Dated 7th February, 2018

Changes in indirect taxes as per the new finance bill 2018 _final

Changes in indirect taxes as per the new finance bill 2018


Customs

Introduction of Social Welfare Surcharge on Imported Goods

  • Social welfare surcharge @ 10% on the aggregate of duties, taxes and cesses, has been introduced on all imported goods with an objective to provide education, health and social security. Such Surcharge on imported goods shall be in addition to any other duties of customs/tax /cess.
  • For calculation of social welfare surcharge safeguard duty, countervailing duty, anti-dumping duty and social welfare surcharge would not be included.
  • The provisions of the customs act shall apply in relation to levy and collection of the social welfare surcharge.
  • The surcharge will be effective from 2nd of February, 2018.
  • Specified goods as mentioned in Notification No.11/2018-cus dated 02.02.18are exempted from social welfare surcharge. Moreover, such goods were previously also exempt from levy of EC and SHEC.
  • Surcharge on Motor Spirit, gold and Silver as prescribed is being exempted in excess of amount calculated @3% of the aggregate of duties of customs.
  • Surcharge is also not leviable on IGST and GST compensation cess on imported goods.
  • The imposition of surcharge would have additional impact of 7% to be levied on aggregate duties of customs.

Other Relevant Changes in the Customs Act, 1962

  • The scope of customs act has been widened to include any offence/ contravention committed outside India earlier the scope of act was limited, as the said act was applicable to the whole of India. This is likely to enhance the customs range significantly. As most of the customs frauds are beyond borders this amendment is likely to internationalize the Indian customs and prevent frauds thereof.
  • Assessment is now defined which was earlier an inclusive definition. Retaining the earlier inclusive definition the term assessment has been made more clear by defining is as determination of the dutiability of any goods & amount of duty, tax, cess or any sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 or under any law for the time being in force with reference to:
  1. Tariff classification
  2. Value of such goods
  3. Exemption Notification
  4. Quantity, weight, volume, measurement or other specifies wherein duty is determined as per these indices
  5. Origin of such goods
  6. Any other factor
  • With respect to prohibition on importation or exportation of goods a new sub section has been inserted. Now any prohibition / restriction relating to import/export of any goods if provided in any other law, shall be executed under the Customs Act, 1962 only if such restrictions or prohibitions are notified under the Customs Act.
  • Assessment is being amended so as to expand the scope of verification beyond self assessment to all the entries made on importation/exportation of goods. Moreover, to provide legal backing for the risk-based selection of self-assessed bills of entry/ shipping through appropriate selection criteria.
  • The audit clause as contained in the section of assessment has been deleted and a new chapter has been introduced for Audit. Moreover, as per the explanation given the scope of audit has been widened to that of importer/exporter/custodian approved or licensee of a warehouse and any other person concerned directly/ indirectly in clearing, forwarding, stocking, carrying, selling or purchasing of imported goods/ export goods/ dutiable goods.
  • The section governing Exports have also been included in the provisional assessment. Moreover, any document/ information as required by the proper officer for final assessment, shall be submitted by importer/exporter within such time and the proper officer shall finalise the provisional assessment within such time and manner as may be prescribed.
  • New provisions included wherein the government may by notification grant exemption from payment of customs duty goods for goods imported for repair, further processing or manufacture on fulfilment of certain conditions stated herein below:
  1. Such goods shall be re-exported after such repair, further processing or manufacture within a period of 1 year from the date on which the order for clearance of the imported goods is made.
  2. Such goods are identifiable in the export goods.
  3. Such other conditions as may be specified in that notification.

Similar, conditions as stated above is also applicable for importation of goods after exportation for the purpose of repair, further processing or manufacture from the whole or any part of customs duty.

  • In order to reduce litigation and facilitate smoothening of dispute resolution process, the finance bill has also included a provision of pre-notice consultation.
  • Instead of giving a show cause notice the proper officer may also issue a supplementary notice, regarding recovery of duty and all provisions of this section shall apply to the supplementary notice as it would have applied to a show cause notice.
  • For speedy litigation if the proper officer is unable to determine the amount of duty/interest pursuant to serving of notice on such person and after consideration of representation from such person, within the prescribed time or within the extended period of time then such proceeding shall be deemed to have been concluded as if no notice had been issued. This means that if demand notice is not adjudicated even within the extended period then such proceeding shall be deemed to have been concluded. Earlier the provisions contained the words “where it is possible to do so” has been deleted and the prescribed timelines will be applicable. However, specific types of cases have been listed in newly inserted provision which would be included in the recovery provisions wherein such timelines will not be applicable.
  • Regarding Refund if any refund order is modified by any appeal and new refund amount so determined is less than the actual refund, then the excess amount has to be refunded back to Government along with applicable interest from the date of refund till the date of recovery.
  • Relevant sections of the act have been amended so as to provide for clearance of goods by customs automated system in addition to existing clearance system by the proper officer.
  • The concept of electronic cash ledger in line with GST is being introduced with provisions for Advance Deposit of duties, taxes, etc.
  • The concept of ‘Controlled Delivery’ has been introduced, though such delivery was earlier carried out by intelligence agencies, however, legal provisions for the same were missing. In this regard the Proper officer or any person authorized by him in this behalf may have control over movement of goods
  1. Within India
  2. From outside India to a place within India and
  3. From India to a place outside India.
  • Earlier Notice of seizure was required to be given within 6 month of seizure of goods otherwise the goods were to be returned to the person from whom such seizure was made but Principal Commissioner has the power to extend such period of 6 months to a further period not exceeding 6 months. Now proper officer has to inform the person from whom goods were seized before the expiry of period specified by the Principal Commission of Customs or Commission of Customs.
  • Previously Assistant Commissioner and Deputy Commissioner of Customs & Gazetted Officer below the rank of Assistant Commissioner and Deputy Commissioner of Customs had the power to adjudge such confiscation or penalty where the value of goods did not exceed Rs. 5 lakhs &Rs. 50000 respectively. Now any confiscation or person liable to penalty under may be adjudged by such Officers upto a specified limit, as the board may notify.
  • The option to pay fine in lieu of confiscation will not be applicable in case of proceedings where the person who is liable to pay duty along with interest pays so either on receipt of notice from the proper officer or on the basis of his own ascertainment of such duty. Also fine in lieu of confiscation has to be paid within a period of 120 days from the date of option given there under otherwise such option shall become void, unless an appeal against such order is pending.
  • The Commissioner (Appeals) shall be provided with the power of remanding the matter back to the adjudicating authority with directions for fresh adjudication or decision, as the case may be, in the following cases, namely:—
  1. where an order or decision has been passed without following the principles of naturaljustice; or
  2. where no order or decision has been passed after re-assessment ; or
  3. where an order of refund has been issued by crediting the amount to Fund without recording any finding on the evidence produced by the applicant.
  • Power shall be provided to the Board who may take such measures or prescribe separate procedure or documentation for a class of importers or exporters or for categories of goods etc. for the purposes of facilitation of trade.
  • Central Government may enter into an agreement or any other arrangement with the Government of any country outside India or with such competent authorities of that country, as it deems fit, for facilitation of trade, enforcing the provisions of this Act and exchange of information. Further Information received may be used as evidence in investigations and proceedings under this Act.
  • Bonded Warehouse Sales- For calculation of IGST and GST compensation cess value of goods sold from warehouse shall be higher of transaction value (actual amount paid or payable as consideration for sale of goods) or the value determined under the Customs Tariff Act (Assessable value under Customs + BCD). Furthermore, it provides that where such bonded warehouse sale takes place more than once, transaction value of the last of such transaction shall be considered. It may be noted that earlier, the value of imported goods, for purposes of charging customs duty, Integrated Tax and Compensation Cess, was determined as per Section 14 of the Customs Act at the time of import i.e. at the time of filing of the into-bond Bill of Entry. Any costs incurred after the import of goods, or any margin on sale of bonded warehouse goods cannot be added to the value of the goods, for the purpose of levy of duties of customs at the stage of ex-bonding.After the proposed amendment, BCD shall continue to be charged on the same value under Section 14 of the Customs Act. However, Integrated Tax and Compensation Cess shall be charged on this value with the addition of any margin earned on bonded warehouse sale.
  • Certain retrospective amendment in service tax

    Service tax has been exempted on the following services:

  • Services provided or agreed to be provided by the Naval Group Insurance Fund by way of life insurance to personnel of Coast Guard, under the Group Insurance Schemes of the Central Government , are exempted retrospectively from service tax for the period commencing from 10th September, 2004 and ending with 30th June, 2017.
  • Services provided or agreed to be provided by the Goods and Services Tax Network (GSTN) to the Central Government or State Governments or Union territories administration, are retrospectively exempted from service tax for the period commencing from 28th March, 2013 and ending with 30th June, 2017.
  • Payment of services provided to the Government is liable to service tax under reverse change mechanism. However, it is proposed to exempt service tax retrospectively on consideration paid to the Government in the form of Government's share of profit petroleum in respect of services provided or agreed to be provided by Government by way of grant of license or lease to explore or mine petroleum crude or natural gas or both , for the period commencing from 1st April, 2016 and ending with 30th June, 2017. Service tax collected on the above stated services shall be refunded. For claiming such refund, an application shall be made by the taxpayer within six months from the day on which Finance Bill, 2018 receives assent.
  • Miscellanous changes

  • The Additional Duty of Customs leviable on motor spirit commonly known as petrol and high speed diesel oil are being abolished by omitting the relevant sections in Finance Act, 1998 and Finance Act, 1999, respectively. Further by the time Finance Bill, 2018 is passed by parliament, the Additional Duty of Excise leviable on domestically manufactured and produced motor spirit commonly known as petrol and high speed diesel oil are being fully exempted. Consequently, notification Nos. 57/98—Customs dated 01.08.1998, 59/99-CE dated 11.05.1999, 06-2015-Customs dated 01.03.2015, 07/2015-Customs dated 01.03.2015 related to Additional Duty of Customs are being rescinded.
  • A Road and Infrastructure Cess is being imposed on motor spirit commonly known as petrol and high speed diesel, falling under heading 2710, at the rate of Rs. 8 per litre as an additional duty of customs. This levy of Road and Infrastructure Cess will come into effect immediately in terms of declaration under the Provisional Collection of Taxes Act, 1931. Simultaneously, the Additional Duty of Customs leviable under Section 3(1) of Customs Tariff Act, 1975 in lieu of Additional Duty of Central Excise (Road and Infrastructure Cess) leviable is being exempted on imported motor spirits commonly known as petrol and diesel oil.
  • Imported Motor Spirits commonly known as petrol and high speed diesel oil are exempted from Education Cess and Secondary Higher Education Cess. Till the enactment of the Finance Bill, 2018, Education Cess and Higher Secondary Education Cess shall be exempt vide Notification.
  • Import manifest & Export manifest shall be substituted by the words arrival/import manifest & departure/export manifest respectively.
  • CBEC will be known as Central Board of Indirect Taxes & Customs.

Changes in customs tariff

Tariff heading Item Description Current rate Revised Remarks
08013100 Cashew nuts in shell 5% 2.5% Notification no.50/2017 dated 30th June 2017 (S.No.22) standard rate of duty has been revised
1508,1509,1510,1512,
1513,1514 Or 1515
All goods, crude and edible grade 12.5% 30% Notification no.50/2017 dated 30th June 2017 (S.No.63) standard rate of duty has been revised
1508,1509,1510,
1512,1513,1514
Or 1515
All goods, refined and edible grade 20% 35% Notification no.50/2017 dated 30th June 2017 (S.No.64) standard rate of duty has been revised
151620 All goods of edible grade 20% 35% Notification no.50/2017 dated 30th June 2017 (S.No.77) standard rate of duty has been revised
15171021,15179010,
15180011,15180021,
15180031
All goods of edible grade 20% 35% Notification no.50/2017 dated 30th June 2017 (S.No.79) standard rate of duty has been revised
68159100,6901,
6902, or 6903
All goods 5% 7.5% Notification no.50/2017 dated 30th June 2017 Newly Tariff heading no. 68159100 and 6901 has been inserted
70 Solar tempered glass or solar tempered (antireflective coated) glass for use in manufacture of solar cells/panels/modules Nil 5% Notification No. 50/2017(S.No.340) items under tariff head 70 is now attracts NIL rate of duty
70 Perform of silica for use in the manufacture of telecommunication grade optical fibers or optical fiber cables Nil 5% Notification No. 50/2017(S.No.341) items under tariff head 70 is now attracts 5% rate of duty
71 Diamonds including lab grown diamonds-semi processed, half-cut or broken 2.5% 5% Notification no.50/2017 dated 30th June 2017 (S.No.350) standard rate of duty has been revised
71 Non-industrial diamonds including lab-grown diamonds(other than rough diamonds) 2.5% 5% Notification no.50/2017 dated 30th June 2017 (S.No.351) standard rate of duty has been revised
8407
    All good other than engines of
  1. motor vehicles falling under heading 8702 or 8704
  2. motor cars falling under heading 8703 or
  3. motor cycles falling under heading 8711
2.5% 7.5% Notification no.50/2017 dated 30th June 2017(S.No-448A) has Newly inserted
84072100 Outboard Motors 2.5% 5% Notification no.50/2017 dated 30th June 2017 (S.No-448B) has Newly inserted
8408
    All goods Other than Engines of
  1. motor vehicles falling under heading 8702 of 8704
  2. motor cars falling under heading 8703 or
  3. motor cycles falling under heading 8711
2.5% 7.5% Notification no.50/2017 dated 30th June 2017 (S.No-448C) has Newly inserted
8409
    All goods other than parts suitable for use solely or principally with the engines of heading 8407 or 8408 of a kind used in-
  1. motor vehicles falling under heading 8702 or 8704
  2. motor cars falling under heading 8703 or
  3. motor cycles falling under heading 8711
2.5% 7.5% Notification no.50/2017 dated 30th June 2017(S.No-448D) has Newly inserted
84831091
    All goods other than Crank shaft for engines falling under heading 8407 of
  1. motor vehicles falling under heading 8702 or 8704
  2. motor cars falling under heading 8703 or
  3. motor cycles falling under heading 8711
2.5% 7.5% Notification no.50/2017 dated 30th June 2017(S.No-448E) has Newly inserted
84831092
    All goods other than Crank shaft for engines falling under heading 8404 of-
  1. motor vehicles falling under heading 8702 or 8704
  2. motor cars falling under heading 8703 or
  3. motor cycles falling under heading 8711
2.5% 7.5% Notification no.50/2017 dated 30th June 2017 (S.No-448F) has Newly inserted
8456, 8463 Ball screws for use in the manufacture of CNC Lathes (tariff item 84581100, 84589100) or Machining Centers (tariff item 84571010, 84571020 2.5% - Notification no.50/2017 dated 30th June 2017 (S.No-462) newly substituted All type CNC machine tools falling under headings 8456 to 8463
8456, 8463 Linear Motion Guides for use in the manufacture of CNC Lathes (tariff item 84581100, 84589100) or Machining Centers (tariff item 84571010, 84571020) 2.5% - Notification no.50/2017 dated 30th June 2017 (S.No-463) newly substituted All type CNC machine tools falling under headings 8456 to 8463
8456, 8463 CNC Systems for use in the manufacture of CNC Lathes (tariff item 84581100, 84589100) or Machining Centers (tariff item 845710 10, 84571020) 2.5% - Notification no. 50/2017 dated 30th June 2017 (S.No-464) newly substituted All type CNC machine tools falling under headings 8456 to 8463
8511
    All goods other than of a kind used in conjunction with engines of
  1. motor vehicles falling under heading 8702 or 8704
  2. motor cars falling under heading 8703 or
  3. motor cycles falling under heading 8711
7.5% - Notification no.50/2017 dated 30th June 2017 (S.No-489A)Newly inserted
85299090 Parts of Radio Trunking terminals 5% - Notification no.50/2017 dated 30th 2017(S.No-499) Newly substituted the tariff heading
8529
    The following goods for use in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panels of heading 8529, namely: -
  1. Open cell (15.6” and above);
  2. Plate diffuser;
  3. Film diffuser;
  4. Reflector sheet; (v) Film, top;
  5. Film, middle;
  6. Film, bottom; (viii) BAR, LED;
  7. Bezzal;
  8. Back cover sheet (xii) Back Light Unit Module
Nil 10% Notification no.50/2017 dated 30th June 2017(S.No-516) newly substituted the tariff heading and rate of duty
85291099, 85299090 Parts suitable for use solely or principally with the apparatus of heading 8525, 8526 or 8527 Nil 10% Notification no.50/2017 dated 30th June 2017(S.No-516A) Newly substituted
85291099, 85299090
    Parts suitable for use solely or Principally with the apparatus of heading 8528 namely:-
  1. other cathode ray tube monitors(85284900)
  2. other monitors(85285900)
  3. other projectors(85256900)
  4. reception apparatus for television, whether of not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus,-
  1. not designed to incorporate a video display or screen(85257100)
  2. other monochrome(852873)
Nil 10% Notification no.50/2017 dated 30th June 2017(S.No-516B) Newly substituted
8708 All goods other than parts and accessories of the motor vehicles of heading 8702 to 8704 Nil 10% Notification no.50/2017 dated 30th June 2017(S.No-530A) has Newly Inserted
9018, 9019, 9020, 9021
or 9022(except 90183230, 90185020,
90189021, 90189024, 90189043,
901890 95, 90189096, 90189097,
90189098, 90191020, 90229010
or 90229030)
All goods 5% 7.5% Notification no.50/2017 dated 30th June 2017(S.No-563A) has Newly Inserted
950691 Articles and equipment for general physical exercise gymnastics or athletics Nil 10% Notification no.50/2017 dated 30th June 2017(S.No-594A) has newly Inserted
5007 Woven fabrics of silk or of silk waste 10% 20% Notification no.82/2017 dated 27th October 2017(S.No-2A) has newly Inserted
85451100 Electrodes of a kind used for furnaces Nil Nil Notification no.27/2011 dated 1st march 2011 (S.No-62A) has newly inserted


Changes in indirect taxes as per the new finance bill 2018 _final

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Changes in indirect taxes as per the new finance bill 2018 _final

Changes in indirect taxes as per the new finance bill 2018 _final
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BT Associates, India

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Twenty years of exprience in tax practice, specialist in structuring & planing and tax optimization under indirect tax. Lead eastern India indirect tax practice of Ernst & Young in past.