Budget 2016-Amendment in the Customs & Central Excise Tariff
MAY 02, 2016
By Samir Kumar Sinha
As per the Finance Bill, 2016, there is proposal for amendment in the First Schedule of Customs and Central Excise Tariff in order to add certain new goods with a specified tariff heading to be effective from 01.01.2017. The said proposal has been made under Clause 138(ii) and 143(ii) of the Finance Bill, 2016.
Clause 138(ii) seeks to amend the First Schedule to the Customs Tariff Act, 1975 in the manner specified in the Fourth Schedule of the Finance Bill, 2016 with a view to harmonise the same with the HSN and Clause 143(ii) seeks to amend the First Schedule to the Central Excise Tariff Act, 1985 in the manner specified in the Eighth Schedule of the Finance Bill, 2016 with a view to harmonise the same with the HSN.
As per the Customs and Central Excise Tariff, certain goods have a distinct tariff heading. However, there are other goods which are not specified in the Customs and Central Excise Tariff. As such, these goods are classified on the basis of generic description, composition or use, as the case may be. Since there are several residual tariff headings under each chapter of tariff, these goods have to be classified under specific tariff heading for assessment purpose as per the Explanatory Notes and the General Rules for the Interpretation of the Schedule to the Customs and Central Excise Tariff Acts read with the Section and Chapter notes of the First Schedule to the said Acts .
If the proposed amendment in the Customs and Central Excise Tariff is approved, assessment of such goods will be easy and uniform. It is found that sometimes field formations of Customs and Central Excise have different opinion for classification of certain goods which are not specified in the Customs and Central Excise Tariff thereby causing ambiguity in assessment. Such amendment will definitely remove the scope of any ambiguity.
It is understood that it is the prerogative of Central Board of Excise and Customs (CBEC) under Ministry of Finance to finalise the classification of goods under Customs and Central Excise Tariff. Accordingly, CBEC issues clarification as required regarding classification of certain goods which are not specified in the tariff. However, there are certain instances wherein it is found that the Director General of Foreign Trade (DGFT) has issued clarification regarding classification of certain goods which are not specified in the tariff. Two such circulars issued by the DGFT are as mentioned below:
(i) DGFT Policy Circular No. 29(RE-2005)/2004-09 dated 06.10.2005; and
(ii) DGFT Policy Circular No. 22(RE-07)/2004-2009 dated 24.12.2007.
Very interestingly, goods notified by the said circulars are still neither specified in the Customs and Central Excise Tariff nor ITC(HS) Policy.
In the case of Thai Acrylic Fibre Co. Ltd Versus Designated Authority [2010-1923-TIOL-CESTAT-DE], the Hon'ble Tribunal has observed that Designated Authority is not a trained customs official for classification of goods. Contents of para 26 of the said case law are as under:
"26. Secondly, it is a fact that, in the impugned final finding dated 03.10.2008, the D.A. has indicated a Customs classification under Heading 350330 with the remark that the classification is indicative only and is in no way binding on the scope of the investigation. The classification indicated by the D.A. is clearly wrong and was avoidable. First indicating a wrong classification, and then saying that it is no way binding is rather inelegant to say the least. Such faux pas on the part of the D.A., who is not a trained Customs official but is drawn from the Administrative Service, is understandable. However, nothing prevents the D.A. from taking a trained Customs specialist on board his team, as is done by the anti-dumping authorities by the other WTO member countries such as the USA and the EC."
Since the classification of goods is decided on the basis of certain factors such as Section Notes, Chapter Notes, Explanatory Notes and General Rules for the Interpretation as prescribed in the Customs and Central Excise Tariff, Customs and Central Excise officials are obviously trained persons who are competent enough to finalise the classification of goods based on Brussels Tariff Nomenclature (BTN) and governed by World Customs Organisation.
Board may like to take cognizance of the above and do the needful before the Finance Bill, 2016 is enacted.
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