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Changes In Central Excise in Budget 2014

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Changes in Central Excise

Amendment has been proposed in the definition of ‘Central Excise Officer’ under Section 2(b) of the CE Act so as to cover a Principal Chief Commissioner of Central Excise / Principal Commissioner of Central Excise, where any reference is made to a Chief Commissioner of Central Excise / Commissioner of Central Excise under the Act.

All powers conferred and functions exercised by the Chief Commissioner of Central Excise / Commissioner of Central Excise will equally apply to the Principal Chief Commissioner of Central Excise / Principal Commissioner of Central Excise.

*      Sec 15A is being inserted in Central Excise Act whereby assessees or specified authorities (such as VAT / Sales Tax authorities, Income Tax authorities, State Electricity Board, Registrar of Companies etc.) will be required to submit information/return in prescribed format to an authority / agency.
The Motive behind provision is to enable exchange of information between relevant authorities in order to identify tax evaders or recover confirmed dues.
The authorities will also be empowered to issue a notice for submission of information within a period of 90 days.
*      It is also proposed to insert Sec 15B which provides for imposition of penalty if the information return is not submitted whereas a penalty may be imposed at the rate of INR 100 per day for which the failure to furnish the information continues

*      Section 31(g) and section 32(1) is being amended to change the name of the ‘Customs and Central Excise Settlement Commission’ to the ‘Customs, Central Excise and Service Tax Settlement Commission’ as the scope of the functioning of the Customs and Central Excise Settlement Commission was expanded in the year 2012 so as to include settlement of Service Tax matters as well.


*      Section 32E(1) has been proposed to be amended to extend the scope of the cases which can be taken up by the Settlement Commission, in which the assessee has not filed the prescribed returns, provided that the Settlement Commission is satisfied with the circumstances for non-filing of returns

*      Section 32E is being amended to omit sub-section (2) which provides for filing of application before the  Commission  for  a  period  o180  days,  where  the  excisable  goods,  books  of  accounts  or documents have been seized under the Central Excise Act or Rules there under.


*      Section 32O has been amended so as to insert explanation, the bar on filing of subsequent applications to the Settlement Commission will apply where there has been any concealment of particulars of duty liability from a Central Excise Officer and not from settlement commission.

*      Section 35B(1) is being amended so as to increase the discretionary powers of the Tribunal to refuse admission of appeal from the existing Rs.50,000 to Rs.2 lakh


*      Section 35B(1B) is being amended to substitute the words “by notification in the official gazette” with “by order” so as to enable the Board to constitute a Review Committee by way of an order instead of by way of a notification.

*      Section 35C is proposed to be deleted to do away with the provisions in relation to the validity period of Stay Orders in view of substitution of section 35F with a new section
Earlier the was a cap of 365 days was imposed on the extension of a Stay Order by the Tribunal. Further there have been the cases where the time limit was extended beyond 365 limits where the pending appeals had not been heard by the Tribunal, due to no fault attributable to the assessee
*      Section 35E(3) has been proposed to be amended to enable the Board to extend the period, for determining whether the Department would be required to file an appeal before the Commissioner (Appeals) or the Tribunal, by a further thirty days.

*      Pre-deposit and Stay of Recovery before Appellate Authorities

An entirely new procedure for appellate proceedings before the Commissioner (Appeals) and Tribunal. Going forward, assessees will be required to make a mandatory pre-deposit for filing of appeal, which will be as follows:
·         7.5% of the duty demanded or penalty imposed or both for Commissioner (Appeals) or the Tribunal at the first stage;
·         Another 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal;
·         The total pre-deposit under the Section is subject to a ceiling of Rs. 10 Crore.

The said provision will not apply to stay applications and appeals pending on the date of commencement of the Finance (No. 2) Act, 2014.

*      An Amendment has been made in section 35L of Central Excise Act so as to provide that the determination of disputes relating to taxability or excisability of goods is covered under the term “determination of any question having a relation to rate of duty”.

*      Section 35R(4) is being amended so as to enable the Commissioner (Appeals) to take into consideration the fact that a particular order cited as a precedent decision on the issue has not  been appealed against for reason of low amount. This power was previously only available with the Tribunal

Amendment to the Central Excise Tariff Act, 1985

The Third Schedule to the CETA (which specifies the goods for which certain specified activities, that amounts to deemed manufacture) has been aligned to Notification No. 49/2008-CE(NT) dt. December 24, 2008, which specifies goods liable for assessment based on Retail Sale Price. This amendment will take effect immediately

Notification No. 17/2014Central Excise (N.T.) dt. July 11, 2014
Notification  No.  49/2008  CE  (NT)  dt.  December  24,  2008, has been amended to include goods falling under CETH 8421 99 00 (viz. other parts of centrifuges, including centrifugal dryers, filtering or purifying machinery and apparatus, for liquids and gases), on the clearance of which an abatement of 35% will be available.

Notification No. 19/2014Central Excise (N.T.) dt. July 11, 2014
o   The CE Rules have been amended to make it mandatory for all assessees to pay the applicable Excise Duty electronically through Internet Banking. The Assistant Commissioner or the Deputy Commissioner may, for reasons recorded in writing, allow the assessee to pay the Duty through any other mode. This amendment will take effect from October 1, 2014.

o   Further, Rule 8(3A) has been substituted to provide that in case of default in payment of Excise Duty, the assessee must suo motu pay a penalty of 1% per month on the amount of Excise Duty unpaid for each  month  or  part  thereof.  This  change  will  take  effect  from  the  date  of  publicatioof  the amending Rules in the Official Gazette.


Notification No. 20/2014Central Excise (N.T.) dt. July 11, 2014
Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 has been amended so as to provide that in cases where excisable goods are sold at a price below the manufacturing cost and profit, and price is not the sole consideration for the sale, and there is no additional consideration flowing from the buyer to the assessee directly or indirectly, the value for the assessment of duty shall be deemed to be the transaction value. This change will take effect from the date of publication of the amending Rules in the Official Gazette.

*      Changes in Rate of Excise Duty
There is no change in the peak rate of Excise Duty @ 12%.


Increase in rate


    Duty on cigarettes is being increased by 72% for cigarettes of lengths not exceeding 65 mm and by 11% - 21% for cigarettes of other lengths.   Similar increase is proposed on cigars, cheroots and cigarillos. Tabulated below is the summary of changes in rates of Excise Duty:


Tariff
Item
Description
(length in mm)
Rs. Per 1000
Sticks
(existing rate)
Rs. Per 1000
Sticks
(new rate)
24022010
Non filter not exceeding 65
669
1150
24022020
Non-filte exceedin 6 bu not
exceeding 70
2027
2250
24022030
Filter not exceeding 65
669
1150
24022040
Filter exceeding 65 but not exceeding
70
1409
1650
24022050
Filter exceeding 70 but not exceeding
75
2027
2250
24022060
Filter exceeding 75 but not exceeding
85
2725
Tariff                item
omitted
24022090
Other
3290
3290


   Duty on pan masala, unmanufactured tobacco and jarda, scented tobacco (including gutkha and chewing tobacco) are increased from 12% to 16%, from 50% to 55% and from 60% to 70%, respectively.
    Duty on winding wires of copper is increased from 10% to 12%

    Duty on recorded smart cards is increased from 2% (without CENVAT credit) or 6% (with CENVAT credit) to 12%


   clean energy cess levied on coal, lignite and peat is increased from Rs. 50 per tonne to Rs. 100 per tonne.

*      Full Exemption from Excise Duty

Liquefied propane and butane mixture, liquefied propane, liquefied butane and liquefied petroleum gases  supplied  to  non-domestic  exempted  category  (NDEC)  customer  by  IOCL,  HPCL,  BPCL  is exempted retrospectively w.e.f. February 8, 2013

    Unbranded articles of precious metals are being exempted retrospectively for the period March 1,2011 to March 16, 2012


   Back sheet and EVA sheet (including the  specified  raw materials  used  in their  manufacture)  for manufacture of solar photovoltaic cells or modules

   Solar tempered glass used in the manufacture of solar photovoltaic cells or modules, solar power generating equipment or system and flat plate solar collectors

Flat copper wire used in the manufacture of PV ribbons for use in the manufacture of solar cells or modules

   Machinery, equipments etc. required for initial setting up of solar energy production projects, and compressed biogas plant
   Parts  consumed  within  the  factory  of  production  for  manufacture  of  non-conventional  energy devices and if such parts are used elsewhere than the factory of production, the exemption is allowed subject to actual user condition

   Parts of tractors removed from one or more factories of tractor manufacturer to the other factory of the same manufacturer for manufacture of tractors

    Intermediate goods manufactured and consumed captively for further manufacture of matches is being fully exempted

   Educatio Cess   an Secondary    Higher   Educatio Cess   (Custom component)   is   being exempted on goods cleared by an EOU into the DTA

   Reverse Osmosis (RO) membrane element for water filtration or purification equipment (other than household type filters). For household type filters, the duty is reduced from 12% / 10% to 6%

    Forged steel rings used in manufacture of bearings of Wind Operated Electricity Generators

    All goods supplied to National Technical Research Organization


    Security threads and security fibre supplied to Security Paper Mill Corporation of India Limited and Bank Note Paper Mill India Private Limited


   Plastic material reprocessed out of scrap or waste and cleared into the DTA by an EOU unit. This would bring EOU at par with DTA and SEZ units

   HIV/AIDS drugs and diagnostic kits supplied under the National AIDS Control Programme


*      Reduction in rates


    Duty on machinery for use in Agriculture, Agro Processing and Plantation Sector is reduced from 10% to 6%

    Duty on Footwear having retail sale price above Rs.500 but not exceeding Rs.1,000 is reduced from 12% to 6%.  Footwear of retail sale price up to Rs.500 will continue to be exempted

    Duty on metal core PCB and LED driver used in the manufacture of LED lights, fixtures and LED Lamps is reduced from 12% to 6%

    Duty on branded petrol is reduced from INR 7.50 per liter to INR 2.35 per liter


*      Withdrawal of Exemption

§  Optional Excise Duty of 2% (without CENVAT credit) / 6% (with CENVAT credit) on writing and printing paper for printing of educational textbooks has been withdrawn and instead a uniform Excise Duty of 6% (with CENVAT credit) is levied

1.   Customs

A.    No change in Peak Rate. It remains at rate of 10%.
A.
B.      Changes in duty rates with immediate effect of major items are as follows:
B.

Sr. No.

Chapter
Heading

Description of goods

                        Rate of BCD



Till
10.07.2014
From
11.07.2014
1
29011000
Ethane and Other Goods
5.00%

2.50%
2
29012100
Ethylene
5.00%

2.50%
3
29012200
Propylene
5.00%

2.50%
4
29012400
Butadiene
5.00%

2.50%
5
29024100
Ortho Xylene
5.00%

2.50%
6
27111200
Propane
5.00%

2.50%
7
29051100
Methyle Alcohol
7.50%
5.00%

8
27074000
Naphthelene
10.00%
5.00%

9
7219,
7220
Stainless Steel Flat Products
5.00%

7.50%
10
90
Specified HIV/AIDS drugs and
diagnostic kits imported under
National AIDS Control Programme
(NACP) funded by the Global
Fund to Fight AIDS, TB and Malaria (GFATM)
10.00%
NIL
11
85287212
LCD and LED TV panels of below 19 inches
10.00%
NIL
12
8529,
4016
Specified parts of LCD and LED panels for TVs
10.00%
NIL
13
854011
Colour Television picture tubes for
use in manufacture ofcathode ray television
10.00%
NIL
14
3208,
3815,
3901, or
3920
The specified goods used in the manufacture of EVA  (Ethylene Vinyl Acetate) sheets or
backsheet, which are used in the
manufacture of solar photovoltaic
cells or modules
10.00%
NIL

*      Baggage Rules, 1998:

(a) The limit on duty free import as baggage has been enhanced as follows:
(i) Articles upto Rs. 45,000/- other than personal effects can be imported by a passenger of and above 10 years provided such passenger has returned after staying abroad for more than three days .
(ii) Articles upto Rs. 17,500/- other than personal effects can be imported by a passenger of and above 10 years provided such passenger has returned after staying abroad for three days or less.
(b) The quantity of duty free import of certain items have been reduced as follows:
(i) for cigarettes from 200 to 100 numbers;
(ii) for cigar from 50 to 25 numbers;
(iii) for tobacco from 250 gms to 125 gms.
*      Export duty:

Chap
Heading
Description
Effective Rate


Till 10.07.2014
From
11.07.2014
2606 00 10
Bauxite (natural), not
calcined
10.00%
20%
2606 00 20
Bauxite (natural),
calcined
10.00%
20%


 Changes in statutory provisions effective from date of enactment of Finance Bill, 2014.
1) The bill of entry presented prior to date of entry inwards of vessel or arrival of aircraft was deemed to be presented on date of entry inwards or arrival of aircraft. This deeming fiction has been extended for arrival of vehicles also for import of goods through land or rail. Hence the date of presentation of bill of export will be date of arrival of vehicle. The rate of duty and tariff valuation in force on date of arrival of vehicle will be relevant for assessment.


2) The bill of entry was allowed to be presented 30 days prior to arrival of vessel or aircraft. This facility has been extended for filing of bill of export also.

 Amendments in Indirect Taxation




  1. CHANGES IN SERVICE TAX
  2. CHANGES IN CUSTOMS
  3. CHANGES IN CENVAT CREDIT RULES


CA. Vineeta Chhatwani Chartered Accountant, M.COM
Address: 302, Purab Paschim Apt, Nehru Chowk,Ulhasnagr -421 002. Mumbai. Co: +91-9028207905

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