Major changes proposed in the Finance
Bill, 2013-14 with regard to Central Excise are discussed here below:
Changes in Central Excise Act, 1944
Section 9(1) of Central Excise Act
provides that whoever commits any of the following offences:
1.1 Evades payment of any duty
payable under the Central Excise Act or removes any excisable goods in
contravention of any of the provisions of the Act or any rules made
thereunder or in any way concerns himself with such removal.
1.2 Acquires possession of, or in
any way concerns himself in transporting, depositing, keeping,
concealing, selling or purchasing, etc. of any excisable goods which he
knows or has reason to believe, are liable to confiscation under the
1.3 Contravenes any provision of
the Act or rules made thereunder in relation to credit of any duty
allowed to be utilised towards payment of excise duty on final products.
1.4 Fails to supply or supplies
false information is punishable:
in case of offence relating to
any excisable goods, duty leviable thereon exceeds thirty lakhs of
rupees, with imprisonment for a term which may extend to seven years
and with fine;
in other case with imprisonment
for a term which may extend to three years or with fine or with both.
Section 9(1) is amended so as to
substitute the amount of thirty lakhs rupees with fifty lakhs rupees.
Thus now an offence involving evasion in which duty leviable exceeds
fifty lakhs rupees shall be punishable with term of imprisonment
extending to seven years and fine. In other cases punishment may be
imprisonment for a term which may extend to three years or with fine or
Section 9A of the Central Excise
Act, 1944 is amended to provide that in case where the evasion of duty
involved, or Cenvat Credit availed/utilised, in contravention of the
provisions of Act or Cenvat Credit Rules 2004, is more than rupees fifty
lakhs, such an offence shall be cognizable and non-bailable. Cognizable
offence implies that an officer can arrest an offender without a
warrant. In case of bailable offence, normally an offender is released
on suitable bail upon his arrest whereas in case of non-bailable offence
offender is not entitled to bail automatically but Court may still order
him to be released on suitable bail-with or without conditions.
Section 11 of the Central Excise
Act –1944 is amended to provide recovery of excise dues from third
party. The section now provides for:
3.1 Recovery of money due to the
Government from any person other than from whom money is due after
giving a proper notice, if that other person holds money for or on
account of the first person.
3.2 The other person to whom such
notice is issued is bound to comply.
3.3 If the other person to whom
notice is served fails to comply, he shall be deemed to be a person from
whom duty and any other sums of any kind payable under the Act have
become due and face all the consequences under the Act.
Section 11A of the Central Excise
Act, 1944 is amended to provide that if a notice for demand is once
served on assessee under this section then if further demand is raised
on the same grounds as relied upon in first notice of demand then in
case of second or subsequent demand if only a statement containing
details of duty not paid, short levied or erroneously refunded is given
then such a statement shall be deemed to be sufficient service of
Section 35C(2A) of the Act,
provides that the Appellate Tribunal shall, where it is possible to do
so, hear and decide every appeal within a period of three years from the
date on which such appeal is filed. Further where an order of stay is
made in any proceeding relating to an appeal, the Appellate Tribunal
shall dispose of the appeal within a period of one hundred and eighty
days from the date of such order. It is also provided that if such
appeal is not disposed of within such period of one hundred and eighty
days, the stay order shall, on the expiry of that period, stand vacated.
The intention of the Central
Government in inserting the above sub-section did not have the desired
effect in as much as the CESTAT is granting an extension of the stay
initially ordered by relying upon, on the ground that the appellant is
not, in any way, responsible for the pendency of the appeal.
With a view to put an end to this
concept of "further extension of stay", a proviso is added to section
35(C)(2A) to provide that where an appeal in which a stay is granted, is
not disposed of within the period of one hundred and eighty days of
passing of stay, the Appellate Tribunal may, on an application made in
this behalf by appellant and on being satisfied that the delay in
disposing of the appeal is not attributable to such appellant, extend
the period of stay to such further period, as it thinks fit, not
exceeding one hundred and eighty five days, and in case the appeal is
not disposed of within the total period of three hundred and sixty-five
days from the date of second stay order, such stay order shall, on the
expiry of the said period, stand vacated."
As a result of this amendment,
after three hundred and sixty five days of passing of a stay order for
the first time in any appeal, Department can initiate recovery
proceedings, even if the appeal is still pending with the Appellate
50 lakhs, as against the current limit of
lakhs, except in cases involving disputes related to classification or
valuation of goods or services. This is a welcome amendment as a result
of which, appeals filed with CESTAT, shall get decided on a more
expeditious basis. This amendment should be specifically made applicable
to all appeals and stay petitions pending to be heard by the CESTAT
Section 129C of the Customs Act,
1962, (which is applicable to central excise appeals in terms of section
35D of the Central Excise Act, 1944), is amended to allow single member
of the CESTAT Benches to dispose of appeals involving amounts of up to
Under section 23A of the Act, an
application for ‘advance ruling’ can be made in respect of any
‘activity’ of production or manufacture of goods. The definition of the
term ‘activity’ is expanded to include any new business of production or
manufacture proposed to be undertaken by the existing producer or
manufacturer. Thus advance ruling can now be sought in respect of new
products or goods proposed to be manufactured.
Under section 23C of the Act, an
advance ruling can be sought, inter alia, on the issue of
admissibility of credit of excise duty paid or deemed to have been paid
on the goods used in or in relation to the manufacture of excisable
goods. This section is amended to extend the advance ruling provisions
also to admissibility of the credit of service tax paid or deemed to
have been paid on input services used in the manufacture of excisable
Under section 28E of the Customs
Act, 1962, only a select category of persons are eligible for advance
ruling. This includes joint ventures and resident public limited
companies. However, the resident public limited companies are not
eligible for advance ruling under the Central Excise law. Vide
Notification No. 4/2013-CE(N.T.) dated 1-3-2013, the resident public
limited companies are also specified as class of persons eligible for
seeking advance ruling on central excise and service tax matters as is
available on customs side.
Section 37C of the Act is amended
to specify the additional mode of documents; i.e. ,by speed post with
proof of delivery or through courier approved by the Central Board of
Excise and Customs.
Changes in cenvat Credit Rules 2004 (CCR)
Under Rule 3(5) (5A) (5B), when a
manufacturer or a service provider removes inputs or capital goods, on
which CENVAT credit is taken and if:
• Capital goods are removed as such
or cleared as waste and scrap or written off either in part or full;
• Inputs are removed as such or
Then the manufacturer or service
provider fails to pay such amount, it can be recovered in a manner
provided in Rule 14 for recovery of CENVAT credit wrongly taken and
accordingly interest and penalty as provided in Central Excise Act or the
Finance Act, 1994, as the case may be, are applicable.
Changes in the Central Excise Tariff
Act, 1985 (effective from 1-3-2013)
Major changes in the rates of duty
are as follows:
a. Exemption from duty
Tapioca sago (Sabudana) and
tapioca starch manufactured and consumed captively in the manufacture
of tapioca sago.
Henna powder or paste, not mixed
with any other ingredient.
Ships and other vessels.
Consequently, there will be no CVD on these ships and vessels when
Hand made carpets and carpets and
other textile floor coverings of coir or jute, whether or not hand
Branded readymade garments and
made-ups are fully exempted if no CENVAT credit availed. In case of
cotton there will be zero duty at the fibre stage and in the case of
spun yarn of man made fibres, there will be a duty of 12% at the fibre
stage. The ‘zero excise duty route’ will be in addition to the CENVAT
route now available.
Intermediate goods manufactured
and consumed captively by exempted units under Area Based Exemption
Scheme in Himachal Pradesh and Uttarakhand.
b. Increase in rate of duty
30,000 per machine per month to
40,000 per machine per month.
SUV – from 27% to 30% except in
case of SUV registered as taxi.
Silver manufactured from
zinc/lead smelting – from NIL to 4%.
Compounded levy on stainless
steel "Patta Patti" – from
Mobile phones of retail sale
price exceeding `
2,000/- from 1% to 6%
Cigarettes – increase by about
18% on all cigarettes except cigarettes of length not exceeding 65 mm.
Similar increases on cigars and cigarillos.
Marble tiles and slabs – from
30 per square meter to `
60 per square meter.
c. Rate of duty on truck chassis is
reduced from 14% to 13%.
d. Branded Ayurvedic medicaments
and medicaments of Unani, Siddha, Homeopathic or bio-chemic system are
brought under MRP based assessment with abatement of 35% from MRP.