Notes on clauses

Customs

 

Clause 54 seeks to amend clause (n) of sub-section (2) of section 11 to include designs and geographical indications along with patents, trademarks and copyrights to enable the Central Government to prohibit either absolutely or conditionally the import or export of goods to protect these legal rights.

 

 

Clause 55 seeks to amend section 27 to provide that if the amount of claim is less than rupees one hundred, the same shall not be refunded.

 

 

Clause 56 seeks to amend sub-section (1) of section 28 to provide that the proper officer shall not serve a show cause notice, where the amount involved is less than rupees one hundred.

 

 

Clause 57 proposes to amend section 28BA to include notices issued under sub-section (4) of section 28, in addition to notices issued under sub-section (1) of section 28 for recovery of duties.

 

 

Clause 58 of the Bill seeks to substitute clause (a) of section 28E of the Customs Act, for the purpose of expanding the scope of activity of import or export so as to include any new business of import or export by an existing importer or exporter in order to enable such importer or exporter to seek advance ruling before the Authority for Advance Rulings.

 

 

Clause 59 proposes to amend section 29 to empower Board to allow landing of aircrafts and vessels at any place other than customs airports or customs ports.

 

 

Clause 60 proposes to amend section 30 to provide for electronic filing of import manifest and to insert a proviso that where this is not feasible, the Commissioner of Customs may allow the delivery of such manifest in any other manner.

 

 

Clause 61 proposes to amend sub-section (1) of section 41 to provide for electronic filing of export general manifest and to insert a proviso that where this is not feasible, the Commissioner of Customs may allow the delivery of such manifest in any other manner

 

 

Clause 62 seeks to amend sub-section (2) of section 47 to reduce the interest free period for payment of customs duty from five days to two days. 

 

 

Clause 63 seeks to amend section 49 to provide that goods may be permitted to be stored for a period not exceeding thirty days in a public warehouse and the private warehouse in the interest of accountability and early finalization of assessment and to insert a proviso that the Commissioner of Customs may extend the period of storage for a further period not exceeding thirty days at a time.

 

 

Clause 64 proposes to substitute clause (a) of sub-section (1) of section 69 to provide that any warehoused goods may be exported to a place outside India without payment of import duty if a shipping bill or bill of export in prescribed form or label or declaration accompanying the goods as referred to in section 82 has been presented in respect of such goods.

 

 

Clause 65 of the Bill seeks to substitute sub-section (6) of section 104 of the Customs Act with new sub-sections (6) and (7) so as to provide that notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence under section 135 and relating to evasion or attempted evasion of duty exceeding fifty lakh rupees, or prohibited goods notified under section 11 which are also notified under sub-clause (C) of clause (i) of subsection (1) of section 135, or import or export of any goods which have not been declared in accordance with the provisions of the Act and the market price of which exceeds one crore rupees, or fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under the Act, if the amount of
drawback or exemption from duty exceeds fifty lakh rupees, shall be non-bailable and also to provide that all other offences under the Act shall be bailable.

 

 

Clause 67 seeks to amend section 129C of the Customs Act, with a view to enhance the monetary limit of the Single Bench of the Appellate Tribunal to hear and dispose of appeals from “ten lakhs rupees” to “fifty lakhs rupees”.

 

 

 

Clause 68 of the Bill seeks to amend sub-clauses (B) and (D) of clause (i) of sub-section (1) of section135 of the Customs Act so as to increase the threshold limit for punishment with imprisonment up to seven years and with fine, from “thirty lakh” rupees to “fifty lakh” rupees.

 

 

 

Clause 69 of the Bill seeks to amend sub-section (1) of section 142 of the Customs Act, by inserting a new clause (d) therein to provide for recovery of any amount due to the Central Government. It provides that in case of dues of customs, the proper officer may require any person (third party) from whom the amount is due or may become due to the defaulter, to pay to the Central Government so much of the amount as is sufficient to pay the amount due.

 

 

 

Clause 70 seeks to omit section 143A since the same has become redundant as the export promotion schemes have undergone a complete change.

 

 

Clause 71 seeks to amend section 144 to provide that there shall be no liability of duty on any goods consumed as samples during testing or examination.

 

 

Clause 72 seeks to subsitute section 146 with new section 146 so as to substitute the words ‘customs house agents’ with the words ‘customs brokers’ considering the global practice and internationally accepted nomenclature.

 

 

Clause 73 seeks to amend clause (b) of sub-sections (2) and (4) respectively of section 146A which is of consequential nature in view of the amendment of section 146 and also to include any offence committed under the Finance Act, 1994 as a disqualification for person to act as an authorised representative in customs matters.

 

 

Clause 74 seeks to amend sub-section (3) of section 147 to provide that the agents are equally liable for any act or omission when the agent is expressly or impliedly authorised by the owner, importer or exporter of any goods to be his agent in respect of such goods for all or any of the purposes of the Act.

 

 

Clause 75 of the Bill seeks to amend the notification issued under sub-section (1) of section 25 of the Customs Act bearing number G.S.R. 153(E), dated the 1st March, 2011 in the manner specified in the Second Schedule so as to amend the said notification retrospectively to subsitute the entry in column (2) against Sl. No. 56 with the entry “7210, 7212” and to refund all such duty of customs which has been collected but which would not have been so collected had the notification been in force at all material times and an application for the claim of refund of duty of customs shall be made within six months from the date on which the Finance Bill, 2013 receives the assent of the President.

 

 

 

 

Customs Tariff

 

Clause 76 of the Bill seeks to amend the First Schedule to the Customs Tariff Act in the manner specified in the Third Schedule so as to,––


                (a) incorporate changes in description of goods;

                (b) to omit entries relating to certain tariff items;

                (c) to revise the rate of customs duty on certain tariff items;

                (d) omit a chapter note relating to classification of certain tariff items; and

                (e) to insert a supplementary note after Sub-heading Note relating to certain tariff items.

 

 

Clause 77  of the Bill seeks to amend the Second Schedule to the Customs Tariff Act in the manner specified in the Fourth Schedule. Sub-clause

     (a) thereof seeks to substitute the entry under column (2) against Sl. No. 43 with retrospective effect with effect from the first day of March, 2011. Sub-clause 

    (b) seeks to insert new entries 9A, 23A, 23B, 24A and 24B.

 

 

Excise

 

Clause 78 of the Bill seeks to amend section 9 of the Central Excise Act so as to increase the threshold limit of evasion, for punishment with imprisonment upto seven years and with fine, from “thirty lakh rupees” to “fifty lakh rupees”.

 

 

Clause 79 of the Bill seeks to amend section 9A of the Central Excise Act—


    (i) to substitute sub-section (1) so as to provide that offences under section 9, except the offences referred to in the proposed sub-section (1A), shall continue to be noncognizable;

    (ii) to insert new sub-section (1A) so as to provide that offences relating to excisable goods where the duty leviable on such goods exceeds fifty lakh rupees and punishable under clause (b) or clause (bbbb) of subsection (1) of section 9 shall be cognizable and nonbailable.

 

Clause 80 of the Bill seeks to amend section 11 of the Central Excise Act, so as to provide for additional modes of recovery of the amount due to the Central Government. 

 

    Besides the existing mode of recovery, now it is proposed to provide that in case of dues of central excise, the Central Excise Officer may require any other officer of Central Excise or Customs to recover the amount due from such money which is payable to such person.


    It is also proposed to provide for another mode of recovery so that a person (third party) from whom amount is due or may become due to the defaulter shall be required to pay to the Central Government so much amount as is sufficient to pay the arrears of revenue. Any of these two new modes of recovery can be used by the Central Excise Officer besides the existing modes of recovery

 

 

Clause 81 of the Bill proposes to insert sub-section (7A) in section 11A with a view to provide that where a notice or notices have been served under sub-section (1) or sub-section (3) or subsection (4) or sub-section (5), service of a statement of details of duty of excise not levied, or not paid or short levied or short paid or erroneously refunded, on the person chargeable with duty of excise, shall be deemed to be service of notice on such person if the grounds relied upon are the same.

 

 

Clause 82 of the Bill seeks to amend sub-section (1) of section 11DDA of the Central Excise Act, so as to align the same with section 11A.

 

 

Clause 83 of the Bill seeks to amend section 20 of the Central Excise Act so as to make the provisions applicable only to offence which is non-cognizable. 

 

 

Clause 84 of the Bill seeks to amend clause (a) and clause (b) of the proviso to sub-section (2) of section 21 of the Central Excise Act so as to make the provisions regarding release of arrested person on bail or on personal bond applicable only to an offence which is non-cognizable.

 

 

Clause 85 of the Bill seeks to substitute clause (a) of section 23A of the Central Excise Act, for the purpose of expanding the scope of activity of production or manufacture so as to include any new business of production or manufacture by the existing producer or manufacturer in order to enable such producer or manufacturer to seek advance ruling before the Authority for Advance Rulings.

 

 

Clause 86 of the Bill seeks to amend clause (e) of subsection (2) of section 23C of the Central Excise Act, so as to extend the Advance Ruling provisions also to the admissibility of the credit of service tax paid or deemed to have been paid on input service used in the manufacture of the excisable goods.

 

 

Clause 87 of the Bill seeks to amend sub-section (1) of section 23F of the Central Excise Act, so as to substitute the word,figures and letter “section 28-I”, with the word, figures and letter “section 23D”.

 

 

Clause 88 of the Bill seeks to insert a new proviso after the second proviso in sub-section (2A) of section 35C of the Central Excise Act, so as to stipulate that on an application made by a party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, the Appellate Tribunal shall have the power to extend the period of stay to such further period, as it thinks fit, not exceeding one hundred and eighty-five days, and in
case the appeal is not so disposed of within the total period of three hundred and sixty-five days from the date of order referred to in the first proviso, the stay order stands vacated.

 

 

Clause 89 seeks to amend section 35D of the Central Excise Act, with a view to enhance the monetary limit of the Single Bench of the Appellate Tribunal to hear and dispose of appeals from “ten lakh rupees” to “fifty lakh rupees”.

 

 

Clause 90 of the Bill seeks to amend clause (a) of subsection (1) of section 37C of the Central Excise Act, so as to specify additional modes of service of specified documents. These modes are speed post with proof of delivery or by courier as approved by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963. Sub-clause (ii) of said clause proposes to make consequential amendments in sub-section (2)
of section 37C.

 

 

Clause 91 of the Bill seeks to amend the Third Schedule to the Central Excise Act so as to insert a new entry 31A relating to medicaments used in Ayurveda, Unani, Siddha, Homoeopathic or Bio-chemic systems and to subsitute the entry “7615 10 11” for the existing entry “7615 19 10” in column (2) against Sl. No. 64 in the manner specified in the Fifth Schedule.

 

 

Central Excise Tariff

 

 

Clause 92 of the Bill seeks to amend the First Schedule to the Central Excise Tariff Act in the manner specified in Sixth Schedule so as to,––


    (a) incorporate changes in the description of goods;
    (b) to omit entries relating to certain tariff items;
    (c) revise tariff rates in respect of certain tariff items.

 

 

 

Service tax

 

Clause 93 seeks to amend Chapter V of the Finance Act, 1994 relating to service tax in the following manner, namely:-


    Sub-clause (A) seeks to amend section 65B of the said Act, so as to modify the scope of certain services.

 

    Sub-clause (B) seeks to omit Explanation to section 66B of the said Chapter inser ted by issuing a not i f icat ion under subsection (1-I) of section 95 thereof since a new section 66BA is being inserted to the same effect.

 

    Sub-clause (C) seeks to insert a new section 66BA in the said Chapter, so as to clarify that reference to section 66 in the Act or any other Act for the time being in force shall be construed as reference to the provisions of section 66B. This sub-clause shall come into effect retrospectively with effect from the 1st day of July, 2012.


    Sub-clause (D) seeks to omit the word ‘seed’ from sub-clause (i) of clause (d) of the section 66D so as to modify the scope of the service.


    Sub-clause (E) seeks to insert a new sub-section (2A) in section 73 with a view to save the notices issued for extended period under the proviso to sub-section (1), in cases where any appellate authority or tribunal or court decides that such notices are not sustainable on the grounds specified therein. Such notices shall be deemed to have been issued under sub-section (1) for invoking normal limitation.

    Sub-clause (F) seeks to amend clause (a) of sub-section (1) of section 77, to restrict the maximum penalty for failure to take registration, to rupees ten thousand.

    Sub-clause (G) seeks to insert a new section 78A, so as to impose penalty, which may extend up to one lakh rupees, on director, manager, secretary or other officer of the company for knowingly involved in the contraventions specified therein. Sub-clause (H) seeks to amend section 83 so as to substitute the figure and letter “9A”with the words, brackets, figures and letter “sub-section (2) of section 9A” with the view to apply only subclause (2) of section 9A of the Central Excise Act, 1944 to service tax.

    Sub-clause (I) seeks to amend sub-section (5) of section 86 of the said Chapter to empower the tribunal to condone the delay in filing appeal or cross objection by the assessee also.

 

    Sub-clause (J) seeks to substitute clauses (i) and (ii) of subsection (1) of section 89 so as to provide that––

        (i) in the case of an offence specified in clauses (a), (b) and (c) of sub-section (1) where the amount exceeds fifty lakh rupees, the punishment shall be imprisonment for a term which may extend to three years, but shall not, in any case, be less than six months;
        (ii) in the case of an offence specified in clause (d) of sub-section (1) where the amount exceeds fifty lakh rupees, the punishment shall be imprisonment for a term which may extend to seven years, but shall not, in any case, be less than six months;
        (iii) in the case of any other offence, the punishment shall be imprisonment for a term which may extend to one year.

 

It further seeks to substitute sub-section (2) thereof so as to provide that a person convicted of an offence punishable under clauses (i) and (iii) shall be punished for every second and subsequent offence with imprisonment for a term which may extend to three years and in the case of an offence punishable under clause (ii), shall be punished for every second and subsequent offence with imprisonment for a term which may extend to seven years.

 

    Sub-clause (K) seeks to insert new sections 90 and 91.


        The proposed section 90 seeks to provide that an offence under clause (ii) of sub-section (1) of section 89 shall be cognizable and all other offences shall be non-cognizable and bailable. 

        The proposed section 91 seeks to provide for power to arrest. It seeks to empower the Commissioner of Central Excise, to authorise any officer of Central Excise not below the rank of Superintendent of Central Excise, to arrest a person for the offences specified in clause (i) or clause (ii) of sub-section (1) of section 89. 

        It further seeks to empower the Assistant Commissioner or the Deputy Commissioner to release the person so arrested on bail in case of non-cognizable and bailable offences, and for this purpose, he shall have the same power as that of an officer-in-charge of a police station and shall be subject to provisions under section 436 of the Code of Criminal Procedure, 1973.

 

    It also seeks to provide that the arrests so made shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973, relating to arrests.

 

    Sub-clause (L) seeks to amend section 95 so as to empower the Central Government to issue orders for removal of difficulty in case of certain provisions inserted by the proposed amendments in this Chapter, up to one year from the date of commencement of the Finance Bill, 2013.


    Sub-clause (M) seeks to insert new section to provide exemption from service tax to the extent notices have been issued upto the 28th February, 2013 under section 73, in respect of taxable services provided by the Indian Railways during the period prior to the 1st day of July, 2012.

 

Chapter VI containing clauses 94 to 104 provides for the Service Tax Voluntary Compliance Encouragement Scheme, 2013.


    The Scheme is a one-time measure to encourage voluntary compliance by persons who may not have filed the returns or paid the service tax dues for the period commencing from 1st October, 2007 and ending on 31st December, 2012. It provides that such persons shall declare the tax dues and pay the same in accordance with the provisions of the Scheme. It further provides for certain immunities including penalty, interest or any other proceeding under the Chapter V of the Finance Act, 1994 to those persons who opt for the Scheme.


Chapter VII of the Bill seeks to provide for levy, collection and recovery of Commodities Transaction Tax. 

 

Clause 106 of the Bill seeks to define certain terms and expressions used in this Chapter.

 

Clause 107 of the Bill seeks to make a provision for the charging of a tax cal led commodi t ies t ransact ion tax at the rate of 0.01 per cent. in case of sale of commodity derivatives in respect of commodities other than agricultural commodities traded in recognised associations.

 

Clause 108 of the Bill provides the manner of computing the value of a taxable commodities transaction. The value of a taxable commodities transaction, in the case of sale of commodity derivative, shall be the price at which the commodity derivative is traded.


Clause 109 of the Bill provides for collection and recovery of commodities transaction tax by a recognised association from the seller. The amount of commodities transaction tax collected by the recognised associations has to be paid to the credit of the Government by 7th day of the month following the month in which the commodities transaction tax is collected. 

 

    Sub-clause (1) of clause 110 of the Bill provides for furnishing, by recognised associations (assessee) responsible for collection of commodities transaction tax, of a return in the prescribed form and prescribed manner and setting-forth such particulars as may be prescribed in respect of all taxable commodities transactions entered into during a financial year in that association.


    Sub-clause (2) confers power on the Assessing Officer to issue notice requiring any assessee who has not furnished the return, to furnish such return within such time as may be specified in the notice.


    Sub-clause (3) provides for furnishing of revised return before the assessment is made, in case of discovery of any omission or wrong statement in the return earlier furnished.

 

Clause 111 of the Bill contains provisions relating to assessment of the value of taxable commodities transactions and commodities transaction tax payable or refundable on the basis of such assessment. It also provides that no assessment shall be made after the expiry of two years from the end of the relevant financial year.


Clause 112 of the Bill provides for rectification of mistakes apparent from the record of any order passed by the Assessing Officer within one year from the end of the financial year in which the order sought to be amended was passed. The Assessing Officer may rectify mistakes either suo motu or at the instance of the assessee. Further, any amendment which has the effect of enhancing an assessment or reducing a refund or otherwise
increasing the liability of the assessee shall be made only after giving the assessee a reasonable opportunity of being heard. 

 

Clause 113 of the Bill provides for payment of simple interest at the rate of one per cent. for every month or part of a month where the commodities transaction tax collected is not credited to the account of the Central Government within the period specified in the said clause. 

 

Clause 114 of the Bill provides for imposition of penalty on the assessee responsible to collect transaction tax. The penalty would be a sum equal to the amount of commodities transaction tax not collected in a case where the assessee fails to collect the whole or any part of commodities transaction tax. In other cases, such penalty imposed will be one thousand rupees for every such failure. However, the penalty imposable under this clause shall not exceed the amount of commodity transaction tax that was to be paid.

 

Clause 115 of the Bill provides for penalty for failure to furnish return under clause 110. The penalty in such cases will be one hundred rupees for every day during which the failure continues.

 

Clause 116 of the Bill provides that any person, who fails to comply with notice issued under sub-clause (1) of clause 111, shall be liable to pay, by way of penalty, in addition to any commodities transaction tax and interest, a sum equal to ten thousand rupees for each failure.

 

Clause 117 of the Bill provides that no penalty will be imposable under clause 114, clause 115 or clause 116, if the assessee proves that there was reasonable cause for the failure to comply with the provisions of the said clause.

 

    It is further proposed that no order imposing a penalty under this Chapter shall be made unless the assessee has been given a reasonable opportunity of being heard.

 

Clause 118 of the Bill provides that sections 120, 131, 133A, 156, 178, 220 to 227, 229, 232,260A, 261, 262, 265 to 269, 278B, 282 and 288 to 293 of the Income-tax Act, 1961 which, inter alia, relate to issue of notice of demand, recovery and collection of tax, appeals to High Courts and the Supreme Court, appearance of authorised representatives, etc., will so far as may be, apply in relation to commodities transaction tax.

 

 

Clause 119 of the Bill provides for payment of simple interest at the rate of one per cent. for every month or part of a month where the commodities transaction any order passed under clause 111 or clause 112 by an Assessing Officer. This clause also contains provisions relating to time for filing appeal, etc., and provides that provisions of section 249 to 251 of the Income-tax Act, 1961, shall as far as may be, apply in such cases.

 

 

Clause 120 of the Bill provides for appeal to the Appellate Tribunal against order passed by Commissioner of Income-tax (Appeals) under clause 119. This clause contains provisions relating to time and procedure for filing appeal before the Appellate Tribunal. This clause also provides that where an appeal has been filed under this clause, the provisions of sections 252 to 255 of the Income-tax Act, 1961 shall, as far as may be, apply to such appeals.

 

Clause 121 of the Bill provides for punishment, by way of imprisonment upto a period of three years and with fine, for making any statement in any verification, account or statement which is false. This clause also provides that an offence punishable under this clause shall be deemed to be non-cognisable within the meaning of the Code of Criminal Procedure, 1973.

 

Clause 122 of the Bill provides that no prosecution shall be instituted for an offence under clause 121 except with the prior sanction of the Chief Commissioner of Income-tax.

 

Clause 123 of the Bill confers power on the Central Government to make rules for the purposes of carrying out the provisions of this Chapter. This clause also provides that every rule made under this clause shall be laid before each House of Parliament.

 

Clause 124 of the Bill confers power on the Central Government to issue orders for removal of any difficulty arising in giving effect to the provisions of this Chapter. This power is available to the Central Government for a period of two years from the date on which the provisions of this Chapter come into force. Every order made under this clause shall be laid before each House of Parliament. This amendment will take effect from the date appointed in the notification to be issued by the Central Government.

 

 

 

Miscellaneous

 

Clause 125 of the Bill seeks to amend section 98 of the Finance (No. 2) Act, 2004 relating to charge of securities transaction tax.

 

        It is proposed to amend the Table given under the said section which specifies the rates at which the securities transaction tax shall be charged.

        The proposed amendments seek to reduce the rates of securities transaction tax from 0.1 per cent. to zero per cent. in respect of the purchase of units of an equity oriented fund entered into in a recognised stock exchange where the contract for the purchase of such unit is settled by actual delivery. It is further proposed to insert a new serial number 2A and the entries relating thereto, so as to reduce the rate of securities transaction tax from 0.1 per cent. to 0.001 per cent. in respect of the taxable securities transaction of sale of unit of an equity oriented fund of the nature referred to under column (2) of the said Table. It is also proposed to reduce the rate of securities transaction tax from 0.017 per cent. to 0.01 per cent. in respect of taxable securities transactions of derivatives of the nature referred to under the said column (2), in item (c), against serial number 4. It is also proposed to reduce the rate of securities transaction tax from 0.25 per cent. to 0.001 per cent. in respect of taxable securities transactions of the units of equity oriented fund of the nature referred to under column (2) against serial number 5.

 

This amendment will take effect from 1st June, 2013.