cenvat Credit Rules 2004

4. Excise & Service Tax Registration

5. Other Miscellaneous Changes in Act, Rules & Tariff.

CHANGES MADE IN CENTRAL EXCISE ACT 1944 BY FINANCE BILL 2015-15:

SECTION
TYPE OF AMENDMENT
SUMMARY OF CHANGES
ANALYSIS
Sec 3A
Explanation Added
This section empowers the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods (Tobacco, Pan Masal).
Explanation added to provide for word ‘Factor’ includes ‘Factors’
This will enable the Central Government to specify more than one factor relevant to the production of such goods.
Accordingly Government has issued Notification No 4/2015 CE NT & 5/2015 CE NT dt 1st March 2015 to specify more factors.
Sec 11A
Amendment
This section empower Central Government to recover duties non paid/levied or short paid/levied or erroneously refunded.
Amendment is made by way of omission of some subsection of Sec 11A and amending the Explanation.
Below clause is omitted:
Extended Period of 5 years to issue show cause notice will be applicable in case where during audit/investigation it is found that there is default in payment of Service Tax deliberately/fraudulently but details of the same are available on specific records.
Explanation is added to provide that:
Sec 11A will not be applicable in case of non payment/short payment is declared in periodic return filed.
With this amendment government tried to remove the ambiguity in Section 11A and to bring more clarity. Also it is provided that such non payment/erroneously refund is reflected in the periodic returns filed, Sec 11A will not be applicable.
Sec 11AC
Substitution of New Section
Section 11 AC provide for amount of Penalty payable in cases mentioned in Section 11A. New Section 11AC is substituted to provide for penalty in more rationalized way. Now penalty payable will be as under:
Sr. No.
Particulars
Cases Not involving Fraud/ wilful mis-statement/ suppression of facts/ contravention of any provision of the Act or rules
Cases involving Fraud/ wilful mis-statement/ suppression of facts/ contravention of any provision of the Act or rules
A
In addition to the duty as determined under sub-section (10) of section 11A, assessee in default is also liable to
penalty not exceeding 10% of the duty so determined or `5000 whichever is higher
penalty equal to 100% of the duty so determined shall be payable
B
if duty and interest payable under Sec 11AA is paid either before issue of SCN/within 30 days of Notice
No Penalty
Penalty payable shall be 15% of the duty demanded, provided same is also paid within 30 days of SCN
C
if such penalty along with duty & Interest as determined under Sec 11A(10) & Sec 11AA is paid within 30 days of Order
Penalty equal to 25% of the penalty so imposed shall be payable
Penalty equal to 25% of the penalty so imposed shall be payable
 Note: if the duty amount gets reduced in any appellate proceeding, then penalty amount shall also stand modified accordingly, and benefit of reduced penalty (25% of penalty imposed) shall be admissible if duty, interest and reduced penalty is paid within 30 days of such appellate order
Sec 31 to 32
Amendment
Section 31 to 32 provide for Settlement of Cases. Many of the provisions under this Section were become redundant due to passage of time. Hence same are omitted.
Also It is provided that, if due to occurrence of vacancy in the office Chairman of Settlement Commission due to any reason,   Vice chairman or Member of the Settlement Commission to act as Chairman. Earlier only Vice chairman was designated.
Unwanted Garbage from provisions of Settlement Commission is removed. Also member of Settlement Commission also allowed to act as Chairman in event of vacancy in the office of Chairman due to any.
Sec 37(4) & 37(5)
Amendment
Section 37 empower Central Government to fram rules in various cases. Also it provide for penalty in some cases of Rs 2000.
Amount of such penalty is increased to Rs 5000
Section 37 empower Central Government to fram rules in various cases. Also it provide for penalty in some cases of Rs 2000.
Amount of such penalty is increased to Rs 5000
Third Schedule to Central Excise Act 1944
Amendment
Third Schedule to Tariff Act provide for goods in which case packing/repacking/labelling/Re-labelling shall amount to Manufacture and accordingly Excise duty needs to be discharged on such activity.
Scope of this Schedule is increased to include more goods under it.
It will increase Excise Revenue of Government by increasing the ambit of Excise

CHANGES MADE IN CENTRAL EXCISE RULES 2002 BY NOTIFICATION NO 8/2015 CE NT DATED 1ST March 2015:

RULE TYPE OF AMENDMENT SUMMARY OF CHANGES ANALYSIS EFFECTIVE FROM
Rule 10 Amendment This rules prescribe Rules for maintenance of Daily Stock Account (DSA).Now facility of maintenance of DSA is provided in electronic form as well, with a condition that each page of DSA will be authenticated by Digital Signature Welcome move towards Paperless Society 1st March 2015
Rule 11 Amendment This rules prescribe the regulation w.r.t Invoicing.Now it is provided that:

1)      If goods are directly sent to a job worker, on the direction of a manufacturer/service provider, the invoice shall state manufacturer/service provider as Buyer and job worker as the consignee and it should provide their details.

2)      If goods are directly sent to any person on the direction of the registered dealer, the invoice shall also contain the details of dealer as the buyer and the person as the consignee, and that person shall take CENVAT credit on the basis of the registered dealer’s invoice.

3)      If the goods imported by register Importer and     sent directly to buyer’s premises, then invoice issued by the importer shall mention that goods are sent directly from the place or port of import to the buyer’s premises.

4)      Other provisions of Rule 11 shall also made be applicable to register Importer mutatis mutandis.

5)      Invoice now can be digitally signed. However Duplicate copy for Transporter still needs to be self-attested by manufacturer.

·         Clarification provided for business procurement process of “Bill To – Ship To”

·         Move towards E-Governance by allowing to authenticate the invoice by digital signature.

1st March 2015
Rule 12(6) & 17(5) New Sub-Rule This Rule contain provision relating to various returns. Now Penalty clause is inserted for late filing of Return.Penalty of Rs 100/- per day is payable for after due date till filing of return, subject to Maximum of Rs 20000/-

In Excise, there was no separate penal clause for charging penalty for late filing of Excise Return. Under general clause Penalty for late filling of return was levied.

 

With introduction of this amendment, timely filing of returns is to be insured. Else be ready to pay penalty upto Rs 20000/- PER RETURN.

This will increase Tax Revenue drastically or will change habit of assessee so that timely returns will be filled.

1st March 2014
Rule 18 Amendment This Rule provides for Rebate of duty paid on goods used in Exports.Explanation to this rules is substituted with new one, to provide that” Export means taking goods out of India to a place outside India and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.” Due to this amendment Litigation w.r.t Rebate on supply of goods to EOU will come to any end.Changes in the same line is also incorporated in Rule 5 of Cenvat Credit Rules 2004 1st March 2014
 Importer Dealer:

Notification No. 08/2014 – CE NT dated 28th Feb 2014 made mandatory to Import Dealer to get registered under Excise, if he wish to pass-on the Cenvat Credit like registration requirement for First Stage Dealer (FSD) / Second Stage Dealer (SSD). However there are many regulations in Central Excise Rule 2002 governing FSD/SSD which were not prescribed for Import dealer. However now vide Notification No 8/2015 CE NT dated 1st March 2015, same were also made applicable to Import Dealer as well.

CHANGES MADE IN CENVAT CREDIT RULES 2004 BY NOTIFICATION NO 6/2015 CE NT DATED 1ST March 2015:

RULE TYPE OF AMENDMENT SUMMARY OF CHANGES ANALYSIS EFFECTIVE FROM
Rule 4 Amendment This rule provide Condition for eligibility of Cenvat Credit.Changes made under this rule is as under:1)      Cenvat credit on Inputs/Capital Goods can be taken by manufacturer/service provider immediately on receipt of goods by job worker If goods are directly sent to job worker from suppliers premises.

However in case of Capital Goods, Cenvat credit in first year will be available upto 50%.

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If such goods is not received back by manufacture from job worker within 180 days in case of inputs & 2 years in case of Capital Goods, then Cenvat credit needs to be reversed.

2)      Time limit for availment of Cenvat credit on inputs & input Services is increased to 1 year from date of document. Earlier it was 6 month.

3)      Goods sent to job worker, can sent to another job worker from the place of first job worker. However period of 180 is applicable.

4)      Service tax paid under Reverse Charge whether partial or full, credit is available once service tax is paid, irrespective of whether payment for value of input service is made within 3 months or not. However this is applicable from

Great Relief to Industry and Business. Now:

a)      Goods can be sent to job worker’s premises directly without worrying for Cenvat eligibility.

b)      Time limit for Cenvat availment is increased to 1 year

c)      Cenvat credit of Service tax paid under partial reverse charge can be availed immediately after payment of service tax, irrespective whether payment for value of service is made or not.

Amendment mentioned in (1) to (3) is effective from 1st March 2015.

Amendment mentioned at (4) is effective from 1st April 2015.

Rule 5 Amendment This Rule provide for Refund of Cenvat credit in case of Export of Goods.Now meaning of Exports is provided for. Export means “means any goods which are to be taken out of India to a place outside India.” Litigation w.r.t Refund on supply of goods to EOU is come to an end. 1st March 2015
Rule 6 Amendment Rule 6 provide for Reversal of Cenvat credit in case excisable/taxable as well as exempted goods/services are manufactured or service are provided.Now meaning of Exempted goods is widen to include “Non-Excisable” goods cleared for Consideration from Factory. This is increase Scope of Rule 6 drastically and it will become applicable to most of manufacture. 1st March 2015
Rule 7 Amendment Provision of maintenance of records and declaration of details on invoice as applicable to registered dealer is now made applicable to importer. Last year, Excise Registration to Importer is made mandatory to those who wish to pass on Cenvat. In same line with this, other provisions are also made applicable to them and changes are also incorporated at other relevant rules. 1st March 2015
Rule 14 Substitution Rule 14 provide that Cenvat credit wrongly availed AND utilised will be recovered along with interest.However newly substituted Rule provide:1)      Wrongly taken Cenvat credit will also be recovered even though it is not utilised.2)      It provide mechanism for determination of utilization of wrong utilization of Cenvat credit as under:“All credits taken during a month shall be deemed to have been taken on the last day of the month for the purpose of Rule 14 and the utilisation thereof shall be deemed to have occurred in the following manner, namely: –

(i) the opening balance of the month has been utilised first;

(ii) credit admissible in terms of these rules taken during the month has been utilised next;

(iii) credit inadmissible in terms of these rules taken during the month has been utilised thereafter.”

Welcome move. Now:a)      Wrongly availed credit can also be recovered by government.b) Mechanism is provided for wrongly utilised credit. Confusion as to whether FIFO/LIFO method is to be followed in this regards is clarified. 1st March 2015

 CENTRAL EXCISE & SERVICE TAX REGISTRATION COMPLIANCE:

(Amendment to principle Notification No 35/2001 CE NT is made vide NOTIFICATION NO 7/2015 CE NT DATED 1ST March 2015)

Notification No 7/2015 has made in some changes in Excise Registration. Rather this Notification is in nature of giving clarity to difficulties faced w.r.t Registration. CBEC has also issued Circular No. 997/4/2015-CX dated 28th Feb 2015 in this regards.

Summarized Bullet provisions incorporated by Notification 7/2015 is given as under:

i. Application for registration/cancellation shall be filed ONLY by online method

ii. PAN No is must for getting registration under Excise except government department

iii. Temporary Registrant should apply for PAN based registration within 3 month

iii. Email Id, Mobile Number, details of other government Registration details is compulsorily to be quoted on registration application. Existing applicant should incorporate this details within 3 month.

iv. Excise Registration: Once duly completed application form is received online on ACES, registration would be granted within two working days and Registration Certificate will be issued online without any examination of the documents and verification of documents or premises before the grant of registration, Registration Certificate will be issued online. Online copy of registration certificate is sufficient proof of registration. No need to have hard copy of registration. Signature of issuing authority is not required on online registration certificate. Verification of the documents and premises shall be carried out post facto. The applicant shall submit self-attested copy of the prescribed documents at the time of the verification of the premises.

v. Service Tax Registration: Similarly in service tax, the registration process for single registration has been simplified by providing for grant of registration online within two working days of filing the complete Form ST-1 in ACES. The specified documents should reach the office of the jurisdictional Deputy/Assistant Commissioner within 15 days of the date of filing the registration application

vi. In case of Change in constitution of assessee amounting to change in PAN number, fresh registration is to be obtain. In other cases, intimation of such changes is to be given with 30 days

OTHER MISCELLANEOUS CHANGES MADE IN CENTRAL EXCISE ACT 1944, CENTRAL TARIFF ACT 1984 AND RULES MADE THEREUNDER:

(EFFECTIVE FROM 1ST MARCH 2015)

SR. NO. PARTICULARS AMENDMENT EFFECTED VIDE SUMMARY OF CHANGES
1 MRP Valuation Goods Notification No 3/2015 CE NT Government has made some amendment to goods coming under MRP valuation and also inserted new categories of goods to whom MRP valuation provisions will be made application.
2 Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 Notification No 9/2015 CE NT Letter of undertaking can be submitted by assessee having clean records for availing benefit of this rules instead of submitting Bond.
3 Advance Ruling Notification No 11/2015 CE NT & Notification No 9/2015 ST Now Partnership Firm, LLP, Sole Proprietorship & One Person Company registered under Excise/Service Tax can make application under Sec 23A of Central Excise Act 1994 for getting Advance Ruling
4 Duties Chargeable Based on Factor of Production ( Tobacco, Pan Masala) Notification No 5/2015 CE & Notification No 6/2015 CE Additional factors based on which duty payable is to be calculated is specified.
5 Notification No 1/2011 CE & 2/2011 CE (Popularly called as Composition Scheme of Excise) Notification No 7/2015 CE & Notification No 8/2015 CE Under the said Notification ‘Condensed milk put up in unit containers – 0402 91 10 or 0402 99 20 ’ product is added under Serial No 1A.
6 Additional Duty of Excise under Section 85 of Finance Act 2005 Notification No 9/2015 CE Said duty is exempted on ‘Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured – 2202 10’ by inserting Sr. No. 1A in Notification No 6/2005 CE
7 Petrol & High Speed Diesel Oil Notification No 10/2015 CE, 11/2015 CE & Notification 12/2015 CE Additional Duty on said product is increased to Rs 6 from earlier Rs 2. Vide Notification No 10/2015 CE & 11/2015 CE. However Cenvat Rate on said product is reduced as per Notification 12/2015 CE & Ed Cess on the same is exempted.Due to which Net impact of Duties on Petrol & Diesel is kept same as it was earlier
8 Agarbatti Notification No 13/2015 Full exemption from excise duty is being extended to captivity consumed intermediate compound coming into existence during the manufacture of Agarbattis. Agarbattis attract NIL excise duty.
9 Duties & Exemption on other goods Kindly Refer Notification No 12/2015 CE dated 1st March 2015 & Fifth Schedule to Finance bill 2015
10 Place of Removal in case of Exports for Cenvat Credit on Input Service Circular No. 999/6/2015-CX dated 28th Feb 2015

· Exports By Manufacturer:

In such case, shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. After Let Export Order is issued, it is the responsibility of the shipping line to ship the goods to the foreign buyer with the exporter having no control over the goods. In such a situation, transfer of property can be said to have taken place at the port where the shipping bill is filed by the manufacturer exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly.

·  Exports through Merchant Exporter –

Place of removal shall be the place where the property in the goods passes from the manufacturer to the merchant exporter. In most of the cases, this place would be the factory gate

Presented by- CA SWAPNIL MUNOT

Cell   : 90212 65137/91569 46463, Mail : munotswapnil@gmail.com

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8 responses to “Budget 2015- Analysis of Changes in Central Excise”

  1. Rakesh Kalra says:

    I query is we have fill wrong quarterly excise return of our company. Can i change our excise return.

  2. A.Mitra says:

    I have filed 3 nil central excise dealer return by 209 days,108 days and 26 days for Dec’. Are there any late fee mandatory? How much and Can I go for Appeal for relaxation the Penalty of late filing of return since we have no excise sale there.

  3. S M BHATNAGAR says:

    HOW TO CODON OF DELAY IN FILLING REBATE CLAIM UNDER RULE 18 OF CENTRAL EXCISE RULE 2002.OUR CLAIM IS DECEMBER 2014

  4. Manoj B. Gavali says:

    Thanks for detailed analysis. ONly a single query. You have written applicable date for Rule 12(6) as well as Rule 17(5) of Central Excise Rules, 2002 as 1st March 2014 in table above. It should be 1st March 2015 as provided under notification no.08/2015. I think this is typo error and need to be corrected.

  5. samanta megha says:

    pls. guide me late filling of return ER-3, what is the maximum penalty and minimum to number of day.

  6. D Madarsa says:

    Hi sir

    My Default amount 986731/- My e payment Challan Dated 18.04.2015 52500/-and 05.05.2015 reaming amount payable
    how to penalty calculation please refer the excel sheet

  7. dILIP says:

    Dear Sir,

    I query is we have already cenvat of CHA Bill, Forwarding & clearance Service,Insurance of Export Goods but is ready Excise Circular 99915 what is this . We have extra claim of Service tax of after Let Export Order.? Pl reply

    Thanks

    Dilip Bhatt

  8. bharathkumar says:

    Kerala fertilizer mixture producers association would like to know any amendments in the recent budget regarding excise duty of 1% levied on fertilizer physical mixtures produced without any manufacturing process as per notification on 1.3.2011.The raw materials used had already been suffered ED at the first point of purchase.We have been representing for a total withdrawal of duty on all fertilizer mixtures and waiver of fines and penalties imposed on our members recently by the dept.

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