The
Hon’ble President has given assent to the Finance Bill, 2015 on Thursday, May
14, 2015. Accordingly, the Finance Bill, 2015 has now become Finance Act (No.20), 2015. We have already
provided the changes in Service tax that are
effective from May 14, 2015 and the changes
that will become effective only from the date to be notified in our
earlier newsletter.
Now,
we are summarizing herewith changes under the Central Excise and the Customs
effective from May 14, 2015 for easy digest:
PART I: CHANGES UNDER THE CENTRAL EXCISE
EFFECTIVE FROM MAY 14, 2015:
Changes
under various Sections under the Central Excise Act, 1944 (“the Excise Act”)
Section
11A:Recovery of duties not levied or not paid or short-levied or short-paid or
erroneously refunded
- a)
Section 11A(5), 11A(6) and 11A(7) of the Excise Act contains the
provisions relating to the category of cases where fraud, collusion,
wilful mis-statement, etc., is involved but the details relating to the
transactions are available in the specified record like reduced penalty of
50%, maximum penalty of 25% in cases where the duty amount, interest and
reduced penalty is paid before issuance of SCN etc.
- b)
Effective from May 14, 2015, Section 11A(5), 11A(6) and 11A(7) of the
Excise Act are omitted so as to bring uniformity in treatment of cases
involving fraud, collusion, wilful mis-statement, etc. irrespective of
whether the details of the transaction is so recorded or not;
- c)
New sub-section 16 inserted after Section 11A(15) of the Excise Act to
provide that the provisions of Section 11A shall not apply to cases where
the non-payment or short payment of duty is self-assessed and declared as
duty payable by the assessee in the periodic returns filed and that in
such cases recovery of duty shall be made in such manner as may be
prescribed;
- d)
Sub-clause (vi) inserted in Explanation 1 to Section 11A of the Excise Act
(containing provision relating to ‘relevant date’)to provide that in cases
where only interest is required to be recovered, the relevant date would
be the date of payment of duty.
- e)
Transition provisions – Explanation 2 has been substituted to provide that
if Show Cause Notice was not issued prior to enactment of the Finance
Bill, 2015, recovery of duty will be governed by the provisions as
amended.
Section
11AC:Rationalization of penal provisions:
Non-fraud cases:In
cases not involving fraud or collusion or wilful misstatement or suppression of
facts or contravention of any provision of the Excise Act or Rules with the
intent to evade payment of duty, in the following manner:
- a)
Ceiling of 10% of the duty determined under Section 11A(10) of the Excise
Act or Rs. 5,000/-, whichever is higher has been incorporated;
- b) No
penalty leviable if duty amount and interest is paid within 30 days of
issuance of SCN and proceedings in respect of such duty amount and
interest shall be deemed to have been concluded;
- c)
Reduced penalty equal to 25% (i.e. 2.5% of Duty) of the penalty if the
duty amount, interest and reduced penalty is paid within 30 days of
communication of the Adjudication Order.
- d) If
the duty amount or penalty is increased in any Appellate proceedings, then
the benefit of reduced penalty (i.e. 25%) shall be admissible if duty,
interest and reduced penalty on such increased amount is paid within 30
days of such Appellate Order.
Fraud cases:In
cases involving fraud or collusion or wilful misstatement or suppression of
facts or contravention of any provision of the Excise Act or Rules with the
intent to evade payment of duty, in the following manner:
- a)
Penalty shall be of 100% of the duty determined under Section 11A(10) of
the Excise Act. However, in respect of the cases where the details
relating to such transactions are recorded in the specified record for the
period beginning with the April 8, 2011 upto the date on which the Finance
Bill, 2015 receives the assent of the President [i.e. May 14, 2015](both
days inclusive), the penalty shall be 50% of the duty so determined;
- b)
Reduced penalty equal to 15% of the duty amount alleged in the SCN shall
be levied if duty, interest and reduced penalty is paid within 30 days of
issuance of SCN. Further proceedings in respect of such duty amount,
interest and penalty shall be deemed to be concluded;
- c)
Reduced penalty equal to 25% of the duty amount, determined by the Central
Excise officer by an Adjudication Order, shall be levied if the duty,
interest and reduced penalty is paid within 30 days of communication of
Order of the Central Excise Officer; and
- d) If
the duty amount gets modified in any Appellate proceedings, then the
amount of penalty and the interest payable thereon shall stand modified
accordingly, and after taking into account the amount of duty so modified,
the person who is liable to pay such amount of duty, shall also be liable
to pay the amount of penalty and interest so modified;
- e) If
the duty amount or penalty isincreased in any Appellate proceedings, then
the benefit of reduced penalty (i.e. 25%) shall be admissible if duty,
interest and reduced penalty on such increased amountis paid within 30
days of such Appellate Order.
Transition
provisions:Explanation I prescribes transition provision in the following
manner:
a)
Amended provisions of Section 11AC of the Excise Act shall apply to cases where
no SCN is issued, before the date of enactment of the Finance Bill, 2015 (i.e.
May 14, 2015); and
b)
In cases where SCN has been issued but no Adjudication Orderhas been issued
before the date of enactment of the Finance Bill, 2015 (i.e. May 14,
2015),assesse shall be eligible to closure of proceedings on payment of duty
and interest in non-fraud cases or on payment of duty, interest and 15% penalty
in fraud cases, within 30 days from the date on which the Finance Bill, 2015
receives the assent of the President (i.e. May 14, 2015);
c)
In cases where Adjudication Order is passed after the date of enactment of the
Finance Bill, 2015 (i.e. May 14, 2015), assesse shall be eligible to benefit of
reduced penalty of 25% of penalty amount in non-fraud cases or 25% of duty
amount in fraud cases, subject to the condition that the payment of duty,
interest and penalty is made within 30 days of the communication of the Order.
Provisions
relating to Settlement Commission has been amended to, inter alia, include amendment in the
proviso to Section 31(c) to delete the reference to“in appeal or revision, as
the case may be” so as to provide that when any proceeding is referred back,
whether in appeal or revision or otherwise, by any Court, Appellate Tribunal or
any other Authority to the Adjudicating Authority for a fresh adjudication or
decision, then such cas eshall not be entitled for settlement.
Penalty
provided under sub-sections (4) and (5) of Section 37 of the Excise Act (Power of Central
Government to make Rules) increased to Rs. 5000/-. Earlier it was Rs.
2000/-.
S.
No. 205A of Notification No. 12/2012-Central Excise dated March 17, 2012 exempts railway or tramway track
construction material of iron and steel from payment of Excise duty on the
value of rails, subject to conditions specified therein. This exemption is
being made applicable retrospectively for the period from March 17, 2012 to
February 2, 2014.
PART II: CHANGES UNDER THE CUSTOMS EFFECTIVE
FROM MAY 14, 2015
Changes
under various Sections under the Customs Act, 1962 (“the Customs Act”)
Section
28:Rationalization of penal provisions:
Non-fraud cases:
In cases not involving fraud or collusion or wilful misstatement or suppression
of facts or contravention of any provision of the Customs Act or Rules with the
intent to evade payment of duty, in the following manner:
a)
Proviso inserted in Section 28(2) of the Customs Act: No penalty leviable if
duty amount and interest is paid within 30 days of issuance of SCN and
proceedings in respect of such duty amount and interest shall be deemed to have
been concluded;
Fraud cases:
In cases involving fraud or collusion or wilful misstatement or suppression of
facts or contravention of any provision of the Customs Act or Rules with the
intent to evade payment of duty, in the following manner:
a)
Section 28(5) of the Customs Act amended to provide that reduced penalty equal
to 15% (instead of 25% earlier) of the duty amount alleged in the SCN shall be
levied if duty, interest and reduced penalty is paid within 30 days of issuance
of SCN.
Transition
provision:Explanation 3 inserted to prescribe transition provision in the
following manner:
a)
In cases where SCN has been issued but no Adjudication Order has been issued
before the date of enactment of the Finance Bill, 2015 (i.e. May 14, 2015), assesse
shall be eligible to closure of proceedings on payment of duty and interest in
non-fraud cases or on payment of duty, interest and 15% penalty in fraud cases,
within 30 days from the date on which the Finance Bill, 2015 receives the
assent of the President (i.e. May 14, 2015);
Section
112:Penalty for improper importation of goods etc.
Section
112 is being amended so as to substitute sub-clause (ii) of clause (b) to
provide that penalty for improper importation of the dutiable goods other than
the prohibited goods would be higher of the following:
1. Penalty not exceeding 10% of the
duty sought to be evaded or
2. Rs. 5,000/-
It
is also being provided that if the duty as determined under Section 28(8) of
the Customs Act and the interest payable thereon under Section 28AA thereof is
paid within 30 days from the date of communication of the Order of the proper
officer determining such duty, the amount of penalty liable to paid by such
person under this Section shall be 25% of the penalty so determined.
Section
114: Penalty for attempt to export goods improperly etc.
Section
114 is being amended so as to substitute clause (ii) to provide that penalty
for improper exportation of the dutiable goods other than the prohibited goods
would be higher of the following:
1. Penalty not exceeding 10% of
the duty sought to be evaded or
2. Rs. 5,000/-
It
is also being provided that if the duty as determined under Section 28(8) of
the Customs Act and the interest payable thereon under Section 28AA thereof is
paid within 30 days from the date of communication of the Order of the proper
officer determining such duty, the amount of penalty liable to paid by such
person under this Section shall be 25% of the penalty so determined.
Provisions
relating to Settlement Commission has been amended to, inter alia, include amendment in the proviso
to clause (b) of Section 127A to delete the reference to “in appeal or
revision, as the case may be” so as to provide that when any proceeding is
referred back, whether inappeal or revision or otherwise, by any Court,
Appellate Tribunal or any other Authority to the Adjudicating Authority for a
fresh adjudication or decision, then such case shall not be entitled for
settlement.
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