Duty on articles of jewellery @ 1%: Need for Clarification & Protection

The Government of India, vide Circular No. 1025/13/2016-CX  dated 22^nd April, 2016,  has constituted the sub-committee of the High Level Committee to consider the issues related to compliance procedure for the excise duty, including records to be maintained, operating procedures and any other issues that may be relevant concerning the imposition of excise duty on Articles of Jewellery w.e.f 1^st March 2016.

All associations have been given an opportunity to submit representation before the subcommittee in writing and the all India associations to state their case in person.

The response can be sent via e-mail to highlevelcommittee@gmail.com or by post addressed to the Office of the High Level Committee (HLC), Suite No. 215, The Janpath Hotel, Janpath Road, Opp. BSNL Building, New Delhi-110 001

Some of the points which I have come across which need clarification or protection are as under:

1) In order to be eligible to the concessional rate of duty of 1%, the articles of jewellery shall be manufactured from inputs or capital goods on which appropriate duty of excise leviable has been paid. Appropriate duty includes nil duty also. On failing to prove it, the duty at tariff rate i.e. 12.5% shall apply.

a) How to prove the duty paid character of the inputs used in the manufacture of articles of jewellery ?

b) On whom does the primary onus to prove the duty paid character of inputs lie ?

There are certain judicial decisions which suggest a way out for this situation.

in the case of Calcutta Paper Mills Manufacturing Company v. CEGAT and Ors. reported in 1986 (25) E.L.T. 939. The ld. Judge held:

“It is not possible for the petitioners to discharge onus that the base paper purchased by petitioners from the market is duty paid. The goods available in the market must be presumed to have been duty paid. It is absolutely impossible for a purchaser to know whether excise duty on the manufactured goods sold to the purchasers had already been paid by the manufacturers. If the purchaser has to satisfy the excise authorities that goods which he has purchased from the market suffers duty, it would impose a burden which no purchaser would be able to discharge. In the case of Sulekh Ram and Sons v. UOI and Ors. reported in 1978 (2) E.L.T. 525,1978 Delhi High Court has held that under excise system no goods can be removed from the place of manufacture without first paying the excise duty. Therefore, a purchaser can presume that the goods are duty paid. It would be incredible if the purchasers were required to ascertain whether Excise duty has already been paid by the manufacturer before the sale of such goods or not inasmuch as the purchasers have no means of knowing it.”

2) Under Rule 11CER 2002 goods can’t  be removed except on invoice which shall be serially numbered and shall contain the registration number, address of the concerned Central Excise division, name of the consignee, description, classification, time and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value, of goods and the duty payable thereon.

a) What will happen when a salesman of a jeweller carry items of jewellery on approval and sale basis. He travels to different areas of the city and also to other cities of the same state and cities of other states?

b) How will the excise accounting be done when part of the abovestated consignment is sold and part of it is return to the shop or factory?

3) Job work in article of jewellery.-

a) Under Rule 12AA (1) of CER 2002 it is provided that every person who gets articles of jewellery or other articles of precious metals on his behalf, on job work basis (called the said person) shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee.

b) Sub rule (7)provides that “Notwithstanding anything contained in these rules, the job worker shall not be required to get himself registered or shall not be required to maintain any record evidencing the processes undertaken for the sole purposes of undertaking job work under these rules unless he has exercised his option in terms of the proviso to sub-rule (1).”

c) The proviso to sub-rule (1) was as under:-

“Provided that the job worker may, at his option, agree to obtain registration, maintain accounts, pay the duty leviable on such goods, prepare the invoice and comply with the other provisions of these rules and in such a case the provisions of these rules shall not apply to the said person.”

This proviso has since been omitted vide notification no. 8/2012 CE(NT) dated 17-3-2012.

Therefore the words “unless he has exercised his option in terms of the proviso to sub-rule (1)” in sub rule 7 need also to be omitted lest it may give an impression that a Job worker can undertake the responsibilities of the principal manufacturer.

4) Rule 22. Access to a registered premises.-           

a) It is provided that an officer empowered by the Principal Commissioner or Commissioner, shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue.

b) The said officer can also demand a list in duplicate of all the records prepared and maintained for accounting of transaction in regard to receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods, as the case may be;  all the financial records and statements including trial balance or its equivalent, cost audit reports  and the Tax Audit Report u/s 44 AB of the Income tax Act

The  above provisions are prone to misuse and can be used as an effective tool in the hands of excise inspectors to harass small jewellers and can also be a breathing ground for corruption. Suitable guidelines must be issued to prevent its misuse.

Rule 23 and 24:- Power to stop and search and detain or seize goods:- 

a) It is provided in Rule 23 that any Central Excise Officer, may search any conveyance carrying excisable goods in respect of which he has reason to believe that the goods are being carried with the intention of evading duty.

b) It is further provided in Rule 24 that if a Central Excise Officer,  has reason to believe that any goods, which are  liable to excise duty but no duty has been paid thereon or the said goods were removed with the intention of evading the duty payable thereon, the Central Excise Officer may detain or seize such goods.

The  above provisions are also prone to misuse particularly in case of small jewellers who carry the jewellery on their person and sell them on approval and sale basis. They don’t operate from any shop but from a carry bag and  travel to different areas of the city and also to other cities of the same state and cities of other  states.

What documents should they carry to prove that the goods are duty paid or that they are not the manufacturer but a retail trader who buys jewellery from the open market and sale them in the open market ?. They are engaged in only trading of the articles of jewellery.

Readers are encouraged to submit their own observations which need further clarification and support.

(Author can be reached on sonuandfirm@gmail.com )

Excise Duty kya h

Supoose man take you to the jewelers have you bought 10 grams of pure gold at Rs 30,000. You have to take her to the jewelers Bnbane defeat. Goldsmith took you 10 grams of gold and Rs 2,000 will Bnbai. Well you said. Goldsmith then removed and 1 g of 1 gram of gold put taka. Why could not
defeat you in stitches without. Rs 3,000 per 1 gram of gold recovered. Lally and Rs 2000 you Bnbai separately. That was the setback of Rs 5,000. Now only 25 thousand survived the 30 thousand gold price. And less than 1 gram of gold remaining 9 grams. That did not end the matter. Then you re-sell your gold necklace or jewelery Bnbane again go to the goldsmith, he first speaks of cutting taka. And 0.5 grams of gold and in the name of cleaning is reduced. Now you are left with only 8.5 grams of gold. The remaining 30 thousand Rs 25500 only gold.

👉🏻ap would know

Gold + 32,000 = Rs 2,000 crore to Rs 30,000 Bnbai

1 g of chopped Rs 3,000 taka + 0.5 re-sell or to break the name of cleaning bite = = 1500

8.5 grams of gold remaining

The price 32000 - 6500 = 25500 rupees loss

⚠〽srkar motivations

Goldsmith on excise duty levied on the receipt must meet consumer gold. And the village will taka. He will have nothing to weigh gold. As a gold weighing 10 grams and 1 gram of taka to jeweler Rashid felt by the consumer will have to pay 11 grams rosary. -------------------------------------- 👨👨👧                                 👦jago customer Jago👨 👨👧👦 --------------------------------------- ♻♻ 👌🏻👌🏻 👌🏻🔱👌🏻👌🏻👌🏻

Author :- Sonu Mehla

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Mobile No:- 8285910007

E-mail:- sonuandfirm@gmail.com

Central Excise Returns ER4, ER5, ER6 and ER7 are not required to be filed w.e.f 1st April 2016

The Central Excise Returns ER4, ER5, ER6 and ER7 are not required to be filed w.e.f 1st April 2016 (refer notification No.8/2016 CE(NT) dtd 1.3.2016 & 13/2016-CE(NT) dtd 1.3.2016 ). Assessees can continue to file these returns in ACES for the past period.

A new Annual Return, is prescribed under Rule 12 (2) (a) of Central Excise Rules, 2002 read with Rule 9A of Cenvat Credit Rules, 2004. The new format will be notified by the Board. The same has to be filed by 30th November 2016.

Sone Ki “Chidiya” ko Tax ki “Bediya”.

rjun (Fictional character): Krishna, what is the reason of agitation held by Jewellers across the Country. Why there businesses are closed from so many days? Let us discuss the reason of agitations as well as implication of taxation on gold and effect of the same on businessman and customers.

Krishna (Fictional character): Arjuna, Government have reason to believe that black money is generally invested into jewellery and real estate. To deal with the same, in the recent years, Government have come up with the various legal provisions to regulate real estate business and

transactions thereof. At this time, Government is now turned to regulate jewellery business and transactions thereof. Once upon a time, India was known as “Golden Bird” (Sone ki Chidiya). India was one of the wealthiest Countries in the world in terms of possession of jewellery, gold and silver and the same is now increasing day by day. Most people in India whether male or female have developed their interest to invest in jewellery or articles thereof. The gold worth millions of rupees are being imported in India which resultant into outflow of Indian currency out of India. Most of the purchase and sales transactions in India are dealt in cash and which effect into evasion of taxation that may lead to creation of black money. Therefore, in the recent budget i.e. 2016-17, Government have introduced new Excise Duty levy, Gold Bonds and Gold Deposit Scheme.

Arjun:Krishna, let us discuss new Excise Duty levy on Gold and its articles.

Krishna:Arjuna, with effect from 1st March 2016, Excise Duty has been imposed @ 1% (without input tax credit) and 12.5 % (with input tax credit) on articles of jewellery excluding silver jewellery, other than studded with diamonds/other precious stones. Up to turnover limit of Rs. 6 crore of clearances in a year there would not levy of excise duty. This has led to protests and strikes taking place on account of the fact these procedures are cumbersome for this largely un-organised sector. As per this new provision, in the process of manufacture of jewellery, jewellers are required to maintain records for stock statement, sales, purchases and job work charges, etc. This would lead to, according to the Government, more transparency in such type of businesses and it would help Government to collect more duty and decline in evasion of taxes as well as to check on black money involvement.

Arjun: Krishna, what is rate of Sales Tax (VAT) is levied under Maharashtra Valued Added Tax law (MVAT law) on Gold articles?

Krishna: Arjuna, as per MVAT law, VAT to be levied @ 1.2 % on purchases-sales transactions. If the turnover crosses a threshold limit of Rs. 10 lacs, VAT is require to pay to the Government account. Jewellers are paying this tax regularly. Jewellers have suggested to the Government that VAT rate can be increase to compensate excise duty levy. Jewellers are familiar to Sales Tax compliances and procedures thereof. Further, Government have reason to believe that Sales Tax is levied on sales and therefore, businesses are getting enough time to adjust sales turnover while undertaking these compliances and which may lead to according to them evasion of taxes. Therefore, Government is wishing to implement the new levy of Excise Duty. Central Excise is a stock reconciliation based control and imposition is also a step in transition to GST.

Arjun: Krishna, what are the rules and regulation under the Income Tax law on Gold & jewellery?

Krishna: Arjuna, out of net sales and purchases turnover, on which VAT is levied, Income Tax is charged on the net profit earned from such transaction by the jewellers. Moreover, Jewellers are required to collect TCS @ 1% from buyer, where cash sales transaction exceeds Rs. 5 lacs. Further, buyer of jewellery is required to provide PAN details while purchasing gold worth of Rs. 2 lacs whether in cash or cheque. Generally if gold held as investment assets, are sold within three years then short term capital gain on the profit is levied at normal rates (i.e. max 30%) and if sold after three years then long term capital gain is levied on the profits @ 20%. Further, Government have introduced ‘Income Disclosure Scheme, 2016’ through this black money, Gold, Immovable property, etc can be converted into further liquidity into the market by paying onetime Tax, Interest and Penalty in toto of 45%. Thus gold laying in Black can be converted into White by Tax payers.

Arjun: Krishna, Government has introduced Gold Bond Scheme, what are the features of such scheme?

Krishna: Arjuna, under this new scheme, one can purchase Gold Bonds instead of physical gold from Banks with interest rate of 2% to 3% which is tax free under Income tax law. Further, as pronounced in the recent budget (i.e. union budget 2016), the long term capital gain out of this on redemption only to be tax free. Gold Bonds will be issued in value of gold in rupees and as per denominated in grams of gold. This investment shall be of 2 grams to 500 grams for the year. Period of investment would be of 5 to 8 years and on maturity return of investment would be as per the rate of gold applicable as on date. Thus Instead of Physical Gold, people can invest in Gold bonds, and the money collected by Banks can be used in Economy of India.

Arjun: Krishna, what is ‘Gold Monetisation Scheme’?

Krishna: Arjuna, to use the ideal gold lying in the lockers of Citizens of India, this scheme has introduced. This scheme will allow people to earn regular interest on gold. It is a gold savings account which will earn tax free interest for the physical gold that people deposit in it. Further, capital gain out of this scheme also tax free only on maturity. Gold can be deposited into the banks for range from 1 year to 15 years. On maturity, investor would get gold coin or gold bar as per the applicable value as on date of maturity. Thus Gold lying ideal with people can be brought in Economy of India by Banks who collect it.

Arjun: Krishna, what we shall learn from various gold schemes and provisions under the law?

Krishna: Arjuna, when Golden Bird take away black money, it recollect the Hindi proverb, say, ‘Ab pachatae hoot kya , jab chidiya chug gayi khet’ which means, why repent now, when the bird has already eaten the crop. Thus “Sone Ki “Chidiya” ko Tax ki “Bediya”. To overcome this, Government have introduced preventive measures like aforesaid schemes and provisions under the various laws to curb black money and eliminate tax evasion involved in jewellery transactions. This would help in appropriate and legal use of gold investment which will lead to become India again as a golden bird (Sone Ki Chidiya) like older era. This is true fact that in todays’ world a common man is still preferred to invest in gold. Let’s see what happens in future to this jewellery business.

Excise on Jewellery – A Brief Overview

From last 35 days All over the country all jewelers are on Strike against the Excise duty imposed in the Union Budget 2016. Holi, Gudi Padwa, etc. all festival are passed or in upcoming days but still they are on STRIKE and also government also not accepting the demand as the Imposition of excise in line with GST.

The scheme of levy and collection of Central Excise duty on articles of Jewellery is as under:

(a) The levy and collection of Central Excise Duty is on the manufacture of Jewellery (excluding silver Jewellery, not studded with diamonds, ruby, emerald or sapphire).

(b) It is applicable to both branded as well as unbranded Jewellery.

(c) The rate of duty on the Jewellery are as follows: (i) 1% on transaction value [without Cenvat credit on inputs and capital goods. However credit on input services is eligible] or  (ii) 12.5% with Cenvat credit of inputs, input services and capital goods.

(d) The benefit of SSI exemption (exemption based on value of clearance) is available if the value of manufactured goods (on own or through job worker) cleared domestically has not crossed Rs. 12 Crores (all goods manufactured including silver Jewellery) in the financial year 2014-15. The benefit for March 2016 is 50 lakhs.

(e) Similarly if the domestic value of clearance has not crossed 12 (all goods manufactured including silver Jewellery) crores in the financial year 2015-16, for the financial year 2016-17, exemption upto 6 crores of value of clearances can be availed.

(f) The said exemption based on value of clearance is not available if manufacturer affixes the brand name of another person.

(g) For determining the eligibility for availing SSI exemption based on previous financial year as explained above, a certificate from a chartered accountant, based on books of account shall suffice and does not require any verification from the departmental officers’ side.

(h) While computing the above said value of clearances, the value of Exports or the value of traded goods i.e. purchased and sold or the goods manufactured with the brand name of others (on which duty has to be paid) should not be counted.

SOME OTHER IMPORTANT CLARIFICATION

1. Whether the duty is restricted only for the gold Jewellery or it also extends to all articles of gold?

The duty has been imposed in Budget 2016-17 on articles of Jewellery falling under headings 7113. Article of Jewellery as per chapter notes means any small objects of personal adornment (for example, rings, bracelets, necklaces) and also includes articles of personal use of a kind normally carried in the pocket, in the handbag or on the person (e.g. cigar, snuff boxes etc.). The duty is imposed upon Jewellery item only and not on all the items. Hence, duty is not applicable on all articles of gold. As far as other articles of gold it depends upon the nature of goods and many have been exempted. Articles of Articles of goldsmiths’ or silversmiths’ wares of precious metal or of metal clad with precious metal, brand name is liable to duty of 1%;

2. Whether there is any concession for silver Jewellery?

Yes. The excise duty levy would not be applicable to branded or unbranded silver Jewellery, which are fully exempted from excise duty, however if such silver Jewellery is studded with diamonds, ruby, emerald or sapphire then the same shall suffer excise duty irrespective of the fact whether it is branded or not. 23. Whether the change in purity has any impact on dutiability? No. Change in purity of gold i.e. it may be 18K, 22K will not impact the duty liability.

3. From which date the duty of excise is liable to be paid?

For all the clearances from the place of manufacture on or after 1st March 2016, duty is liable to be paid. Excisable goods which were produced on or before 29.2.2016 but lying in stock at the place of manufacture and are not removed as on 29.2.2016 shall attract excise duty upon clearance.

4. What is the taxability of stock as on 29.02.2016

All excisable goods which were produced or manufactured on or before 29.2.2016 but lying in stock at the place of manufactureas on 29.2.2016 are liable to excise duty upon clearance. However if the goods were already cleared from the place of manufacture and are lying in stock in any other place like showroom, warehouse, stocking  place, etc., are not liable for duty as goods were already cleared form the place of manufacture. This is for the reason that point of collection of duty is the point of clearance of goods from the place of manufacture. Since this event would have been already completed in these cases, there cannot be duty liability.

5. Whether any declaration has to be made as to stock as on 29.02.2016?

No. There is no requirement of declaration of any stock to as on 29.02.2016 to be made to department. However it is suggested to have a certification from Chartered Accountant as to stocks lying at different places since duty liability differs depending upon where the stocks were situated as on 29.02.2016.

6. When the excise duty has to be paid?

Excise Duty has to be paid on removal of the goods from the place of manufacture, in case the place of manufacture and sale is one and the same, then in such case excise duty can be paid on sale to customer. In case the place of manufacture and the place of removal are different, then  the excise duty has to be paid on removal of goods from place of manufacture (workshop) to place of sale (showroom). Even though liability arises at the time of removal, account of liability has to be kept and payment has to be made once a month/quarter.

7. What is the periodicity of payment of duty?

Duty needs to be paid on monthly basis on or before 6th of the succeeding month. In case of month of March, duty needs to be paid by 31st March. SSI units are permitted to make payment on quarterly basis.

8. What is the manner of calculating SSI exemption benefit?

SSI exemption calculation could be understood with the help of following example: Presuming domestic clearance of all the goods manufactured for FY 2014-15 is Rs.10Crs. The table hereunder gives some clarity on the subject:

Year	Value of clearance (in Rs.)	Previous clearance Less than Rs. 12 cr	Exemption (In Rs.)	Dutiable (In Rs.)
I (2015 – 2016)	60 Lakhs in march 2016. Entire year – 4crores	Yes	50 Lacs	10 Lacs
II (2016-17)	9 crores	Yes	6 crores	3 crores
III	14 Crores	Yes	6 Crores	8 Crores
IV	3 Crores	No	Nil	3 Crores
V	11 Crores	Yes	6 Crores	5 Crores

For Details Refer :- ICAI BOOK on Central Excise Law and Procedure for Jewellery Industry (Including 105 FAQ’s)

Important changes in Excise & Customs effective from 01.04.2016

Union Budget 2016: Important changes in Excise & Customs effective from April 1, 2016

Affirming that the economy is right on track, the Hon’ble Finance Minister Shri. Arun Jaitley presented the Union Budget for 2016-17 on February 29, 2016. Although, Shri. Arun Jaitley in his ‘Make in India’ Budget speech laid more emphasis on agriculture, farmers welfare, infrastructure, social sector etc., but there are slew of changes in Indirect Taxes also, requiring attention of the Trade & Industry.

Under Excise & Customs, all changes in rates of duty take effect from the midnight of 29^th February / 1^st March, 2016. Some of the important changes are:

• Excise duty @ 1% without Cenvat credit on Inputs and Capital Goods (Cenvat credit available on Input Services)/ 12.5% with Cenvat credit on article of jewellery;
• Excise duty of 2% (without Cenvat credit) or 12.5% (with Cenvat credit) levied on readymade garments and made up articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff except those falling under 6309 and 6310 of Retail Sale Price (RSP) of Rs. 1000 and above when they bear or are sold under a brand name;
• The tariff value for readymade garments and made up articles of textile is also increased from 30% to 60% which shall apply to all goods mentioned in the Notification No. 20/2001-Central Excise (N.T.) dated April 30, 2001;
• Excise duty exemption presently available to concrete mix manufactured at site for use in construction work at such site extended to Ready mix concrete;
• Clean Energy Cess (renamed as Clean Environment Cess) increased from Rs. 200/- per tonne to Rs. 400/- per tonne,
• Infrastructure Cess levied on motor vehicles under heading 8703 subject to certain exceptions

The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2016.

Further, there are other important changes in the Central Excise and the Customs that are effective from April 1, 2016, summarized below for easy digest:

A: Important changes in the Central Excise

♣ The Central Excise Rules, 2002 (“the Excise Rules”) is being amended vide Notification No. 8/2016-CE(NT) dated March 1, 2016, broadly, to provide as under:

Rule 12:

a. Reduction in number of returns to be filed by a Central Excise assessee above a certain threshold, from 27 to 13, that is, 1 annual and 12 monthly returns. Monthly returns are already being e-filed. CBEC will provide the detailed procedure for e-filing of annual return also;

b. The facility for revision of return, hitherto available to a Service tax assesses only, is being extended to manufacturers also. Accordingly, manufacturers can revise their returns by the end of the calendar month in which the original return is filed;

c. Where an assessee submit a revised return, the relevant date for recovery of Central Excise duty, if any, under Section 11A of the Central Excise Act, 1944 (“the Excise Act”), shall be the date of submission of such revised return;

Rule 17:

d. The above discussed facility (point b and c) for revision of return is also being extended to 100% Export Oriented Undertaking;

Rule 11:

e. In cases where invoices are digitally signed, the manual attestation of copy of invoice, meant for transporter, is done away with.

Rule 26:

f. In cases where the proceedings in respect of duty, interest and penalty have been concluded against the person liable to pay duty under clause (a) or clause (d) of Section 11AC(1) of the Excise Act, then penalty proceedings initiated against other persons will also deemed to be concluded.

♣ Rationalisation of rate of interest on delayed payment of Excise duty – Section 11AA of the Excise Act read withNotification No. 15/2016-CE(NT) dated March 1, 2016

The rate of interest is rationalised to 15% per annum as against present rate of 18% in case of delayed payment of Excise duty.

♣ New Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016 made effective from March 16, 2016

Vide Notification No. 20/2016-CE(NT) dated March 1, 2016, the existing Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2001 were scheduled to be substituted, w.e.f April 1, 2016, with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016 (“new RGCR Rules”), so as to simplify the rules, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise authorities.

However, vide Notification No. 22/2016-CE(NT) dated March 15, 2016, applicability of the new RGCR Rules has been preponed to March 16, 2016.

The new RGCR Rules have been further amended to specify that the bond to be executed by the manufacturer shall be supported by a surety. The words, “or security” are omitted from Rule 4(5) thereof.

B: Important changes in the Customs

♣  New Baggage Rules vide Notification No. 30/2016-Customs (NT) dated March 1, 2016

The existing Baggage Rules, 1998 are being substituted with the Baggage Rules, 2016, so as to simplify and rationalize multiple slabs of duty free allowance for various categories of passengers.

In this regard, following notifications have been issued as regards the Baggage Rules, 2016:

Notification No.	Particulars
26/2016-Customs dated March 31, 2016	Effective rate on duty on BaggageSuperseded Notification No. 136/1990-Customs dated March 20, 1990, according to which article exceeding specified limit shall be taxable @ 35% ad valorem. This rate of duty is not applicable to certain goods like alcohol in excess of two litres.
27/2016-Customs dated March 31, 2016	Superseded Notification No. 137/1990-Customs dated March 20, 1990, according to which specified persons after residing outside India for a particular period can import specified items upto specified limit (Rs.2,00,000/-or Rs.5,00,000/-) without payment of import duty, subject to conditions given in the notification, and beyond that limit shall be taxable @ 15% ad valorem for items given in Table –II
43/2016-Customs (NT) dated March 31, 2016	Rules 3, 4, 6 and 7 of the Baggage Rules, 2016 has been amended.

♣ Amendment in Customs Baggage Declaration Regulations vide Notification No. 31/2016-Customs (NT) dated March 1, 2016

The Customs Baggage Declaration Regulations, 2013 is being amended so as to prescribe filing of Customs declaration only for those passengers who carry dutiable or prohibited goods.

♣ Rationalisation of rate of interest on delayed payment of Customs duty – Section 28AA of the Customs Act, 1962 read with Notification No. 33/2016-Customs (NT) dated March 1, 2016

The rate of interest is rationalised to 15% per annum as against present rate of 18% in case of delayed payment of Customs duty.

♣ Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 made effective from March 16, 2016

Vide Notification No. 32/2016-Customs (NT) dated March 1, 2016, the existing Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 were scheduled to be substituted, w.e.f April 1, 2016, with the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 (“new IGCR Rules”), so as to simplify the rules, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise authorities. Need for additional registration is also being done away with.

However, vide Notification No. 39/2016-Customs (NT) dated March 15, 2016, applicability of the new IGCR Rules has been preponed to March 16, 2016.

The new IGCR Rules have been further amended to specify that the bond to be executed by the manufacturer shall be supported by a surety. The words, “or security” are omitted from Rule 5(2) thereof.

In order to view important changes in Service Tax and Cenvat Credit Rules, 2004, effective from April 1, 2016, please click on the link below:

Imp. changes in Service Tax and Credit Rules w.e.f. April 1, 2016

(Author can be reached at Email: sonuandfirm@gmail.com)

Analysis of key changes in Excise & Custom Duty: Budget 2016

UNION BUDGET 2016: CHANGES IN EXCISE AND CUSTOMS:

Changes in Customs and Central Excise law and rates of duty have been proposed through the Finance Bill, 2016 (Clauses 113 to 138 for Customs and Clauses 139 to 144 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.11/2016-Customs to No.23/2016-Customs	01.03.2016
Non-Tariff	No.30/2016-Customs (NT) to No. 33/2016-Customs (N.T.)	01.03.2016
CENTRAL EXCISE
Tariff	No.5/2016-Central Excise to No.18/2016-Central Excise	01.03.2016
Non-Tariff	No.5/2016-Central Excise (N.T.) to No.21/2016-Central Excise (N.T.)	01.03.2016
CLEAN ENERGY CESS
	No.1 and No. 2/2016-Clean Energy Cess	01.03.2016
INFRASTRUCTURE CESS
	No.1/2016-Infrastructure Cess	01.03.2016

Unless otherwise stated, all changes in rates of duty take effect from the midnight of 29^th February / 1^st March, 2016. A declaration has been made under the Provisional Collection of Taxes Act, 1931 in respect of clauses 138 (i), 142 (i), 143 (i), 159, 231 and 232 of the Finance Bill, 2016 so that changes proposed therein take effect from the midnight of 29^th February / 1^stMarch, 2016. The remaining legislative changes would come into effect only upon the enactment of the Finance Bill, 2016. These dates may be carefully noted.

UNDER EXCISE:

• Excise Duty levied on Certain goods:
• Exemption on articles of Jewellery [excluding silver jewellery, other than studded with diamonds or other precious stones namely, ruby, emerald and sapphire] withdrawn with a higher threshold exemption upto Rs. 6 crore in a financial year subject to the eligibility limit of Rs. 12 crore in the preceding financial year, along with simplified compliance procedure, from Nil to 1% (without Input Tax Credit [“ITC”] or 12.5% (ITC). Thus, a jewellery manufacturer will be eligible for exemption from Excise duty on first clearances upto Rs. 6 Crore during a financial year, if his aggregate domestic clearances during preceding financial year were less than Rs. 12 crore.
• Branded readymade garments and made up articles of textiles of retail sale price of Rs. 1000 or more changed from Nil (without ITC) or 6%/ 12.5% (with ITC) to 2% (without ITC) or 12.5% (with ITC).
• Increase in Excise Duty rate on certain goods:
• Excise Duty on various tobacco products increased by 10% to 15% other than beedi raised, to discourage consumption of tobacco and tobacco products.
• Domestically manufactured charger/adapter, battery and wired headsets/speakers for supply to mobile phone manufacturers as original equipment manufacturer, increased from Nil to 2% [without Input Tax Credit (“ITC”)] or 12.5% [with ITC].
• Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR)/network video recorder (NVR), CCTV camera/IP camera, lithium ion battery [other than those for mobile handsets] from 12.5% to 4% [without ITC] or 12.5% [with ITC].
• Decrease in Excise Duty rate on certain goods:
• Exemption from levy of Excise duty provided to improved chulhas (including smokeless chulhas) capable of burning wood, agrowaste, cowdung, briquettes and coal has been withdrawn.
• Electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of centrifugal pump reduced from 12.5% to 6% where more than 50% of such pumps are used in agriculture.
• Refrigerated containers reduced from 12.5% to 6%.
• Micronutrients [covered under S. No. 1(f) of Schedule 1 Part (A) of the Fertilizer Control Order, 1985 and manufactured by the manufacturers which are registered under the Fertilizer Control Order, 1985] reduced from 12.5% to 6%.
• Physical mixture of fertilizers, made out of chemical fertilizers on which duty of Excise has been paid, by Co-operative Societies, holding certificate of manufacture for mixture of fertilizers under the Fertilizer Control Order, 1985, for supply to the members of such Co- operative Societies, exempted from 1% (without Input Tax Credit) or 6% (with Input Tax Credit) to Nil.
• Excise Duty on Solar lamp exempt from 12.5% to Nil.
• Inputs, parts and components, subparts for manufacture of charger/adapter, battery and wired headsets/speakers of mobile phone, subject to actual user condition, from 12.5%/ Nil to Nil.
• Parts and components, subparts for manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR)/network video recorder (NVR), CCTV camera/IP camera, lithium ion battery [other than those for mobile handsets] from 12.5% to Nil.
• Specified Notifications relating to area based exemptions has been amended to deny the said exemption to the certain specified Industrial Units.
• Relief measures under the Central Excise:
• Excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work at such site extended to Ready Mix Concrete manufactured at the site of construction for use in construction work.
• Mutual exclusiveness of levy of Excise duty and Service Tax on information technology software [in respect of Software recorded on media “NOT FOR RETAIL SALE”] has been ensured by exempting from Excise duty only that portion of the transaction value on which Service tax is paid, with effect from 01.03.2016.
• Exemption from levy of Excise duty has been extended to the power generation projects based on municipal and urban waste without subject to any conditions specified for initial setting up of a project for the generation of power or generation of compressed bio-gas (Bio-CNG) using non-conventional materials.
• Amendment in the Central Excise Act, 1944
• Section 5A of the Central Excise Act, 1944 (“the Excise Act”) has been amended to omit the requirement of publishing and offering for sale any notification issued, by the Directorate of Publicity and Public Relations of CBEC.
• Section 11A of the Excise Act has been amended to increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, willful mis-statement, etc.
• Section 37B of the Excise Act has been amended to empower the Board for implementation of any other provision of the said Act in addition to the power to issue orders, instructions and directions.
• The Third Schedule has been amended to:

1. a) make some editorial changes, consequent to 2017 Harmonized System of Nomenclature.
2. b) include therein:

1)    All goods falling under heading 3401 and 3402;

2)    Aluminium foils of a thickness not exceeding 0.2 mm;

3)    Wrist wearable devices (commonly known as „smart watches‟); and

4)    Accessories of motor vehicle.

However, the amendment at b) will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

• Amendment in the Central Excise Rules, 2002
• In case of finalization of provisional assessment, the interest will be chargeable from the original date of payment of duty.
• Reduced the number of returns to be filed by a Central Excise Assessee above a certain threshold from 27 to 13, that is, one annual and 12 monthly returns. Monthly returns are already being e-filed. The CBEC will provide for e-filing of annual return also. This annual return will have to be filed by Service Tax Assessees also, above a certain threshold, taking total number of returns to three in a year for them.
• Extended the facility for revision of return, hitherto available to a Service Tax Assessees only, to manufacturers also.
• Provided that in cases where invoices are digitally signed, the manual attestation of copy of invoice, meant for transporter, is done away with.
• Miscellaneous
• Procedures have been prescribed for obtaining Centralized Excise Registration in terms of Rule 9 of the Central Excise Rules, 2002 for the specified manufacturers of articles of jewellery.
• Exemption from the procedures of physical verification of premises for providing registration has been granted to the specified manufacturers of articles of jewellery.
• The Notification No. 9/2012-Central Excise (N.T.) dated 17.03.2012, fixing the tariff value in respect to articles of jewellery (other than silver jewellery) has been rescinded.
• Instructions are being issued to Chief Commissioners of Central Excise to file application to Courts to withdraw prosecution in cases involving duty of less than Rs. five lakh and pending for more than fifteen years.
• The existing Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2001 are substituted with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016, to simplify the rules, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise Authorities.
• Oil Industries Development Cess:

The Oil Industry (Development) Act, 1974 has been amended to reduce the rate of Oil Industries Development Cess, on domestically produced crude oil, from Rs. 4500 PMT to 20% ad valorem. The amendment in the said Act will be effective from the date of assent to the Finance Bill, 2016. Till the enactment of the Finance Bill, 2016, Notification prescribing 20% effective rate of Oil Industries Development Cess will be issued by Ministry of Petroleum & Natural Gas.

• Infrastructure Cess:

Infrastructure Cess levied on motor vehicles, of heading 8703, as under:

• Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc at 1%;
• Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc at 2.5%;
• Other higher engine capacity and SUVs and bigger sedans at 4%;

Exemption provided to three wheeled vehicles, Electrically operated vehicles, Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars for physically handicapped persons and Motor vehicles cleared as ambulances or registered for use solely as ambulance;

Further, no credit of Infrastructure Cess will be allowed, and credit of no other Duty can be allowed to pay Infrastructure Cess.

However, the said Infrastructure Cess will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

• Clean Energy Cess:

The Clean Energy Cess has been renamed as Clean Environment Cess. Also, the Tenth Schedule to the Finance Act, 2010 dealing with Clean Energy Cess has been amended to increase the Scheduled rate of Clean Energy Cess from Rs. 300 per tonne to Rs. 400 per tonne. However, the effective rate of Clean Energy Cess has been increased from Rs. 200 per tonne to Rs. 400 per tonne.

The increase in Clean Energy Cess will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Summarization of Notification Nos. 5 to 18/2016-Central Excise dated 01.03.2016

SI. No.	Notification No.	Description
1.	5/2016-Central Excise	Seeks to suitably amend specified notifications relating to area based exemptions, so as to carry out Budgetary changes
2.	6/2016-Central Excise	Seeks to suitably amend specified notifications relating to area based exemptions, so as to carry out Budgetary changes
3.	7/2016-Central Excise	Seeks to amend Notification No. 7/2012-Central Excise dated 17.03.2012 so as to carry out Budgetary changes
4.	8/2016-Central Excise	Seeks to amend Notification No. 8/2003-Central Excise dated 17.03.2012 so as to carry out Budgetary changes
5.	9/2016-Central Excise	Seeks to amend Notification No. 1/2011-Central Excise dated 01.03.2011 so as to carry out Budgetary changes
6.	10/2016-Central Excise	Seeks to amend Notification No. 2/2011-Central Excise dated 01.03.2011 so as to carry out Budgetary changes
7.	11/2016-Central Excise	Seeks to exempt Central Excise Duty on media with recorded Information Technology Software on so much value as is equivalent to the value of the Information Technology Software recorded on the said media which is leviable to Service tax under the Finance Act
8.	12/2016-Central Excise	Seeks to amend Notification No. 12/2012-Central Excise dated 17.03.2012 so as to carry out Budgetary changes
9.	13/2016-Central Excise	Seeks to rescind Notification No. 62/91-Central Excise dated 25.07.1991 so as to carry out Budgetary changes
10.	14/2016-Central Excise	Seeks to amend Notification No. 33/2005-Central Excise dated 08.09.2005 so as to carry out Budgetary changes
11.	15/2016-Central Excise	Seeks to amend Notification No. 30/2004-Central Excise dated 09.07.2004 so as to carry out Budgetary changes
12.	16/2016-Central Excise	Seeks to amend Notification No. 16/2010-Central Excise dated 27.02.2010 so as to carry out Budgetary changes
13.	17/2016-Central Excise	Seeks to amend Notification No. 42/2008-Central Excise dated 01.07.2008 so as to carry out Budgetary changes
14.	18/2016-Central Excise	Seeks to amend Notification No. 6/2005-Central Excise dated 01.07.2008 so as to carry out Budgetary changes

Summarization of Notification Nos. 5 to 21/2016-Central Excise (N.T.), dated 01.03.2016

SI. No.	Notification No.	Description
1.	5/2016-Central Excise (N.T.)	Seeks to provide a procedure for obtaining Centralized Registration for manufacturers of articles of jewellery
2.	6/2016-Central Excise (N.T.)	Seeks to amend Notification No. 35/2001-Central Excise (N.T) dated 26.06.2001
3.	7/2016-Central Excise (N.T.)	Rescinds Notification No. 9/2012-Central Excise (N.T) dated 17.03.2012
4.	8/2016-Central Excise (N.T.)	Seeks to further amend Central Excise Rules, 2002
5.	9/2016-Central Excise (N.T.)	Seeks to further to amend the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008
6.	10/2016-Central Excise (N.T.)	Seeks to further amend the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010
7.	11/2016-Central Excise (N.T.)	Seeks to further amend Notification No. 20/2001-Central Excise (N.T.), dated the 30.04.2001 so as to amend the tariff values prescribed for articles of apparel and clothing accessories not knitted or crocheted
8.	12/2016-Central Excise (N.T.)	Seeks to further amend Notification No. 49/2008-Central Excise (N.T.), dated the 01.03.2016 so as to amend the rate of abatement from Retail Sale Price for commodities specified therein and bring certain commodities under Retail Sale Price based assessment
9.	13/2016-Central Excise (N.T.)	Seeks to further amend the Cenvat Credit Rules, 2004.
10.	14/2016-Central Excise (N.T.)	Seeks to amend Notification No. 27/2012-Central Excise (N.T) so as to prescribe the time limit for filing application for refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004, in case of export of services.
11.	15/2016-Central Excise (N.T.)	Seeks to prescribe the rate of interest at fifteen per cent per annum for the purposes of section 11AA of the Central Excise Act, 1944.
12.	16/2016-Central Excise (N.T.)	Seeks to amend Notification No. 42/2001 – Central Excise (N.T.) dated 26.06.2001 so as to make further amendments in notification No. 42/2001- CE (NT), dated the 26th June 2001
13.	17/2016-Central Excise (N.T.)	Seeks to amend Notification No. 31/2007-Central Excise (N.T.), dated the 02.08.2007 so as to make further amendments in notification No. 42/2001- CE (NT), dated the 26th June 2001
14.	18/2016-Central Excise (N.T.)	Seeks to amend Notification No. 19/2004-Central Excise (N.T.), dated the 06.09.2004 so as to carry out Budgetary changes
15.	19/2016-Central Excise (N.T.)	Seeks to amend Notification No. 36/2001-Central Excise (N.T.), dated the 26.06.2001 so as to carry out Budgetary changes
16.	20/2016-Central Excise (N.T.)	Seeks to notify new Central Excise (Removal of Goods at Concessional rate of Duty for Manufacture of Excisable Goods), 2016
17.	21/2016-Central Excise (N.T.)	Seeks amend Notification No. 21/2004-Central Excise (N.T) dated 06.09.2004 so as to carry out Budgetary changes

Summarization of Notification Nos. 1 and 2/2016-CEC and Notification No.1/2016-Infrastructure Cess all dated 01.03.2016

SI. No.	Notification No.	Description
1.	Notification No.1/2016 – Clean Energy Cess	Seeks to rescind Notification No. 1/2015-Clean Energy Cess dated 01.03.2015
2.	Notification No.2/2016 – Clean Energy Cess	Seeks to amend Notification No. 5/2010-Clean Energy Cess dated 01.03.2015
3.	Notification No.1/2016 – Infrastructure Cess	Seeks to provide effective rates of Infrastructure Cess on specified goods.

UNDER CUSTOMS:

Following amendment are being made in the Customs Act, 1962 (“the Customs Act”) and the Customs Tariff Act, 1975 (“the Customs Tariff Act”) are as under:

• Reduction in Customs duty on certain goods:
• Refrigerated containers from 10% to 5%;
• Mineral fuels and Mineral oils:
• Coal; briquettes, ovoids and similar solid fuels manufactured from coal from 2.5%/10% to 2.5%
• Lignite, whether or not agglomerated, excluding jet from 10% to 2.5%
• Peat (including peat litter), whether or not agglomerated from 10% to 2.5%
• Coke and semi-coke of coal, of lignite or of peat, whether or not agglomerated; retort carbon from 5%/10% to 5%
• Coal gas, water gas, producer gas and similar gases, other than petroleum gases and other gaseous hydrocarbons from 10% to 5%
• Tar distilled from coal, from lignite or from peat and other mineral tars, whether or not dehydrated or partially distilled, including reconstituted tars from 10% to 5%
• Oils and other products of the distillation of high temperature coal tar similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents from 2.5%/5%/10% to 2.5%
• Pitch and pitch coke, obtained from coal tar or from other mineral tars from 5%/10% to 5%
• Chemicals & Petrochemicals:
• All acyclic hydrocarbons and all cyclic hydrocarbons [other than para- xylene which attracts Nil Basic Customs Duty and styrene which attracts 2% Basic Customs Duty] from 5%/2.5% to 2.5%
• Denatured ethyl alcohol (Ethanol), from 5% to 2.5%, subject to actual user condition
• Electrolysers, membranes and their parts required by caustic soda/ potash unit using membrane cell technology exempted from 2.5% to Nil
• Wood in chips or particles for manufacture of paper, paperboard and news print from 5% to Nil;
• Textiles:
• Specified fibres and yarns from 5% to 2.5%
• Import of specified fabrics [for manufacture of textile garments for export] of value equivalent to 1% of FOB value of exports in the preceding financial year exempted from Applicable Rate to Nil, subject to the specified conditions
• Electronics/ Hardware:
• Polypropylene granules/resins for the manufacture of capacitor grade plastic films from 7.5% to Nil
• Parts of E-readers from Applicable Rate to 5%
• Magnetron of capacity of 1 KW to 1.5 KW for use in manufacture of domestic microwave ovens, subject to actual user condition, from 10% to Nil.
• Specified capital goods and inputs for use in manufacture of Micro fuses, Sub-miniature fuses, Resettable fuses and Thermal fuses from Applicable Rate to Nil;
• Neodymium Magnet (before Magnetization) and Magnet Resin (Strontium Ferrite compound/before formed, before magnetization) for manufacture of BLDC motors, from Applicable Rate to 2.5%, subject to actual user condition;
• Increase in Customs Duty on certain goods:
• Natural latex rubber made balloons from 10% to 20%;
• Imitation jewellery from 10% to 15%;
• Metals:
• Primary aluminium from 5% to 7.5%
• Other aluminium products from 7.5% to 10%
• Zinc alloys from 5% to 7.5%
• Industrial solar water heater from 7.5% to 10%;
• Full exemption on solar tempered glass/solar tempered (anti-reflective coated) glass withdrawn and 5% concessional Basic Customs Duty imposed, subject to actual user conditions;
• Plans, drawings and designs from Nil to 10%;
• Electronics/Hardware:
• E-Readers from Nil to 7.5%
• Preform of silica for manufacture of telecom grade optical fibre /cables from Nil to 10%;
• Exemption on magnetic – Heads (all types), Ceramic/Magnetic cartridges and stylus, Antennas, EHT cables, Level meters/level indicators/ tuning indicators/ peak level meters/ battery meter/VC meters/Tape counters, Tone arms, Electron guns withdrawn, from Nil to Applicable Rate of Basic Customs Duty;
• Specified telecommunication equipment [Soft switches and Voice over Internet Protocol (VoIP) equipment namely VoIP phones, media gateways, gateway Product/Switch (POTP/POTS), Optical controllers and session border controllers, Optical Transport equipment; combination of one / more of Packet Optical Transport Network(OTN) products, and IP Radios, Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching- Transport Profile (MPLS-TP) products, Multiple Input / Multiple Output (MIMO) and Long Term Evolution (LTE) Products on which 10% BCD was imposed in 2014-15 Budget] being excluded from the purview of the other exemption also, now taxable from Nil to 10%;
• Reduction in Special Additional Duty (“SAD”) on certain goods:
• Orthoxylene, from 4% to 2%, for the manufacture of phthalic anhydride subject to actual user condition;
• Exemption from SAD withdrawn fully or in some cases, imposed reduced SAD on certain goods:
• Populated PCBs for manufacture of personal computers (laptop or desktop) from Nil to 4%;
• Populated PCBs of mobile phone/tablet computer withdrawn. Concessional SAD on populated PCBs for manufacture of mobile phone/tablet computer imposed from Nil to 2%;
• Miscellaneous:
• Concessional Basic Customs Duty as presently available under project imports for cold storage, cold room (including for farm level pre-cooling) also extended for ‘cold chain including pre-cooling unit, pack houses, sorting and grading lines and ripening chambers’ from 10% to 5%;
• Machinery, electrical equipment, instrument and parts thereof (except populated PCBs) for semiconductor wafer fabrication/LCD fabrication units exempted from Applicable Rate of Basic Customs Duty and SAD at 4%;
• Machinery, electrical equipment, instrument and parts thereof (except populated PCBs) imported for Assembly, Test, Marking and Packaging of semiconductor chips (ATMP) exempted from Applicable Rate of Basic Customs Duty and SAD at 4%;
• The exemption from Basic Customs Duty, Countervailing Duty, SAD on charger/adapter, battery and wired headsets/speakers for manufacture of mobile phone is withdrawn, now Basic Customs Duty taxable at Applicable Rate, Countervailing Duty at 12.5% and SAD at 4% on it;
• Inputs, parts and components, subparts for manufacture of charger / adapter, battery and wired headsets /speakers, of mobile phone, subject to actual user condition exempted from Applicable Rate of Basic Customs Duty, Countervailing Duty and SAD;
• Parts and components, subparts for manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR)/network video recorder (NVR), CCTV camera/IP camera, lithium ion battery [other than those for mobile handsets] exempted from Applicable Rate of Basic Customs Duty, Countervailing Duty and SAD;
• Changes in the Customs provisions and Rules made there under

Sl. No.	Amendment	Clause of the Finance Bill, 2016
1.	Subsection (43) of Section 2 is being amended so as to add a new class of warehouses for enabling storage of specific goods under physical control of the department, as control over the other types of warehouses would beonly record based.	113
2.	Subsection (45) of Section 2 which defines “warehousing station” is being omitted.	113
3.	Chapter heading of Chapter III is being amended to omit the word “warehousing station”.	114
4.	Section 9 is being omitted.	115
5.	Section 25 is being amended so as to omit the requirement of publishing and offering for sale any notification issued, by the Directorate of Publicity and Public Relations of CBEC	116
6.	Sections 28, 47, 51 and 156 are being amended so as to:a) increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, willful mis-statement, etc. b) provide for deferred payment of customs duties for importers and exporters to certain class of importers and exporters.	117118 119 135
7.	Section 53 is being amended so as to enable the Board to frame regulations for allowing transit of certain goods and conveyance without payment of duty.	120
8.	Sections 57 and 58 are being substituted to provide for licensing by the Principal Commissioner or Commissioner, in place of Deputy/Assistant Commissioner, subject to such conditions as may be prescribed.	121122
9.	New section 58A is being inserted to provide for a new class of warehouses which require continued physical control and will be licensed for storing goods, as may be specified.	122
10	New section 58B is being inserted so as to regulate the process of cancellation of licences which is a necessary concomitant of licensing.	122
11.	The existing section 59 governing warehousing bonds submitted by importers availing duty deferred warehousing is being substituted so as to fix the bond amount at thrice the duty involved and to furnish security as prescribed.	123
12.	The existing section 60 is being substituted to define the date of removal of goods from a customs station and deposit thereof in a warehouse.	124
13.	The existing section 61 is being substituted to extend the period of warehousing to all goods used by Export Oriented Undertakings, Units under Electronic Hardware Technology Parks, Software Technology Parks, Ship Building Yards and other units manufacturing under bond; empower Principal Commissioners and Commissioners to extend the warehousing period upto one year at a time.	125
14.	Section 62 relating to physical control over warehoused goods is being omitted since the conditions for licensing different categories of warehouses and exercising control over the same are being provided under sections 57, 58 and 58A.	126
15.	Section 63 relating to payment of rent and warehouse charges is being omitted in view of the privatization of services, and free market determination of rates, including those by facilities in the public sector.	126
16.	The existing section 64 relating to owner’s rights to deal with warehoused goods is being substituted so as to rationalize the facilities and rights extended under the section.	127
17.	Section 65 is being amended to delete the payment of fees to Customs for supervision of manufacturing facilities under Bond; and empower Principal Commissioner or Commissioner of Customs to licence such facilities.	128
18.	Section 68 is being amended to omit rent and other charges on account of omission of section 63.	129
19.	Section 69 is being amended to omit rent and other charges on account of omission of section 63.	130
20.	Section 71 is being amended so as to substitute the word “exportation” with the word “export” to align with definition contained in sub section (18) of section 2.	131
21.	Section 72 is being amended to delete clause (c) regarding improper removal of samples	132
22.	Section 73 is being amended to provide for cancellation bond in case of transfer of ownership of the goods, and is thus aligned with sub-section (5) of section 59.	133
23.	New section 73A is being inserted so as to provide for custody of warehoused goods and responsibilities including the liabilities of warehouse keepers.	134

• Amendment in the Customs Tariff Act

Sl. No.	Amendment	Clause of the Finance Bill, 2016
1.	To omit Section 8C [Power of Central Government to impose transitional product specific safeguard duty on imports from People’s Republic of China]	137

• Amendment in the First Schedule to the Customs Tariff Act

Sl. No.	Amendment	Clause of the Finance Bill, 2016
	Amendments not affecting rates of duty
1.	Editorial changes in the Harmonized System of Nomenclature (HSN) in certain chapters are being incorporated in the First Schedules, to be effective from 01.01.2017.	138(ii)
2.	To:1) Amend supplementary notes (e) and (f) Chapter 27 so as to change the reference: a) from IS:1460:2000 to IS:1460:2005 for high speed diesel (HSD) and b) from IS:1460 to IS: 15770:2008 for light diesel oil (LDO); 2) Substitute Tariff line 5801 39 10 with description “Warp pile fabrics, uncut” in place of tariff line 5801 37 11 [with description Warp pile fabrics ‘epingle’ uncut velvet] and 5801 37 19 [with description Warp pile fabrics ‘epingle’ uncut other]; 3) Prescribe separate tariff lines for laboratory created or laboratory grown or manmade or cultured or synthetic diamonds; 4) Delete Tariff line 8525 50 50, relating to Wireless microphone.	138(i)

• Summary of the Customs Tariff Notification:

Sl. No	Notifications No.	Description
1.	11/2016-Customs	Exempt CVD on imported media with recorded Information Technology Software on so much value as is equivalent to the value of the Information Technology Software recorded on the said media which is leviable to Service tax under Finance Act, 1994.
2.	12/2016-Customs	Notification No. 12/2012-Customs, dated the 17.03.2012 is being amended.
3.	13/2016-Customs	By making an amendment in Notification No. 171/93-Customs, dated the 16.09.1993, the Exemption limit of the bona fide gifts imported by post or as air freight is being increased from Rs. 10,000/- to Rs. 20,000/-.
4.	14/2016-Customs	By making an amendment in Notification No. 39/96-Customs, dated the 23.07.1996, the exemption in respect of the Serial No. 9, 9A 10 and 10A is being withdrawn.
5.	15/2016-Customs	By making an amendment in Notification No. 27/2011-Customs, dated the 01.03.2011 hereby exempt duty of customs leviable under the Second Schedule, to the Customs Tariff Act on items specified therein.
6.	16/2016-Customs	By making an amendment in Notification No. 21/2012-Customs, dated the 17.03.2012 hereby exempt the additional duty of customs leviable under sub-section 3 (5) of Customs Tariff Act for items specified therein.
7.	17/2016-Customs	By making an amendment in Notification No. 25/1999-Customs, dated 28.02.1999 the words “sub-miniature fuses, micro fuses, resettable fuses and thermal fuses” is being inserted. Now importation of these goods into India for use in the manufacture of the finished goods liable to nil rate of duty.
8.	18/2016-Customs	By making an amendment in Notification No. 25/2002-Customs, dated the 01.03.2002, importation of Capital goods is being exempted from whole of the duty of Customs for the manufacture of the following finished goods mentioned against the Serial No. 64: “Glass and ceramic cartridge fuses, blade fuses, automotive fuses, surface mount fuses, sub-miniature fuses, micro fuses, resettable fuses and thermal fuses”
9.	19/2016-Customs	By making an amendment in Notification No. 24/2005-Customs, dated the 01.03.2005 against serial number 39, in column (3), after the words “All goods”, the words and brackets “ except charger or adapter, battery, wired headsets and speakers of mobile handsets including cellular phones and solar tempered glass or solar tempered (anti-reflective coated) glass” is being inserted.
10.	20/2016-Customs	By making an amendment in Notification No. 230/86-Customs, dated the 03.04.1986 against serial number 3H, in the entry under heading „ Name of the Plant or Project, for the words, “Cold storage, cold room (including for farm level pre-cooling)”, the words and brackets, “Cold storage, cold room (including for farm level pre-cooling), cold chain including pre-cooling unit, packhouses, sorting and grading lines and ripening chambers” is being substituted.
11.	21/2016-Customs	By making an amendment in Notification No. 42/96-Customs, dated the 23.07.1996 for the project specified against serial number 41 the words “Cold storage, cold room (including for farm level pre-cooling)”, the words and brackets “Cold storage, cold room (including for farm level pre-cooling), cold chain including pre-cooling unit, packhouses, sorting and grading lines and ripening chambers” is being substituted for assessment under Heading 9801 of the first schedule to the Customs Tariff Act.
12.	22/2016-Customs	Seeks to further amend Notification No. 81/2005-Customs, dated the 08.09.2005 so as to carry out Budgetary changes
13.	23/2016-Customs	Seeks to further amend Notification No. 72/1994-Customs, dated the 01.03.1994.

• Summary of the Customs Non-Tariff Notification:

Sl. No	Notification No.	Description
1.	30/2016-Customs (NT)	Seeks to notify Baggage Rules, 2016.
2.	31/2016-Customs (NT)	Seeks to further amend Customs Baggage Declaration (Amendment) Regulations, 2016.
3.	32/2016-Customs (NT)	Seeks to notify the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods), Rules 2016.
4.	33/2016-Customs (NT)	Seeks to fix the rate of interest under section 28AA of the Customs Act, 1962 and supersede notification No. 17/2011- Cus (N.T) dated 01.03.2011.

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