Changes proposed in Central Excise Law by Union Budget 2017-18

Note: “Basic Excise Duty” means the excise duty set forth in the First Schedule to the Central Excise Tariff Act, 1985.

A. AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944:

S. No.	Amendment	Clause of the Finance Bill, 2017
1.	Clause (e) of section 23A is being amended so as to substitute the definition of “Authority” to mean the Authority for Advance Ruling as constituted under section 245-O of the Income-tax Act, 1961.	[111]
2.	Section 23B relating to vacancies not to invalidate proceedings is being omitted.	[112]
3.	Sub-section (3) of section 23C is being amended so as to increase the application fee for seeking advance ruling from rupees two thousand five hundred to rupees ten thousand on the lines of the Income-tax Act.	[113]
4.	Sub-section (6) of section 23D is being amended so as to provide time of limit of six months by which Authority shall pronounce its ruling on the lines of the Income-tax Act.	[114]
5.	A new section 23-I is being inserted so as to provide for transferring the pending applications before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) to the Authority constituted under section 245-O of the Income-tax Act from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President.	[115]
6.	Section 32E is being amended so as to insert a new sub-section (5) therein to enable any person, other than assessee, referred to in sub-section (1) to make an application to the Settlement Commission.	[116]
7.	Sub-section (3) of section 32F is being amended so as to substitute certain words therein. It further seeks to insert a new sub-section (5A) therein to enable the Settlement Commission to amend the order passed by it under sub-section (5), to rectify any error apparent on the face of record.	[117]

B. AMENDMENTS IN THE FIRST SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985 [Clause 118 of the Finance Bill, 2017]

S. No.	Amendments involving change in the rate of Basic Excise duty	Rate of Duty
S. No.		From	To
A.	Tobacco and Tobacco Products
1.	Cigar and cheroots	12.5% or Rs.3755 per thousand, whichever is higher	12.5% or Rs.4006 per thousand, whichever is higher
2.	Cigarillos	12.5% or Rs.3755 per thousand, whichever is higher	12.5% or Rs.4006 per thousand, whichever is higher
3.	Cigarettes of tobacco substitutes	Rs.3755 per thousand	Rs.4006 per thousand
4.	Cigarillos of tobacco substitutes	12.5% or Rs.3755 per thousand, whichever is higher	12.5% or Rs.4006 per thousand, whichever is higher
5.	Others of tobacco substitutes	12.5% or Rs.3755 per thousand, whichever is higher	12.5% or Rs.4006 per thousand, whichever is higher

The amendments involving change in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

C. OTHER PROPOSALS INVOLVING CHANGES IN EXCISE DUTY RATES:

S. No.	Amendments involving change in the rate of Additional Excise duty under Finance Act, 2005	From	To
B.	Pan Masala	6%	9%
C.	Tobacco and Tobacco Products
1.	Unmanufactured tobacco	4.2%	8.3%
2.	Amendments involving change in the rate of Basic Excise duty
3.	Paper rolled biris – handmade	Rs.21 per thousand	Rs.28 per thousand
4.	Paper rolled biris – machine made	Rs.21 per thousand	Rs.78 per thousand
D.	Renewable Energy
1.	Solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition	Nil	6%
2.	Parts/raw materials for manufacture of solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition	12.5%	6%
3.	Resin and catalyst for manufacture of cast components for Wind Operated Energy Generators [WOEG], subject to actual user condition	12.5%	Nil
4.	All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes	12.5%	6%
5.	All items of machinery required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen	12.5%	6%
E.	Miscellaneous
1.	Membrane Sheet and Tricot / Spacer for use in manufacture of RO membrane element for household type filters, subject to actual user condition	12.5%	6%
2.	All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual user condition	Applicable duty	6%
3.	Miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner	Applicable duty	Nil
4.	Parts and components for manufacture of miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner, subject to actual user condition	Applicable duty	Nil
5.	Waste and scrap of precious metals or metals clad with precious metals arising in course of manufacture of goods falling in Chapter 71 Strips, wires, sheets, plates and foils of silver Articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire Silver coin of purity 99.9% and above, bearing a brand name when manufactured from silver on which appropriate duty of customs or excise has been paid	Nil	Nil, subject to the condition that no credit of duty paid on inputs or input services or capital goods has been availed by manufacturer of such goods

D. AMENDMENTS IN THE CENTRAL EXCISE RULES, 2002 AND THE CENVAT CREDIT RULES, 2004

S. No.	Amendment
1.	Sub-rule (2) is being inserted in rule 21 of Central Excise Rules, 2002 so as to provide for a time limit of three months [further extendable by 6 months] for granting remission of duty under the said rule 21 read with section 5 of the Central Excise Act, 1944.
2.	Sub-rule (4) is being inserted in rule 10 of CENVAT Credit Rules, 2004 so as to provide for a time limit of three months [further extendable by 6 months] for approval of requests regarding transfer of CENVAT credit on shifting, sale, merger, etc. of the factory.

E. RETROSPECTIVE AMENDMENT

S. No.	Amendment	Clause of the Finance Bill, 2016
1.	To retrospectively [that is with effect from 01.01.2017] specify a tariff rate of excise duty of 12.5% [as against present tariff rate of 27%] on motor vehicles for transport of more than 13 persons falling under tariff items 8702 90 21 to 8702 90 29 of the First Schedule to the Central Excise Tariff Act, 1985.	[119]

F. AMENDMENTS IN THE SEVENTH SCHEDULE TO THE FINANCE ACT, 2005 [Clause 146 of the Finance Bill, 2017]

S. No.	Amendments involving change in the rate of Additional Excise duty	Rate of duty
S. No.		From	To
A.	Tobacco and Tobacco Products
1.	Non-filter Cigarettes of length not exceeding 65mm	Rs.215 per thousand	Rs.311 per thousand
2.	Non-filter Cigarettes of length exceeding 65mm but not exceeding 70mm	Rs.370 per thousand	Rs.541 per thousand
3.	Filter Cigarettes of length not exceeding 65mm	Rs.215 per thousand	Rs.311 per thousand
4.	Filter Cigarettes of length exceeding 65mm but not exceeding 70mm	Rs.260 per thousand	Rs.386 per thousand
5.	Filter Cigarettes of length exceeding 70mm but not exceeding 75mm	Rs.370 per thousand	Rs.541 per thousand
6.	Other Cigarettes	Rs.560 per thousand	Rs.811 per thousand
7.	Chewing tobacco (including filter khaini)	10%	12%
8.	Jarda scented tobacco	10%	12%
9.	Pan Masala containing Tobacco (Gutkha)	10%	12%

The amendments involving change in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Summary of other amendments:

Amendments to be effective from the date on which Finance Bill, 2017 receives the assent of the President

Changes in the provision of Authority for Advance Ruling
- Clause (e) of section 23A is being amended so as to substitute the definition of “Authority” to mean the Authority for Advance Ruling as constituted under section 245-O of the Income-tax Act, 1961.
- Section 23B relating to vacancies (in the Authority for advance ruling) not to invalidate proceedings is being omitted.
- The application fee for seeking advance ruling has been increased from Rs. 2,500/- (Rupees two thousand five hundred) to Rs. 10,000/- (Rupees ten thousand) – Section 23C (3).
- The time limit for pronouncing judgement by Authority for Advance Ruling has been extended from ninety days to six month – Section 23D (6).
- The pending applications before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) would stand transferred to the Authority constituted under section 245-O of the Income-tax Act from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President – new Section 23-I
Changes in the provisions of Settlement Commission:
- A new sub-section (5) has been inserted in Section 32E so as to enable any person, other than assessee, referred to in sub-section (1) to make an application to the Settlement Commission.
- A new sub-section (5A) has been inserted in Section 32F to enable the Settlement Commission to rectify the error in the order passed by it under sub-section (5), which are apparent on the face of record.

Amendment effective from 02.02.2017

Amendment in Central Excise Rules, 2002

Rule 21 provides for the remission of duty in case the goods have been lost or destroyed etc. A new sub-rule (2) has been inserted providing a time limit of three months [further extendable by 6 months] for granting such remission of duty from the receipt of application under this rule read with section 5 of the Central Excise Act, 1944.

Amendments in CENVAT Credit Rules, 2004

Rule 10 of the CENVAT Credit Rules, 2004 provides for transfer of CENVAT credit in different cases. In this regard, a new sub-rule (4) has been inserted so as to provide for a time limit of three months [further extendable by 6 months] for approval of requests regarding transfer of CENVAT credit on shifting, sale, merger, etc. of the factory.

Explanation-I(e) to rule 6 of the CENVAT Credit Rules, 2004 amended so as to exclude banks and financial institutions including non-banking financial companies engaged in providing services by way of extending deposits, loans or advances from its ambit.