Mystery of Notification No 27/2012-CE dated 30th May 2012

By Vijay Kumar

NOTIFICATION No. 18/2012-CE dated 17.03.2012, fixed the effective rate of duty mostly at 12% for several goods. Notification No. 27/2012 CE dated 30th May 2012 rescinded this notification.

Ever since Notification No 27/2012 CE dated 30th May 2012 has been issued, we are getting several mails and calls not only from the not-so-well-informed-remotely-located assessees, but also from reputed consultants and lawyers. Their single doubt was why Notification No 18/2012 dated 17.3.2012 has been rescinded vide Notification No 27/2012 CE? What will happen to the goods covered under Notification No 18/2012 CE dated 17.3.2012 which attracted duty at the rate of 12%/6% under the said Notification? At what rate these goods will be charged from 30 th May 2012?

Actually, Notification No 18/2012 dated 17.3.2012 is only a stop-gap arrangement between the date of presentation of the Finance Bill 2012, and the date of its enactment. In Finance Bill 2012, vide Schedule seven, it was proposed to reduce the tariff rate on many commodities to 12%/6%. But, these rates will become part of the Statutory Tariff only after enactment of the Finance Bill – because the Provisional Collection of Taxes Act applies only to increase or imposition of excise duty and not decrease. In this case, duty was reduced from 16% to 12% and so would not have had immediate effect from 17.3.2012. So, till such time, the rate of duty is maintained at the desired rate by way of an exemption Notification. Once the Finance Bill is enacted, the Statutory rate itself will be 12%/6% and after the enactment of the Finance Bill, the new rates will be part of the Central Excise Tariff and the stop-gap exemption notification becomes useless / redundant. Hence, the same is rescinded. Let us see some entries in Notification No 18/2012 CE and parallel entries in Seventh Schedule to the Finance Act, 2012

And Jewellery too:

Similarly, Notification No 23/2012 CE dated 08.05.2012 (Jewellery exemption) has also been rescinded vide Notification No 27/2012 CE dated 30 th May 2012. One of my consultant friends asked me “Does this mean jewellery will now attract duty? What about the FM's statement that the duty on jewellery has been withdrawn?

This is another story. While keeping the FM's word, CBEC had issued Notification No 23/2012 CE dated 08.05.2012, which came into effect obviously from 08.05.2012, but jewellery remained taxable for the period from 17.3.2012 to 07.05.2012.

Therefore, vide the amendments proposed to the Finance Bill 2012, in Fifth Schedule, an entry was inserted to make the duty rate in Notification No 12/2012 CE at Sl No 199 (i.e., Jewellery ) as Nil with effect from 17.3.2012 without any conditions attached. So the new Notification No 23/2012 CE is no longer required and accordingly the same has been rescinded vide Notification No 27/2012 CE dated 30 th May 2012. (Notification No 23/2012 CE had another entry for goods falling under Ch 8607, which has also been taken care of vide amendments made to the Finance Bill, 2012)

Obviously, the Babus have been very careful in drafting these notifications and they deserve our kudos for taking care of such minute issues, which can boomerang into major litigation.

Incidentally, the subject for Notification No. 18/2012, in TIOL reads as, "Effective Rate of 12% and 6% fixed for many items for which the Tariff Rates have also been reduced. But as the reduction in tariff does not have immediate effect, the reduction is brought into immediate effect by this notification, which will be rescinded when the Finance bill is enacted". On the Budget Day itself, we told you that this notification will be rescinded when the Finance Bill is enacted.