Level playing field is provided to domestic manufactures of Tunnel Boring Machine(TBM) vis a vis with imported TBM by the Central Government through Notification No 04/2014 -Customs,dated 3.2.2014

Notification to remove CVD benefits available to the imported  TBM-

 [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 04 /2014-Customs

New Delhi, the 3^rd February, 2014

            G.S.R.     (E).- In exercise of the powers conferred by sub-section (1) of section 25 of  the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2012-Customs, dated the 17^th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 185(E), dated the 17^th March, 2012, namely:-

            In the said notification, in the Table,  against serial number 397 and the entries relating thereto, the following shall be substituted, namely:-

“397

84 or any other Chapter

The following goods, namely:- (A) Tunnel boring machines (B) Parts and components of (A) for use in the assembly of Tunnel boring machines

Nil Nil

- -

- -”.

 [F.No. 354/10/2012-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Note: The principal notification No. 12/2012-Customs, dated the 17^th March, 2012, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 185(E), dated the 17^th March, 2012 and was last amended vide notification No. 02/2014-Customs, dated the 20^th January, 2014, published vide number G.S.R. 35(E), dated the 20^th January, 2014.

Tunnel Boring Machines (TBM) are supplied for execution of tunneling infrastructure including India `s ambitious project of Metro Rail Networks. 

Earlier ,the effective rate of CVD as NIL has been prescribed in the case of Tunnel boring machine, Parts and components of Tunnel boring machines for use in the assembly of Tunnel boring machines when imported into India, as per SN 397 of the Customs Notification 12/2012. This notification benefit is extended to goods falling under Chapter 84 or any other Chapter. Thus the intention of this notification is to extend benefits to TBM as such and all goods used in manufacturing of TBM.

However,Tunnel boring machines falls under Central Excise Tariff Heading  8430 and used to  attracts Central Excise duty @ 12% ,whereas ,  parts and accessories  of  these  machines falls under Central Excise Tariff Heading  8431  and attracts Central Excise duty @ 12% as per the First Schedule to  the the Central Excise Tariff Act, 1985 (5 of 1986).

 What is law for levying  additional duty on imported goods equal to effective duty of excise leviable on the goods  manufactured in India:

 Section 3 of the said Customs Tariff Act 1975 (51 of 1975)   is reproduced herewith for easy reference -

“ (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article:”

Explanation to the above sub-section (1) of section 3 of the said Customs Tariff Act 1975 (51 of 1975)  is also reproduced herewith for easy reference

-“Explanation.— In this sub-section, the expression the excise duty for the time being leviable on a like article if produced or manufactured in India” means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty.”

In terms of the Explanation   to sub-section (1) of section 3 of the said Customs Tariff Act , additional duty is equal to effective duty of excise leviable on the goods  manufactured in India . This duty is also called Counter Veiling Duty (CVD) to the imported   goods.

Therefore,  before issuing  this Customs Notifcations, if Tunnel boring machines and their parts and components are manufactured in India then they are suffered Central Excise Duty @ 12 %, and whereas, if they are imported then NIL rate of duty is attracted. This has not only resulted in putting local manufacturers of these goods at  great disadvantage  vis-à-vis with imported goods, but ,it is also in total negation of basic principle of  Counter veiling Duty(CVD) to provide level playing field to imported goods and locally manufactured goods. 

Now,  after issuing  Notification No 04/2014 -Customs,dated 3.2.2014  by the Central Government ,to remove Nil rate of duty benefit available to the imported TBM , there is level playing field to imported and locally manufactured  TBM. 

  This  would make Indian manufacturer more competitive and fuel growth of economy.