Finance Bill Passed by Lok Sabha - Misery Tax withdrawn - Point of Taxation Postponed
IN our Seminar in Mumbai, the CBEC Chairman was rather emotional while defending the Service Tax on health services and said that only centrally air-conditioned hospitals were proposed to be brought under the tax net and not hospitals with air-conditioned operation theatres. Now the Finance Minister has withdrawn the proposed tax, which was termed as a misery tax, though one of our contributors had stoutly defended the tax.
Ms Bhavna Doshi had requested in our Seminar that the assessees should be given some time to understand the ‘point of taxation' and it should be effective after three months. The kind FM has obliged and now this scheme will come into force from 1st July.
Anti Dumping – No more Circumvention: A new sub-section 1A is being added to Section 9A of the Customs Tariff Act to stipulate that: "Where the Central Government, on such inquiry as it may consider necessary, is of the opinion that circumvention of anti-dumping duty imposed under sub-section (1) has taken place, either by altering the description or name or composition of the article subject to such anti-dumping duty or by import of such article in an unassembled or disassembled form or by changing the country of it origin or export or in any other manner, whereby the anti-dumping duty so imposed is rendered ineffective, it may extend the anti-dumping duty to such article or an article originating in or exported from such country, as the case may be."
Already the Department is doing this without Government's intervention – if they suspect anti dumping, the goods are detained and cases registered for false declaration and hefty penalties are imposed.
Branded Ready Made garments – Industry's agony addressed – partly! Many in the ready-made garment industry paid visits to consultants immediately after the budget with many questions, but they did not pay them hoping that the levy would be rolled back. Bad Luck – they cannot avoid consultants, who are themselves worried about the new attack on them. We had carried a detailed article on this garment levy and one of the questions posed was about valuation when retail sale price is not printed. Now the FM has clarified that duty can be paid on wholesale price, but later when RSP is affixed, differential duty if any has to be paid. The abatement from RSP has been increased to 55% and by this the FM says that a unit which had an RSP based sale of Rs. 8.9 Crores in 2010-11, will continue to get SSI benefit in 2011-12. The garment and made-up industry has a high incidence of return of unsold stock. The FM has allowed exemption not exceeding 10 per cent of the value of clearances of the unit in the preceding financial year, for the returned goods. Still several issues are pending clarification. Hopefully in the days to come Board will come up with clarifications.
Has Legal Metrology Act come into force? In the Finance Bill, in several clauses, it had been provided that, for the words, figures and brackets “Standards of Weights and Measures Act, 1976 (60 of 1976)”, the words and figures “Legal Metrology Act, 2009” shall be and shall be deemed to have been substituted with effect from the 1st day of March, 2011 .
Now the amendment to the Finance Bill in all those clauses substitutes that "Legal Metrology Act, 2009" shall be substituted with effect from such date as the Central Government may, by notification in the Official Gazette, appoint . What happened? Has the Act not come into force?
Time limit for adjudication – where possible returns: As per the new Section 28 of the Customs Act, the proper officer is required to determine the duty within six months/one year from the date of notice. Now the words, " where it is possible to do so " have been inserted. That means the adjudicating authority has all the time in the world! Similar amendment is made in the Central Excise Act also.
Recovery – Old Sections for Old Cases: An Explanation is inserted to clarify that recovery proceedings under Section 28 of the Customs Act and Section 11A of the Central Excise Act will continue to be under the old sections for the period before Finance Bill 2011 is enacted.
Better periods – Duty on Sanitary napkins reduced: The Tariff rate on napkins has been reduced from 16% to 5% - maybe they will get an effective rate of 1%.
RSP based levy proposed to be extended to commodities where 1% excise duty is levied: In respect of the 130 items where 1 % excise duty is being levied, RSP based assessment with an abatement of 35 % is proposed to be extended to many of these items to avoid disputes with regard to valuation. Further any waste, scrap or parings arising in the course of manufacture of these items are being exempted from excise levy.
More relief to manufacturers of goods carrying 1% excise levy: As a measure of further relief to the taxpayers exclusively manufacturing these items, a simplified regime is proposed with the following procedural relaxations:
i) Physical verification of premises would not be necessary for new registrants;
ii) Visits to such units by Central Excise officers would be permitted only with due authorisation as in the case of SSI units;
iii) They would be required to file only quarterly returns; and
iv) A simplified return format will be prescribed.
To encourage domestic manufacturers, the following reliefs are being proposed in customs and excise duties:
i) To extend the concessional rate of 5 per cent CVD and Nil SAD to parts of all computer printers imported by actual users;
ii) To exempt seven specified parts of personal computers from levy of special additional duty of customs;
iii) To restore full exemption from excise duty (and CVD) on silicon wafers imported for manufacture of solar cells/modules;
iv) To exempt certain types of coking coal imported for the manufacture of iron or steel from customs duty;
v) To prescribe an unconditional 1 per cent excise duty (and CVD) on mobile handsets including cellular phones in addition to 1 per cent NCCD already leviable; and
vi) To reduce the basic customs duty from 60 to 30 per cent on CKD kits containing a pre-assembled engine, gear box or transmission assembly, imported for the manufacture of vehicles.
The Board will be busy in the coming weeks notifying the FM's commitment to Parliament.