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In the first Union Budget after the introduction of GST, the finance minister (FM) expectedly did not make any changes under the Goods and Services Tax (GST) regime. The changes to the GST law, if any, are expected to be taken up separately under the present Parliamentary session. The FM, however, during his speech did mention that with the introduction of GST, the indirect tax system has been made simpler. Nonetheless, there have been some important announcements on the Customs law front in line with the key initiatives being driven by the government for the last couple of years now, such as Make in India and ease of doing business, dispute resolution, etc.
Customs duty rates amended in line with ‘Make in India’
The following changes in customs duty rates on import of goods have been made in line with the government’s aim of further promoting ‘Make in India’:
Measures for ease of doing business under Customs
- Power to exempt import of goods into India for repair/processing being introduced so as to avoid the need for claiming refund of duty paid on the import of such goods at the time of re-export of the goods.
- Pre-consultation notice to be issued before initiating any proceedings under Customs not involving collusion, willful mis-statement, suppression, etc.
- Ambit of cases that can be referred to Advance Ruling Authority widened to include any issue relating to import/export of goods and not restricted to only determination of duty. Additionally, the ambit of Applicant for making advance rulings has been widened to include any person who holds a valid IEC or any person who is exporting goods to India.
- Time frame for issuance of ruling by an Advance Ruling authority reduced from six months to three months.
- A system enabling assessees to make advance payment which can be subsequently utilised for making payment of customs duty, interest and penalty will be introduced in line with the existence of electronic cash ledger under GST.
- In order to maintain a balance between customs control and facilitation of legitimate trade, separate regulations will be prescribed for a specific class of importers/exporters/ goods, with the intent of expeditious clearance of goods, reduction in the transaction cost of clearance, etc.
- The government has introduced a new procedure for conducting audit of records of importers and exporters under the Customs law and provided necessary guidelines for this.
- Revamping of Customs automated system to facilitate serving of notices, orders, payment of duty, and other customs interactions in electronic mode.
- Provisions empowering the Board to issue regulation for fixing timelines for finalisation of provisional assessments (cases provisionally assessed on account of lack of clarity of rate/amount of duty to be charged) are being introduced to ensure early closure of such assessments.
- Provisions providing a definite time frame for adjudication of demand notices have been introduced, which will lead to timely closure of proceedings initiated against assessees and bring greater clarity in doing business:
- Cases involving charges of collusion, willful misstatement, suppression — 12 months
- Other cases — six months.
- These time periods will be extendable for a further period of 12 and six months respectively. If the demand notice is not adjudicated even within the extended period, it will be deemed that no notice had been issued.
- A relaxation has been provided by way of removal of fine imposed in lieu of confiscation of imported goods at the Customs port/station if the proceedings have been concluded by way of payment of duty along with interest.
- The name of the apex board of indirect taxes, namely Central Board of Excise and Customs, has been changed to Central Board of Indirect Taxes and Customs.
- The scope of the Customs law has been expanded to include within its ambit any offence or contravention committed thereunder by any person even outside India.
- The Education cess of two per cent and Secondary and Higher Education cess of one per cent applicable on import of goods will be abolished and be replaced by the levy of a Social Welfare Surcharge of 10 per cent. The impact of such additional levy will be an increase in the effective rate of customs duty applicable on import of goods from 30.15 per cent to 30.98 per cent.
- Excise duty on petrol and diesel cut by Rs 2 per litre, which is expected to lead to a reduction in the prices of petrol and diesel.
- Certain retrospective exemptions from payment of service tax have been provided by the government on services provided by the Naval Group Insurance Fund by way of life insurance of personnel of Coast Guard, services provided by the GST Network to Central/state governments and Union Territories and on the government’s share of profit in the grant of licence or lease to explore or mine crude petroleum and/or natural gas.
Further, various changes have been introduced towards facilitation of trade, which should keep the business fraternity satisfied. Next up, we will need to wait for the changes to be brought under GST by the government in the coming days. Let us see if the government meets industry expectations under GST aimed at easing the compliance burden of assessees and rationalisation of the GST law.