Budget 2021 – Changes in Customs and Excise

New Agriculture Cess on Petrol and High Speed Diesel

Government has introduced a new Agriculture Infrastructure and Development Cess (AIDC) as an additional duty of excise on Petrol and High-speed diesel. The purpose of this cess is to finance the improvement of agriculture infrastructure and other development expenditure. Do note here that any tax collected as cess can only be utilised for the specific purpose for which the cess has been levied. Rate of AIDC is as follows: Motor Spirit (Petrol) – INR 2.5 per litre 2) High-speed diesel – INR 4 per litre. These new rates have been made effective immediately from the date of presentation of budget.

Reduction in excise duties on Petrol and Diesel to compensate additional cess

Consequent to imposition of AIDC, the petrol and diesel price would increase. To counter the price increase, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on Petrol and High-speed diesel are also reduced to an equal effect, so that consumers do not have to bear any additional burden.

Introduction of Common Customs Electronic Portal

The customs act has been amended to include section 2(7B) where the common portal has been defined referred to as Common Customs Electronic Portal (CCEP). The government is planning to launch a Common Customs Electronic Portal to provide all the trade-related information and facilities for importers and the exporters and improve ease of doing business. The proposed portal will facilitate registration, filing of bills of entry, shipping bills, payment of duty, and viewing and response to show cause notices, audits and other related inquiries by the customs authorities. It is also expected that such a portal will have an automatic risk evaluation of traders. The new portal will be a combination of existing Indian Customs Electronic Gateway (ICEGATE), which provides electronic filing services to cargo carriers and other trading partners, and the existing single-window interface for trade (SWIFT), so that all trade-related information is at one single location. Necessary amendments have been made in section 149, 153 and 154C for this purpose.

Mandatory filing of Bill of Entry before the arrival of goods

Section 46(3) has been amended to provide for a) mandatory filing of Bill of Entry (BoE) before the end of the day preceding the day (including holidays) of the arrival of goods b) to enable the Board to notify period for presenting the bill of entry in certain cases. Presently, an importer is allowed to file Bill of Entry within 30 days from the arrival of goods.

No exemptions in imports to charitable institutions

Under section 25 of the Customs Act, the Central Government is permitted to provide conditional exemptions to a certain class of taxpayers or products, from paying various duties. These include imports by charitable institutions subject to certain conditions. The section is now amended to prescribe a sunset date whereby all conditional exemptions under Customs Act shall come to an end on March 31, 2023, unless specifically extended or rescinded earlier.

The time limit for customs assessment extended

A new section 28BB has been introduced under Customs Act, prescribing a two-year time limit, further extendable by one year by the Commissioner, for completion any assessment proceedings which may lead to notice for recovery of customs duties under section 28.

Wrongful claim of refund may lead to confiscation of goods

Section 113(ja) has been amended to provide for confiscation of any goods entered for exportation under a claim of remission or refund of any duty, to make a wrongful claim in contravention of the provisions of the Customs Act or any other law for the time being in force.

Penalty for fake invoices

A new section 114AC has been inserted in Customs Act to prescribe penalty where any person has obtained any fake invoice to utilize Input Tax Credit based on such invoice for discharging any duty for a claim of refund against exported goods. The penalty in such cases shall be five times the refund amount claimed.

Job work on imported goods

The Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 have been amended to allow 1) job work of materials (except gold and such precious metals) imported under a concessional rate of duty 2) 100% outsourcing for such job work 3) imported capital goods used for the above purpose to be cleared on payment of differential duty, along with interest, on the depreciated value. Depreciation would be the same as applied to Export Oriented Units (EOUs) as per Foreign Trade Policy.

Inventories, photographs and lists permitted as evidence

Explanation to section 139 of Customs Act has been amended to include inventories, photographs and lists certified by the Commissioner (Appeals) as evidentiary documents for investigations and court proceedings.

Changes in Customs Tarriff

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