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Changes For Customs In Finance Bill, 2016
March, 04th 2016

Clause 113(ii) of Finance Bill, 2016 proposes to omit Section 2(45) of Customs Act, 1961 (‘Act’ for short)  which defines the term ‘warehousing station’.

Clause 115 of the Bill proposes to omit Section 9 of the Act which gives powers to Board to declare places to be warehousing station.

Clause 116(ii) of the Bill proposes to omit Section 25(5) of the Act.  Section 25 of the Act gives powers to the Government to grant exemption from duty.  Section 25(5) provides that notwithstanding anything contained inSection 25(4), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes into force.

Clause 126 of the bill proposes to omit Sections 62 and 63.  Section 62 deals with the control over warehoused goods by proper officer.  Section 63 deals with the payment of rent and ware house charges.

Clause 132 (a) of the Bill proposes to omit Section 72(1) (c).  Section 72 deals with goods improperly removed from warehouses etc., Section 72(1) (c) provides that where any warehoused goods have been taken under section 64 as samples without payment of duty the proper officer may demand, and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods.

Insertion of new section

Clause 134 of the Bill proposes to insert a new Section 73A after Section 73.  Section 73 deals with the cancellation and return of warehousing bond.   The new Section 73A provides custody and removal of warehoused goods.  Section 73A(1) provides that all warehoused goods shall remain in the custody of the person who has been granted a licence under Section 57 or Section 58 or Section 58A until they are cleared for home consumption or are transferred to another warehouse or are exported or removed as otherwise provided in the Act.  Section 73A(2) provides that the responsibilities of the person who has the custody of the warehoused goods shall be such as may be prescribed.   Section 73A(3) provides that where any warehoused goods are removed in contravention ofSection 71, the licensee shall be liable to pay duty, interest, fine and penalties without prejudice to any other action that may be taken against him under this Act or any other law for the time being in force.

Substituted new sections

Clause 120 of the Bill proposes for substitution of new section for Section 53.  The new section 53 provides for transit of certain goods without payment of duty.  The new Section 53 provides that subject to the provisions ofSection 11, where any goods imported in a conveyance and mentioned in the import manifest or the import report, as the case may be, as for transit in the same conveyance to any place outside India or to any customs station, the proper officer may allow the goods and the conveyance to transit without payment of duty, subject to such conditions, as may be prescribed.

Clause 121 of the bill proposes for substitution of new Section for Section 57.  Section 57 deals with the appointing of public warehouses.   The new Section 57 deals with licensing of public warehouses.  The new Section 57 provides that the Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a public warehouse wherein dutiable goods may be deposited.

Clause 122 of the bill proposes for substitution of new sections 58, 58A and 58B for Section 58.  The new Section 58 provides for licensing of warehouses.  Section 58A provides for licensing of special warehouses.  Section 58B provides for cancellation of licence.

The new Section 58 provides that the Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a warehouse wherein dutiable goods imported by or on behalf of the licensee may be deposited.

The new Section 58A (1) provides that 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.  Section 58A(2) provides that the Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse licenced under Section 58A(1).

The new Section 58B (1) provides that where a licensee contravenes any of the provisions of this Act or the rules or regulations made there under or breaches any of the conditions of the licence, the Principal Commissioner of Customs or Commissioner of Customs may cancel the licence granted under Section 57 or Section 58 of the Act.  The proviso to this section provides that before any licence is cancelled, the licencee shall be given a reasonable opportunity of being heard.

Section 58B (2) provides that the Principal Commissioner of Customs or Commissioner of Customs may, without prejudice to any other action that may be taken against the licensee and the goods under this Act or any other law for the time being in force, suspend operation of the warehouse during the pendency of an enquiry under sub-section (1).

Section 58B(3) provides that where the operation of a warehouse is suspended under sub-section (2), no goods shall be deposited in such warehouse during the period of suspension.  The proviso to this section provides that the provisions of this Chapter shall continue to apply to the goods already deposited in a warehouse.

Section 58B(4) provides that where the licence issued under Section 57 or Section 58 or Section 58A is cancelled, the goods warehoused shall, within seven days from the date on which order of such cancellation is served on the licensee or within such extended period as the proper officer may allow, be removed from such warehouse to another warehouse or be cleared for home consumption or export.  The proviso to this section provides that the provisions of this Chapter shall continue to apply to the goods already deposited in the warehouse till they are removed to another warehouse or cleared for home consumption or for export during such period.

Clause 123 of the Bill proposes for substitution of new section for Section 59.  Section 59 deals with the warehousing bond.   The new Section 59(1) provides that the importer of any goods in respect of which a bill of entry for warehousing has been presented under Section 46 and assessed to duty under Section 17 or Section 18shall execute a bond in a sum equal to the thrice the amount of the duty assessed on such goods, binding himself-

  • to comply with all the provisions of the Act and the rules and regulations made there under in respect of such goods;
  • to pay, on or before the date specified in the notice of demand, all duties and interest payable under Section 61(2); and
  • to pay all penalties and fines incurred for the contravention of the provisions of this Act or rules or regulations in respect of such goods.

Section 59(2) provides that the Assistant Commissioner of Customs or Deputy Commissioner of Customs may permit an importer to execute a general bond in such amount as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may approve in respect of the warehousing of goods to be imported by him within a specified period.

Section 59(3) provides that the importer shall, in addition to the execution of bond furnish such security as may be prescribed.

Section 59(4) provides that any bond executed under this section by an importer in respect of any goods shall continue to be in force notwithstanding the transfer of the goods to another warehouse.

Section 59(5) provides that where the whole of  the goods or any part thereof are transferred to another person, the transferee shall execute a bond in the manner specified in Sub section (1) or sub section (2) and furnish security as specified under sub-section(3).

Clause 124 of the bill proposes for substitution of new section for Section 60.  The new Section 60 deals with the permission for removal of goods for deposit in warehouse.  Section 60(1) provides that when the provisions ofSection 59 have been complied with in respect of any goods, the proper officer may make an order permitting removal of the goods from a customs station for the purpose of deposit in a warehouse.  Section 60(2) provides that where an order is made under Section 60(1) the goods shall be deposited in a warehouse in such manner as may be prescribed.

Clause 125 of the bill proposes for substitution of new section for Section 61.  Section 61(1) provides that any warehoused goods may remain in the warehouse in which they are deposited or in any warehouse to which they may be removed-

  • in the case of capital goods intended for use in any 100% EOU or EHTP unit or STP unit or any warehouse wherein manufacture or other operations have been permitted under Section 65, till their clearance from the warehouse;
  • in the case of goods other than capital goods intended for use in any 100% EOU or EHTP or STP or any warehouse wherein manufacture or other operations have been permitted under Section 65, till their consumption or clearance from the warehouse; and
  • in the case of any other goods, till the expiry of one year from the date on which the proper officer has made an order under Section 60(1).

The first proviso to this section provides that in the case of any goods referred to in this section, the Principal Commissioner of Customs or Commissioner of Customs may, on sufficient cause being show, extend the period for which the goods may remain in the warehouse, by not more than one year at a time.  The second proviso to this Section provides that where such goods are likely to deteriorate, the period may be reduced by the Principal Commissioner of Customs or Commissioner of Customs to such short period as he may deem fit.

Section 61(2) provides that where any warehoused goods specified in this section remain in a warehouse beyond a period 90 days from the date on which the proper officer has made an order under Section 60(1) interest shall be payable at such rate as may be fixed by the Central Government under Section 47, on the amount of duty payable at the time of clearance of the goods, for the period from the expiry of the said 90 days till the date of payment of duty on the warehoused goods.  The proviso to this section provides that if the Board considers it necessary so to do, in the public interest, if any-

  • by order, and under the  circumstances of an exceptional nature, to be specified in such order, waive the whole or any part of the interest payable under this section in respect of any warehoused goods;
  • by notification in the Official Gazette, specify the class of goods in respect of which no interest shall be charged under this Section;
  • by notification in the Official Gazette, specify the class of goods in respect of which the interest shall be chargeable from the date on which the proper officer has made an order under Section 60(1).

The explanation to this section defines the terms ‘EHTP’, 100% EOU and STP.  The term ‘electronic hardware technology park (EHTP) unit is a unit established under EHTP scheme notified by the Government of India.   100% EOU has the same meaning as in clause (ii) of Explanation 2 to Section 3(1) of Central Excise Act.  The term ‘STP’ unit is a unit established under STP scheme notified by the Government of India.

Clause 127 proposes for substitution of new section for Section 64, which deals with the owner’s right to deal with the warehoused goods.   The new Section provides that the owner of any warehoused goods may, after warehousing the same-

  • inspect the goods;
  • deal with their containers in such manner as may be necessary to prevent loss or deterioration or damage to the goods;
  • sort the goods; or
  • show the goods for sale.

Amendments

The definition ‘warehouse’ under Section 2(43) is substituted by a new definition.  According to the new definition the term ‘warehouse’ is a public warehouse licensed under Section 57 or a private ware house licensed underSection 58 or a special warehouse licensed under Section 58A.

Clause 117 of the Bill proposes amendments in Section 28 which deals with recovery of duties not levied or short levied or erroneously refunded.  The amendment added further causes for recovery of duties as- “duty has not been levied or not paid or has been short levied or short paid or erroneously refunded.   The time limit for issue of show cause notice is extended from one year to two year.

Clause 118(a) of the Bill proposes to insert a new proviso to Section 47(1).  Section 47 deals with clearance of goods for home consumption.  The new proviso provides that the Central Government may, by notification in the Official Gazette, permit certain class of importers to make deferred payment of the said duty or any charges in such manner as may be provided by rules.                                 

Clause 118 (b) of the Bill proposes to substitute new sub section for Section 47(2).  The new Section 47(2) provides that where the importer fails to pay the import duty, either in full or in part, within two days (excluding holidays)-

  1. from the date on which the bill of entry is returned to him for payment of duty; or
  2. in the case of deferred payment under the proviso to sub-section (1), from such due date as may be specified by rules made in this behalf,

he shall pay interest on the duty not paid or short paid till the date of its payment, at such rate, not below 10% and not exceeding 36%, per annum, as may be fixed by the Central Government, by notification in the Official Gazette.

Clause 119(a) of the Bill proposes to renumber the existing provision of Section 51 (which deals with clearance of goods for exportation) as sub-clause (1) and insert proviso to this sub section.  The proviso to this section provides that the Central Government may, by notification in the Official Gazette, permit certain class of exporters to make deferred payment of said duty or any charges in such manner as may be provided by rules.

Clause 119 (b) of the Bill proposes to insert sub section (2) after sub section (1) of Section 51.   The Section 51 (2)provides that where the exporter fails to pay the export duty, either in full or in part, under the proviso to sub-section (1) by such due date as may be specified by rules, he shall pay interest on said duty not paid or short paid till the date of its payment at such rate, not below 5% and not exceeding 36% per annum as may be fixed by the Central Government, by notification in the Official Gazette.  

                  

Clause 128 proposes to amend Section 65(1).  Section 65(1) provides that the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods  with the sanction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs and subject to such conditions and on payment of such fees as may be prescribed.  As per the amendment,  the owner of warehoused goods may carry on manufacturing process on the sanction of Principal Commissioner of Customs or Commissioner of Customs.

Clause 129 proposes to amend Section 68.  After incorporating the amendments the revised Section 68 will read as follows:

Section 68. Clearance of warehoused goods for home consumption. Any warehoused goods may be cleared from the warehouse-

  1. a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;
  2. the import duty, interest, fine and penalties  payable in respect of such goods have been paid; and
  3. an order for clearance of such goods for home consumption has been made by the proper officer.

Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon.

Provided further that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force.

Clause 135 proposes to insert sub clause (c) after sub clause (b) of Section 156.  Section 156 gives general powers to Government to make rules.  The newly inserted Section 156(c) gives the powers to the Central Government to make rules for the due date and manner of making deferred payment of duties, taxes, cesses or any other charges under Section 47 and 51.

 

 
 
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