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Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
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P. K. Mohanty
Joint Secretary (TRU-I)
Tel: 23092687
Fax: 23092031
Email: pk.mohanty@nic.in
D.O.F.No.334/ 3/2013-TRU
New Delhi, dated the 28th February, 2013.
Dear Chief Commissioner/ Commissioner,
The Finance Minister has introduced the Finance Bill, 2013 in Lok Sabha today, i.e., 28th February, 2013. Changes in Customs and Central Excise law and rates of duty have been proposed through the Finance Bill, 2013 (clauses 54 to 77 for Customs and clauses 78 to 92 for Central Excise). In order to prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts, the following notifications are being issued:
CUSTOMS:
Notification Nos.
Date
Tariff
No. 9 /2013-Customs to No.15 /2013-Customs
1st March, 2013
Non-Tariff
No. 25 /2013-Customs(NT)
1st March, 2013
CENTRAL EXCISE
Tariff
No. 5 /2013-CE to No. 12 /2013-CE
1st March, 2013
Non-Tariff
No. 1 /2013-CE (NT) to No. 4 /2013-CE (NT)
1st March, 2013
Unless otherwise stated, all changes in rates of duty take effect from the midnight of 28th February/1st March, 2013. A declaration has been made under the Provisional Collection of Taxes Act, 1931 in respect of clauses 76, 77(b), 91 and 92 of the Finance Bill, 2013 so that changes proposed therein also take effect from the midnight of 28th February/1st March, 2013. The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2013. Retrospective amendments in the provisions of law or notification issued under the respective Acts shall have the force of law only upon the enactment of the Finance Bill, 2013 but with effect from the date indicated in the relevant clause or Schedule. These dates may be carefully noted.
2. Important changes in respect of Customs and Central Excise duty and legislative changes are contained in the three Annexes appended to this letter. Annex I contains Chapter wise changes relating to Customs; Annex II contains Chapter wise changes relating to Central Excise. These
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Annexes also contain a few clarifications. Annex III provides a bird’s eye view of legislative changes proposed in the Finance Bill, 2013.
2.1 The Annexes provide a summary of the changes made and should not be used in any quasi-judicial or judicial proceedings, where only the relevant legal texts need to be referred to.
3. In order to achieve a sharper focus, I have alluded only to the key highlights of the budgetary changes in this communication. The details are contained in the Finance Bill and notifications which alone have legal force. My team and I have made every possible effort to avoid the occurrence of errors or mistakes in the Budget documents. However, given the scale of changes, inadvertent errors cannot be ruled out. I shall be grateful if the provisions of the Finance Bill are studied carefully and feedback on issues that may need clarification is provided urgently.
4. It may kindly be ensured that the changes are implemented in a smooth manner without causing any inconvenience to the taxpayers and other stakeholders. All possible efforts may be made to guide the taxpayers by holding interactive sessions/ seminars for their benefit. In case of any doubt or difficulty, I would request you to kindly bring it to my notice immediately or to the notice of Shri Amitabh Kumar, Director (TRU) (Tel No.011-23092236; e-mail: amitabh.kumar@nic.in, Sh. G. G. Pai, Director (TRU) (Tel No. 011-23092753; e-mail: giridhar.pai@nic.in or Sh. Prashant Kumar Jha, Budget Officer (TRU) (Tel No. 011-23094819; e-mail: prashantk.jha@nic.in ). We can also be reached at budget-cbec@nic.in.
5. Copies of Finance Bill, 2013, Finance Minister’s Budget Speech, Explanatory Memorandum to the Bill, relevant notifications can be downloaded directly from www.indiabudget.nic.in as well as www.cbec.gov.in.
6. To conclude, my team and I would like to express my gratitude to you for the valuable suggestions, feedback and support and would look forward to your comments/ suggestions.
With warm regards,
Yours sincerely,
(P. K. Mohanty)
To
All Chief Commissioners/ Directors General
All Commissioners of Customs
All Commissioners of Central Excise
All Commissioners of Customs and Central Excise
All Commissioners of Service Tax
Director DPPR/ Logistics/Legal Affairs/ Data Management
Annex II
CENTRAL EXCISE
Chapter 1 to 10: No change
Chapter 11
11.1 Tapioca starch manufactured and consumed captively in the manufacture of tapioca sago (sabudana) is being exempted from excise duty. Notification No.12/2012-CE, dated 17th March, 2012 as amended by notification No. 12/2013-CE, dated the 1st March 2013 refers. S. No 8A contains the changes.
Chapter 12-14: No change
Chapter 15
15.1 Sub-heading 1517 90 20 (peanut butter) is being deleted from the First Schedule to the Central Excise Tariff Act, 1985. An amendment has been proposed in the Finance Bill, 2013 (Clause 92 read with the Sixth Schedule) to delete the current sub-heading 1517 90 20 and entries relating thereto from the Tariff. Hereafter, peanut butter will be classified under sub-heading 2008 11 00. At present, sub-heading 1517 90 20 as well as sub-heading 2008 11 00 of the Central Excise Tariff carries a tariff rate of 6%. However, the applied rate is Nil for sub-heading 1517 90 20. The exemption is being continued. In this connection, notification No. 12/2012-CE, as amended by notification No.12/2013-CE, dated 1st March, 2013 refers. S. No 13A contains the changes.
Chapter 16-18: No change
Chapter 19
19.1 Tapioca sago (Sabudana) is being exempted from excise duty. Notification No.12/2012-CE, as amended by notification No. 12/2013-CE, dated the 1st March 2013 refers. S. No 24A contains the changes.
Chapter 20 -23: No change
Chapter 24
24.1 Basic excise duty on cigarettes and other products of tariff heading 2402 is being increased. Clause 92 of the Finance Bill, 2013 read with the Sixth Schedule may be referred to for details. By virtue of the Provisional Collection of Taxes Act, 1931, the levies will come into
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force with immediate effect. There is no change in NCCD and Health Cess rates. The changes in basic excise duty rates are summarized below.
Cigarettes
TARIFF
ITEM
DESCRIPTION
(length in mm)
BED
Rs. per 1000 sticks
(Existing Rate)
BED
Rs. per 1000 sticks
(New Rate)
24022010
Non filter not exceeding 65
509
No change
24022020
Non-filter exceeding 65 but not exceeding 70
1463
1772
24022030
Filter not exceeding 65
509
No change
24022040
Filter exceeding 65 but not exceeding 70
1034
1249
24022050
Filter exceeding 70 but not exceeding 75
1463
1772
24022060
Filter exceeding 75 but not exceeding 85
1974
2390
24022090
Other
2373
2875
Cigar, Cheroots and Cigarillos:
TARIFF ITEM
DESCRIPTION
BED
(Existing Rate)
BED
(New Rate)
2402 10 10
Cigar and cheroots
12% or Rs.1370 whichever is higher
12% or Rs.1781 whichever is higher
2402 10 20
Cigarillos
12% or Rs.1370 whichever is higher
12% or Rs.1781 whichever is higher
2402 90 10
Cigarettes of Tobacco Substitutes
Rs.1258 per thousand
Rs.1511 per thousand
2402 90 20
Cigarillos of Tobacco Substitutes
10% or Rs.1473 whichever is higher
12% or Rs.1738 whichever is higher
2402 90 90
Other
10% or Rs.1473 whichever is higher
12% or Rs.1738 whichever is higher
Chapter 25
25.1. Basic excise duty is being increased on marble slabs and tiles from ` 30 per square meter to ` 60 per square meter. S.No.54 of notification No.12/2012-CE, as amended by notification No. 12/2013-CE, dated the 1st March 2013 refers.
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25.2 Under notification No.12/2012-CE (S.No.55), sulphur recovered as by product in refining of crude oil (sub-heading 2503 00 10) used for the manufacture of fertilisers is exempt from excise duty. "Fertilizers" include bentonite sulphur and hence, sulphur under sub-heading 2503 00 10 used for manufacture of bentonite sulphur is exempt from excise duty. An Explanation has been inserted below the entry against S. No.55 to place the matter beyond doubt. Notification No. 12/2013-CE dated 1st March, 2013 may be referred to for details.
Chapter 26-29: No change
Chapter 30
30.1 Branded Ayurvedic medicaments and medicaments of Unani, Siddha, Homeopathy or Bio-chemic system are being brought under MRP based assessment with an abatement of 35% from the MRP. Ayurvedic medicaments as well as medicaments of Unani, Siddha, Homeopathy or Bio-chemic System (generic as well as branded) have been included in the Third Schedule to the Central Excise Tariff Act, 1944. In this connection, clause 91 of the Finance Bill 2013 read with the Fifth Schedule and notification No. 1/2013-C.E. (NT) dated 1st March, 2013 refer. By virtue of the Provisional Collection of Taxes Act, 1931, the changes will come into force with immediate effect.
Chapter 31 and 32: No change
Chapter 33
33.1 Henna powder or paste, not mixed with any other ingredient is being exempted from excise duty. S No 134 of notification No 12/2012-CE, as amended by notification No 12/2013-CE, dated 1st March 2013 refers.
Chapter 34 -38: No change.
Chapter 39
39.1 S. No. 146 and the entries relating thereto are being deleted from notification No. 12/2012-CE, as a general exemption is being issued. Notification No. 7/2013-CE dated 1st March 2013 may be referred to for details.
Chapter 40-56: No change.
Chapter 57
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57.1 All handmade carpets and carpets & other textile floor coverings of coir and jute, whether or not handmade, falling under Chapter 57, are being fully exempted from excise duty. In this connection, notification No. 12/2012-CE as amended by notification No. 12/2013-C.E. dated 1st March, 2013 refers. S. No 173A contains the changes. Consequently, the entries against S. No. 72 of notification No. 1/2011-CE, dated 1st March, 2011 and S. No. 37 of notification No. 2/2011-CE, dated 1st March, 2011 are being omitted. Notification No. 9/2013-CE and 10/2013-CE, both dated 1st March, 2013 may be referred to.
Chapter 58-60: No change.
Chapter 61-63
61.1 Zero excise duty route, as existed prior to Budget 2011-12, is being restored on readymade garments and made ups. The zero excise duty route will now be available in addition to the CENVAT route under which manufacturers can pay excise duty on the final product and avail of credit of duty paid on inputs. S.No.16 of notification No. 30/2004-CE dated the 9th July, 2004 as amended by notification No.11/2013-CE dated the 1st March, 2013 and S. No.7 of notification No. 7/2012-CE dated 17th March,2012, as amended by notification No. 8/2013- CE dated the 1st March, 2013 may be referred to for details.
Chapter 64 to 67: No change
Chapter 68
68.1 Excise duty on marble slabs and tiles is being increased from ` 30 per square meter to ` 60 per square meter. S. No. 54 of the notification No. 12/2012-CE, as amended by notification No.12/2013-CE dated 1st March, 2013 refers.
Chapter 69 to 70: No change
Chapter 71
71.1 Excise duty of 4% is being imposed on silver produced or manufactured during the process of zinc or lead smelting starting from the stage of zinc or lead ore or concentrate. Notification No.12/2012-CE, as amended by notification No.12/2013-CE, dated the 1st March 2013 refers. S. No 191A contains the changes.
Chapter 72
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72.1. The compounded duty rate on stainless steel “patta- patti” is being increased from Rs 30,000 per machine per month to Rs 40,000 per machine per month. Notification No. 17/2007-CE, dated 1st March, 2007 as amended by notification No. 5/2013-CE, dated 1st March 2013 refers.
Chapter 73: No change
Chapter 74
74.1 Under notification 12/2012-CE (S. No. 217), trimmed or untrimmed sheets or circles of copper, intended for use in the manufacture of handicrafts or utensils attract excise duty of Rs 3,500 per metric tonne. For the purposes of this entry, by way of an explanation, it is clarified that copper means copper and copper alloys including brass. Notification No. 12/2012-CE, as amended by notification No. 12/2013-CE dated 1st March, 2013 refers.
Chapter 75: No change.
Chapter 76
76.1. Sub-heading 7615 19 10 (pressure cookers) is being replaced by sub-heading 7615 10 11 in the Third Schedule to the Central Excise Act, 1944. An amendment has been proposed in the Finance Bill, 2013 (Clause 91 read with the Fifth Schedule). This is basically a technical rectification. In this connection, notification No. 12/2012-CE, as amended by notification No.12/2013-CE, dated 1st March, 2013 refers. S. No 212 contains the changes. Relevant changes are also being made in notification No.49/2008(NT) dated 24th December, 2008 as amended by notification No. 1/2013-CE(NT) dated 1st March,2013.
Chapter 77-84: No change.
Chapter 85
85.1 Excise duty on mobile handsets including cellular phones having retail sale price more than Rs. 2000/- is being increased from 1% to 6%. The duty on mobile phones priced up to and inclusive of Rs. 2000 (retail sale price) would remain unchanged. Notification No. 12/2013-CE, dated 1st March, 2013 (S. No. 263A) provides the details. Consequently notification No. 20/2011-CE, dated 24th March, 2011 is being rescinded. Notification No. 6/2013-CE, dated 1st March 2013 refers.
Chapter 86: No change
Chapter 87
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87.1 The validity period of concessional excise duty of 6% granted to specified parts of hybrid and electric vehicles is being extended by two more years up to 31st March, 2015. Proviso to notification No.12/2012-C.E, as amended by notification No. 12/2013-CE, dated the 1st March 2013 refers.
87.2 The excise duty on chassis of diesel motor vehicles for the transport of goods (8706 00 42) is being reduced from 14% to 13%. In this connection, notification No.12/2012-C.E, as amended by notification No. 12/2013-CE, dated the 1st March 2013 refers. S. No.s 292A and 292B contain the changes.
87.3 Excise duty on SUVs (including utility vehicles falling under CTH 8703) and engine capacity >1500 cc is being increased from 27% to 30 %.( Clause 92 of the Finance Bill, 2013 read with the Sixth Schedule). The SUV has been defined in the notification No. 12/2013-CE dated 1st March, 2013. S. No. 284A contains the changes. By virtue of the Provisional Collection of Taxes Act, 1931, the levy will come into force with immediate effect.
87.4 The taxi refund in respect of SUVs is being adjusted with a view to ensuring that the duty increase does not affect SUVs used as taxis. Now, in respect of SUVs the refund of 28% of the excise duty paid at the time of clearance would be applicable. Notification No.12/2012-CE, as amended by notification No. 12/2013-CE dated 1st March, 2013 may be referred to for details. S.No.s 284 and 284A contains the changes.
Chapter 88: No change.
Chapter 89
89.1 Excise duty on ships, tugs and pusher craft, dredgers and other vessels falling under CETH 8901, 8904, 8905, 8906 90 00 is being exempted. Notification No.12/2012-CE, as amended by notification No. 12/2013-CE dated 1st March, 2013 may be referred to for details.
Chapter 90-96: No change.
Miscellaneous:
Goods manufactured and captively consumed within the factory of production in the manufacture of final products in respect of which exemption is claimed under the Area Based Exemption Scheme under notification Nos. 49/2003-CE and 50/2003-CE, both dated 10th June 2003 (available for Uttarakhand and Himachal Pradesh) is being exempted from excise duty. Notification No. 7/2013-CE dated the 1st March 2013 may be referred to for details.
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Annex III
LEGISLATIVE CHANGES
Advance Ruling
Section 28E of the Customs Act, 1962 defines “advance ruling”. “Advance ruling” means “the determination, by the Advance Ruling Authority, of a question of law or fact specified in the application regarding the liability to pay in relation to an activity which is proposed to be undertaken by the applicant”. “Activity” is defined to mean “import or export”. The definition of “activity” is being expanded to include any new business of import or export so as to enable such importer or exporter to seek advance ruling when he starts a new line of business. Similar amendment has been proposed in section 23A of the Central Excise Act, 1944. “Activity” now includes any new business of production or manufacture by the existing producers or manufacturers. This will enable such producers or manufacturers to seek advance ruling when starting a new line of business.
Under 23 (C) (e) of the Central Excise Act, 1944, an advance ruling can be sought, inter- alia, on the issue of admissibility of credit of excise duty paid or deemed to have been paid on the goods used in/ in relation to the manufacturer of excisable goods. This section is being amended so as to extend the advance ruling provisions also to the admissibility of the credit of service tax paid on or deemed to have been paid on input services used in the manufacture of excisable goods.
Under section 28E of the Customs Act, 1962, only a select category of persons are eligible for advance ruling. This includes joint ventures and resident public limited companies. Presently, the latter category is not eligible for advance ruling under the Central Excise law. Notifications are being issued to make “resident public limited companies” eligible for seeking advance ruling on central excise and service tax matters as is available on the Customs side
Arrests and Prosecutions
Section 104 of the Customs Act, 1962 contains provisions relating to arrest. This section is being amended to make certain offences punishable under section 135 as non-bailable. The offences are:
(a) Evasion or attempted evasion of duty exceeding Rs. fifty lakh;
(b) Prohibited goods notified under section 11 which are also notified under sub-clause (C) of clause (i) of sub-section (1) of section 135;
(c) Import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds Rs. one crore;
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(d) Fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds Rs. fifty lakh.
Barring the offences mentioned above, all other offences under the Customs Act are bailable. Similar changes have been proposed in the Central Excise Act, 1944 and Finance Act, 1994 (relating to Service tax).
Stay Order by Appellate Tribunal and Other Matters
Section 35C (2A) of the Central Excise Act, 1944 and the corresponding provisions under section 129B (2A) of the Customs Act, 1962 are being amended to provide for a maximum ceiling of 365 days up to which the Tribunal can grant stay of recoveries. By inserting a proviso in the abovementioned sections, it is being stipulated that after 365 days from the stay order, this stay shall stand vacated even if the disposal of the case is pending for no fault of the assessee. By virtue of stipulation under section 86(7) of the Finance Act, 1994, the provisions of the Central Excise Act would be applicable for dispute in Service Tax matters.
Section 129C is being amended to enhance the monetary limit of the Single Bench of the Tribunal to hear and dispose of appeals from Rs.10 lakh to Rs.50 lakh. Corresponding changes have been made in Section 35D of the Central Excise Act, 1944.
Other Amendments in the Customs Act, 1962
(i) Section 11: “Designs and geographical indications” have been included along with patents, trade mark and copy rights to enable the Central government to prohibit either absolutely or conditionally the import or export of goods to protect these legal rights;
(ii) Section 27: Where the amount of refund claimed is less than Rs 100/-, the same shall not be refunded;
(iii) Section 28: Show Cause Notice shall not be served where the amount involved is less than Rs 100/-;
(iv) Section 28BA: This section is being amended to provide for provisional attachment of property belonging to any person to whom notice under sub-section (4) of section 28 has been served.
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(v) Section 29: This section is being amended to empower Board to allow landing of vessels or aircrafts at any place other than customs ports or customs airports.
(vi) Section 30 and Section 41: These sections are being amended to provide for electronic filing of Import General Manifest/Export General Manifest. It is also being provided that where this is not feasible, the Commissioner may allow the delivery of such manifest in any other manner.
(vii) Section 47: This section is being amended reduce the interest free period for payment of import duty from 5 days to 2 days;
(viii) Section 49: This section deals with storage of imported goods in a warehouse pending clearance. This section is amended to provide a time limit of 30 days for storage of goods in the interest of accountability and early finalization of assessments. The Commissioner may extend the period of storage for a further period not exceeding 30 days at a time.
(ix) Section 69: This section deals with export of warehoused goods. The document listed under the section is Shipping Bill or Bill of Export. This section is being amended to allow export of warehoused goods under postal export document;
(x) Section 135: In sub-clauses (B) and (D) of clause (i) of section 135(1), the threshold limit for punishment in an offence relating to evasion or attempted evasion of duty or fraudulently availing of or attempting to avail of drawback or any exemption from duty in connection with export of goods,has been increased from Rs.30 lakh to Rs.50 lakh.
(xi) Section 142: A new clause (d) is being inserted in section 142 to provide (i) for recovery of money due to the Central Government from any other person other than the defaulter after giving such other person a notice in writing, (ii) that the person to whom such notice has been issued shall be bound to comply, and (iii) that if the person to whom the notice is issued fails to comply, he shall be deemed to be a defaulter in respect of the amount specified in the notice.
(xii) Section 143A is being omitted.
(xiii) Section 144: Sub-section (3) of section 144 is being amended to remove the duty liability on any sample of goods which is consumed or destroyed during the course of testing or examination.
(xiv) Section 146 is being substituted to change the nomenclature of “customs house agents” to “customs brokers” considering the global practice and internationally accepted nomenclature.
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(xv) Section 146A is being amended so as to:- (a) substitute the phrase “customs house agent” with the phrase “customs broker”; (b) include any offence committed under the Finance Act, 1994 as a disqualification for person to act as an authorized representative in customs matters.
(xvi) Section 147: Sub-section (3) of section 147 is being amended to expand the scope of the liability of agents of the owner, importer or exporter of any goods. It now casts equal responsibility on agents for making correct self-assessment.
Other Amendments in the Central Excise Act
(i) Section 9 provides that an offence case involving evasion in which the duty leviable exceeds thirty lakh rupees shall be punishable with a term of imprisonment extending to seven years with fine. This section is being amended so as to substitute the amount of thirty lakh rupees with fifty lakh rupees.
(ii) Section 9A is being amended to make an offence cognizable and non-bailable where the duty liability exceeds Rs.50 lakh and punishable under clause (b) or clause (bbbb) of sub-section (1) of section 9.
(iii) Section 11 is being amended so as to provide for (i) recovery of money due to the Government from any person other than from whom money is due after giving a proper notice, if that other person holds money for or on account of the first person; (ii) the other person to whom
such notice has been issued is bound to comply and (iii) if the other person to whom the notice is served fails to comply, he shall face all the consequences under this Act.
(iv) Section 11A is being amended to insert sub-section (7A) providing that service of a statement containing details of duty not paid, short levied or erroneously refunded shall be deemed to be a service of notice under sub-section (1) or (3) or (4) or (5) of this section.
Reference to sub-section (1) in section 11DDA is being omitted.
(v) Section 20 is being amended so as to make the provisions applicable only to offence which is non-cognizable.
(vi) Section 21 is being amended so as to make the provisions regarding release of arrested person on bail or personal bond applicable only to offence which is non-cognizable.
(vii) Section 37C is being amended to specify additional modes of delivery of specified documents i.e. by speed post with proof of delivery or through courier approved by the Central Board of Excise & Customs.
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These are the broad changes made through the various clauses of the Finance Bill, 2013. The relevant clauses may kindly be perused to find out the precise changes made.
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