1. Proposal to streamline import duty:
- Around 400 old exemptions have been reviewed and the revised customs duty structure is being re-placed. This is a much-awaited and welcome step. Further, conditional exemptions have been given a life of 2 years only, unless mentioned otherwise in the exemption notifications themselves.
- ‘Tariffisation’ (a new word coined by the Finance Ministry) seeks to rationalise the tariff by bringing unconditional rate exemptions within the tariff itself. This will eliminate the need for looking at mass of notifications to find the rate of duty. Simplification, indeed.
- To make India self-reliant (Aatmanirbhar Bharat) and to give a boost to domestic industry (Make-in-India), withdrawal and increase in import duty for items like wrist wearable devices (smartwatches), hearable devices, and smart meters under Phased Manufacturing Program and project imports. The philosophy over a period of time is to grant exemption to parts for further manufacture; levy higher duty on finished goods.
2. Legislative Changes:
- Customs (Import of Goods Concessional Rate of Duty) 2017 is amended to provide end to end automation in the entire compliance procedure under end-use based exemptions via electric mode and done away with transaction-based permission or intimation. Rules have been drafted with clarity.
- Much needed relief to the Industry has been given in the form of a Circular with respect to the collection of Social Welfare Surcharge (‘SWS’) where Basic Customs Duty (‘BCD’) is exempt.
- Retrospective amendments were introduced to the Customs Act, 1962 to make officers of departments like the Directorate of Revenue Intelligence, Customs (Preventive), and Customs (Audit) proper officers for issuing notices demanding recovery of duty. This, perhaps to overcome a decision of the Supreme Court.
- Amendments introduced to limit the shelf life of Advance Rulings to 3 years in line with the WCO Guidelines.
3. Whether the budget meets the expectation of the Industry:
- Indications in the Budget Speech suggesting changes in the SEZ laws. Proposal to replace SEZ Act with new legislation that will enable the states to become partners in ‘Development of Enterprise and Service Hubs’.
- No relief from legacy litigation as expected by the Industry like Sabka Vishwas and Vivad Se Vishwas Scheme.
- No amnesty scheme to regularise non-fulfilment of export obligation under various export incentive schemes as requested by manufacturers and traders facing issues due to coronavirus outbreak.
- Uncertainty post the Supreme Court judgment in the case of Westinghouse Saxby continues to prevail on the classification of various goods and parts used by the Automotive Industry.
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