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Finance Bill 2016 Saw President and blushed into Finance Act 2016

TIOL-DDT 2846
16 05 2016
Monday

SATURDAY 14th May 2016 was a busy day for the Finance Ministry, for that was the last day on which the Finance Bill 2016 had to be enacted. The Government sailed through the still waters of the Lok Sabha and the rough waters of Rajya Sabha to reach the Rashtrapati Bhavan just in time. The Finance Act 2016 came into existence on 14th May 2016 and silently slipped into history unsung unheard. For some strange reason, the Government does not give too much publicity to such State Secrets.

Customs Changes - Post Finance Act 2016

SEVERAL changes have been proposed in the Finance Bill 2016 relating to warehousing provisions. They have all come into force with effect from 14.05.2016, when the Bill received the assent of the President.

The amendments:

S. No.	Amendment
1.	Subsection (43) of Section 2 is amended to add a new class of warehouses for enabling storage of specific goods under physical control of the department, as control over the other types of warehouses would be only record based.
2.	Subsection (45) of Section 2 which defines "warehousing station" is omitted.
3.	Chapter heading of Chapter III is amended to omit the word "warehousing station".
4.	Section 9 (Power to declare places to be Warehousing stations) is omitted.
5.	Sections 57 and 58 are substituted to provide for licensing by the Principal Commissioner or Commissioner, in place of Deputy/Assistant Commissioner, subject to such conditions as may be prescribed.
6.	New section 58A is inserted to provide for a new class of warehouses which require continued physical control and will be licensed for storing goods, as may be specified.
7.	New section 58B is inserted so as to regulate the process of cancellation of licences which is a necessary concomitant of licensing.
8.	The existing section 59 governing warehousing bonds submitted by importers availing duty deferred warehousing is substituted so as to fix the bond amount at thrice the duty involved and to furnish security as prescribed.
9.	The existing section 60 is substituted for Permission for removal of goods for deposit in warehouse.
10.	The existing section 61 is substituted to extend the period of warehousing to all goods used by Export Oriented Undertakings, Units under Electronic Hardware Technology Parks, Software Technology Parks, Ship Building Yards and other units manufacturing under bond; empower Principal Commissioners and Commissioners to extend the warehousing period upto one year at a time.
11.	Section 62 relating to physical control over warehoused goods is omitted since the conditions for licensing different categories of warehouses and exercising control over the same are now provided under sections 57, 58 and 58A.
12.	Section 63 relating to payment of rent and warehouse charges is omitted in view of the privatization of services, and free market determination of rates, including those by facilities in the public sector.
13.	The existing section 64 relating to owner's rights to deal with warehoused goods is substituted so as to rationalize the facilities and rights extended under the section.
14.	Section 65 is amended to delete the payment of fees to Customs for supervision of manufacturing facilities under Bond; and empower Principal Commissioner or Commissioner of Customs to licence such facilities.
15.	Section 68 is amended to omit rent and other charges on account of omission of section 63.
16.	Section 69 is amended to omit rent and other charges on account of omission of section 63.
17.	Section 71 is amended so as to substitute the word "exportation" with the word "export" to align with definition contained in sub section (18) of section 2.
18.	Section 72 is amended to delete clause (c) regarding improper removal of samples
19.	Section 73 is amended to provide for cancellation bond in case of transfer of ownership of the goods, and is thus aligned with sub-section (5) of section 59.
20.	New section 73A is inserted so as to provide for custody of warehoused goods and responsibilities including the liabilities of warehouse keepers.

Notifications and Circulars: Consequent to the above changes, Government has issued the following notifications on 14.5.2016:

Sl. No.	Notification No. dated 14.05.2016	Details
1	66 /2016- Customs (N.T.)	As per the new Section 58A, (1) The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods there from without the permission of the proper officer. (2) The Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse licensed under sub-section (1). The Board has specified the following class of goods which shall be deposited in a special warehouse licenced under sub-section (1): (1) gold, silver, other precious metals and semi-precious metals and articles thereof; (2) goods warehoused for the purpose of - (a) supply to duty free shops in a customs area; (b) supply as stores to vessels or aircrafts under Chapter XI of the Customs Act, 1962; (c) supply to foreign privileged persons in terms of the Foreign Privileged Persons (Regulation of Customs Privileges) Rules, 1957.
2	67/2016- Customs (N.T.)	The Warehoused Goods (Removal) Regulations, 2016 , notified
3	68/2016- Customs (N.T.)	The Warehouse (Custody and Handling of Goods) Regulations, 2016 , notified
4.	69/2016- Customs (N.T.)	The Special Warehouse (Custody and Handling of Goods) Regulations, 2016 , notified.
5.	70/2016- Customs (N.T.)	The Public Warehouse Licensing Regulations, 2016 , notified
6.	71/2016- Customs (N.T.)	The Private Warehouse Licensing Regulations, 2016 , notified
7.	72/2016- Customs (N.T.)	The Special Warehouse Licensing Regulations, 2016 , notified

And the following Circulars:

1. Circular No.17/2016-Customs., Dated: May 14 2016: The Warehouse (Custody & Handling of Goods) Regulations, 2016 and the Special Warehouse (Custody & Handling of Goods) Regulations, 2016 have been notified under notification no. 68 /16-Cus (NT) dated 14th May 2016 and no.69 / 16-Cus (NT) dated 14th May 2016 respectively.

The regulations prescribe the procedure to be followed by the licensee or bond officer, as the case may be, to permit deposit of the goods into a warehouse. The regulations require that goods arriving at the warehouse from a customs station shall be affixed with a one-time-lock (bottle seal) with its serial number endorsed upon the bill of entry for warehousing and the transport document.

The OTL number along with the date / time of its affixation should be invariably endorsed on the bill of entry and the transport document. All customs stations are required to maintain records incorporating the number of the OTL, bill of entry, truck number, container number (if applicable), date & time of affixing the OTL and the name, designation & telephone number of the officer affixing the OTL.

A similar procedure has been provided under the Warehoused Good (Removal)Regulations, 2016, which supersede the earlier Regulations of 1963, for removal of warehoused goods from one warehouse to another and from a warehouse to customs station for export.

The Principal Commissioner of Customs /Commissioner of Customs may permit movement of goods without affixation of such OTLs, where the nature of goods or their manner of transport so warrant (e.g. Liquid Bulk Cargo transported through Pipe Lines and Over Dimensional Cargo).

The Board desires that the Commissionerates should immediately make arrangements for procuring serially numbered one-time-locks.

2. Circular No.18/2016-Customs., Dated: May 14, 2016: Bond required to be filed under section 59: As per the amended section 59 of the Customs Act, an importer is to execute a triple duty bond at the customs station of import with respect to the goods to be cleared for deposit in a warehouse. The bond will remain valid till the warehoused goods are duly cleared for home consumption or for export from the warehouse and will also cover the movement of goods from the customs station of import to the warehouse or from one warehouse to another as well as for the due accounting of goods while stored in a warehouse.

The bonds to be executed have been finalized in consultation with the Ministry of Law & Justice and are published by the CBEC.

The Changeover - Sudden and Hardly Known

- THE bonds required to be obtained from importer under section 59 have been prescribed under circular no 18/2016 dated 14th May 2016.

- With the supersession of the Warehoused Goods (Removal) Regulations, 1963 the system of physical escorting of goods within the same town has been dispensed with for movement of goods from one warehouse to another.

- Escorting will also not be required for movement of goods from a warehouse to a customs station for export.

- These movements would be done by affixation of a one-time-lock. Instructions have been issued under Board's circular No.17/2016 dated 14th May 2016 regarding removal of goods from a customs station to a warehouse, which also require that the container or means of transport be affixed with a serially numbered one-time-lock (bottle seal).

- The regulations on licensing of different types of warehouses contain transitional provisions to enable the warehouses to switch over to record based control in a smooth and orderly manner.

- The provisions require existing licensees to fulfil certain conditions within a period of three months upon which they can migrate to a system of record based controls and the customs lock can be removed.

- Section 58A has been enacted to provide for a new category of warehouses (special warehouses). These warehouses shall be entitled to store specific classes of goods, which have been notified under sub-section (2) of section 58A (Notification No.66/16 - Cus (NT) dated 14th May 2016). These warehouses shall be under the lock of customs. An existing licensee or any new applicant shall be required to apply for a license under Special Warehouse Licensing Regulations, 2016, if they propose to store or continue to store goods notified under notification 66 /16-Cus (NT)dated 14th May 2016 namely, goods stored for duty free shops/airline/ship/diplomatic stores.

- It is clarified that any regulatory agency can draw a sample while goods are warehoused. If the owner of goods require samples for marketing etc., the same are to becleared on payment of duty by filing an ex-bond bill of entry.

- Under sub-section (2) of section 73A, the responsibilities of licensee have been provided in Warehouse (Custody & Handling of Goods) Regulations, 2016 and Special Warehouse (Custody &Handling of Goods) Regulations, 2016. The regulations also provide for computerization of records in respect of warehoused goods. This is supposed to be a key component based upon which liberalization in respect of warehousing procedures has been carried out.

In order to familiarize officers and trade with the provisions of the new regulations, Board requests the Commissioners/Principal Commissioners/Chief Commissioners to plan interactive sessions.

Not many in the field are aware of these changes which have hit them on a Saturday. What prevented the Board from educating the trade and officers before suddenly dropping the new procedure and statute on them. Wasn't the Board not aware that the Finance Bill would be enacted by 14th May 2016.

CBEC Commissioner (Customs) D.O.F.No. 484/03/2015-LC (Vol II)., Dated: May 14, 2016

Finance Act - Consequent and other Changes

1. SEEKS to replace the references to sub-clauses to clause 159 of the Finance Bill, 2016 with sub-sections to section 162 of the Finance Act, 2016 in the CENVAT Credit Rules - Notification No. 27/2016 - Central Excise (N.T.)., Dated: May 14, 2016.

2. Infrastructure Cess Notification No. 1/2016 2016-Infrastructure Cess, dated the 1st March, 2016 amended to replace the references to sub-clauses to clause 159 of the Finance Bill, 2016 with sub-sections to section 162 of the Finance Act, 2016.- Notification No. 2/2016 -Infrastructure Cess., Dated: May 14, 2016.

3. ‘Clean Energy Cess' renamed as ‘Clean Environment Cess': Notification No. 1/2016 - Clean Environment Cess., Dated: May 14, 2016

Video showing Customs Superintendent demanding bribe goes viral

THERE is a video uploaded in You Tube showing a Customs Superintendent demanding a bribe of Rs. 4000/- (https://www.youtube.com/watch?v=jZ3x8atZXCE). It is heard that after the video went viral, the Customs Superintendent was suspended.

Technology seems to be the only tool to curb corruption.

Anti Dumping Duty on DVD -Re-imposed after Expiry

THE notification No. 98/2010, dated 28.09.2010 which imposed anti dumping duty on "Recordable Digital Versatile Disc [DVD]" was to expire on 12th April 2015. This was extended till 11th April 2016 by Notification No.12/2015-Customs(ADD), dated the 11th April, 2015 and it really expired on 11th April 2016, but dumping continued. And so the government re-imposed the anti dumping duty with effect from 13.5.2016. While the action of the government in not going for an illegal retrospective amendment is laudable, who is responsible for the injury to the domestic industry and loss of revenue to the government?

By the way who is using DVD-R now; is the use substantial to warrant an anti dumping duty?

Notification No. 17/2016-Customs (ADD)., Dated May 13, 2016

Decrease in Tariff Values of all items other than Brass Scrap, poppy seeds, gold and areca nuts

GOVERNMENT has decreased the tariff values of all the oils. For Brass scrap, the tariff value is increased, so is for gold, but silver sees a decline. There is no change for poppy seeds and areca nuts.

Table 1
S. No.	Chapter/ heading/ sub-heading/tariff item	Description of goods	Tariff value USD (Per Metric Tonne) as on 29.04.2016	Tariff value USD (Per Metric Tonne) from 13.05.2016
(1)	(2)	(3)	(5)	(6)
1	1511 10 00	Crude Palm Oil	755	737
2	1511 90 10	RBD Palm Oil	788	741
3	1511 90 90	Others - Palm Oil	772	739
4	1511 10 00	Crude Palmolein	792	751
5	1511 90 20	RBDPalmolein	795	754
6	1511 90 90	Others - Palmolein	794	753
7	1507 10 00	Crude Soyabean Oil	805	776
8	7404 00 22	Brass Scrap (all grades)	2969	2995
9	1207 91 00	Poppy seeds	2533	2533
Table 2
S. No.	Chapter/ heading/ sub-heading/tariff item	Description of goods	Tariff value USD from 29.04.2016	Tariff value USD from 13.05.2016
1	71 or 98	Gold, in any form in respect of which the benefit of entries at serial number 321 and 323 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed.	408 per 10 grams	416 per 10 grams
2	71 or 98	Silver, in any form in respect of which the benefit of entries at serial number 322 and 324 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed.	566 per kilogram	562 per kilogram
Table 3
S. No.	Chapter/ heading/ sub-heading/tariff item	Description of goods	Tariff value USD (Per Metric Tons) from 29.04.2016	Tariff value USD (Per Metric Tons) from 13.05.2016
1	080280	Areca nuts	2617	2617