Central Excise - Budget 2014

Changes in Central Excise Act, 1944 ...................................................................................................... 1

Abatement in MRP provisions ................................................................................................................ 7
Abatement extended to certain goods valued under MRP provisions - Notification No.
17/2014-Central Excise (N. T.) ............................................................................................................ 7
Amendment in Advance Ruling provisions ......................................................................................... 7
Advance ruling provisions extended to Resident private limited companies - Notification No.
18/2014-Central Excise (N. T.) ............................................................................................................ 7
Amendment in Central Excise Rules, 2002 ............................................................................................ 8
Electronic payment of duty is mandatory - Notification No. 19/2014-Central Excise (N. T.) ... 8
Amendment in Central Excise Valuation (Determination of Price of Excisable Goods) Rules,
2000 ............................................................................................................................................................. 8
Sale of Excisable goods at a price less than its manufacturing cost where price is not the sole
consideration - Notification No. 20/2014-Central Excise (N. T.) .................................................... 8
Amendments in CENVAT Credit Rules, 2004 ...................................................................................... 9
Place of Removal - Notification No. 21/2014-Central Excise (N. T.) ............................................. 9
CENVAT Credit on the basis of Invoice - Notification No. 21/2014-Central Excise (N. T.) ....... 9
Eligibility for availing CENVAT Credit in case of reverse charge/joint charge - Notification
No. 21/2014-Central Excise (N. T.) ..................................................................................................... 9
CENVAT credit when export consideration received/not received - Notification No. 21/2014Central Excise (N. T.) .......................................................................................................................... 10
Procedure and facilities for large tax payer (LTU) - Notification No. 21/2014-Central Excise (N. T.) .... 10
Changes in duty payable on pan masala and pan masala containing tobacco based on production
capacity - Notification No. 22/2014-Central Excise (N. T.) ......................................................................... 10

Changes in Central Excise Act, 1944

1. Additional Reference has been made to Principal Chief Commissioner of Central
Excise and Principal Commissioner of Central Excise, wherever the reference for Chief

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Commissioner of Central Excise and Commissioner of Central Excise is being made.

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2. Section 2(b) is being amended so as to provide for inclusion of Principal Chief

Commissioner of Central Excise and Principal Commissioner of Central Excise in the
definition of the Central Excise Officer.
3. Section 15A is inserted which states that an information return shall be filed within
such time, form to such authority or agency as may be prescribed by various class of
persons who are responsible for maintaining various records and information as
under:
a. an assessee;
b. a local authority or other public body or association;
c. any authority of the State Government responsible for the collection of value
added tax or sales tax; or
d. an income tax authority appointed under the provisions of the Income-tax Act,
1961; or
e. (e) a banking company within the meaning of clause (a) of section 45A of the
Reserve Bank of India Act, 1934; or
f.

A State Electricity Board; or an electricity distribution or transmission licensee

under the Electricity Act, 2003, or any other entity entrusted, as the case may be,
with such functions by the Central Government or the State Government; or

g. The Registrar or Sub-Registrar appointed under section 6 of the Registration Act,

1908; or
h. A Registrar within the meaning of the Companies Act, 2013; or
i.

The registering authority empowered to register motor vehicles under Chapter

IV of the Motor Vehicles Act, 1988; or

j.

The Collector referred to in clause (c) of section 3 of the Right to Fair

Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013; or

k. The recognised stock exchange referred to in clause (f) of section 2 of the

Securities Contracts (Regulation) Act, 1956; or
l.

A depository referred to in clause (e) of sub-section (1) of section 2 of the

Bank of India Act, 1934,

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m. an officer of the Reserve Bank of India, constituted under section 3 of the Reserve

Depositories Act, 1996; or

Any defect in such return must be rectified within 30 days from the date of intimation
of such defect. The intention of the new Section is to collect information for the
purposes of the Act, such as, to identify tax evaders or recover confirmed dues etc.
4. If information return is not furnished within time-limit then the prescribed authority
shall serve a notice and in lieu of which the same needs to be submitted within 90
days from the date of service of notice failing which a penalty of Rs 100/- each day as
prescribed u/s 15 B shall be levied.
5. Under section 31(g) and section 32(1) the words Customs and central excise settlement
commission shall be now termed as Customs and central excise and service tax
settlement commission.
6. For Non-payment of additional amount of excise duty declared under settlement
commission under section 32E of Central Excise Act, 1944, interest u/s 11AA @ 18%
p.a shall be applicable instead of interest u/s 11AB.
7. One of the condition for filing the application for settlement commission is that the
periodical return needs to be filed for the period for which settlement is sought.
However, a provision has been made wherein Settlement Commission now at its
discretion accept the application if it is satisfied that the circumstances exist for not
filing the returns by recording the reasons for the same.
8. Earlier in lieu of restriction u/s 32E(2) of Central Excise Act, 1944 assessee was not
eligible to make an application under section 32E(1) to settlement commission upto
the expiry of one hundred and eighty days from the date on which books of account,
other documents have been seized under the provisions of this Act. However, such a
restriction is now relaxed by omitting sec 32(E)(2).
9. Bar on subsequent application to settlement commission u/s 32(O) on any other
penalty is on a person who made the application u/s 32E on the grounds of

concealment of particulars of duty liability from Central Excise Officer. Earlier, it was

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matter can be imposed if any order passed by settlement commission imposing

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not specified from whom such details would have been concealed therefore, now it is
specifically mentioned that if the concealment of duty liability was from Central
Excise Officer.
10. In respect of orders passed by Commissioner (Appeals), Central Board of Excise and
Customs or Board or Commissioner of Central Excise u/s 35A,the discretion lies with
appellate tribunals u/s 35B to refuse admitting an appeal in respect of such orders
where penalties or fine levied is upto Rs.50,000/-. Such limit of Rs. 50,000/- is now
extended to Rs. 2,00,000.
11. Further under section 35B Central board of excise and customs can now constitute a
committee as necessary for the purpose of this act by passing an order and it is not
required to notify the same in official gazette.
12. The time limit prescribed for the appellate tribunal under first, second and third
proviso of 35C (2A) to dispose off the stay orders is now omitted. Earlier the Appellate
Tribunal had to dispose of the appeal within a period of 180 days from the date of
such order. If such appeal is not disposed of within 180 days, then stay order shall on
the expiry of that period, stand vacated. Such stay order even could have been
extended for further 180 days by the Tribunal. This would give great relief for cases
where stay orders are passed and matter is still pending.
13. Time limit for filing of the appeal u/s 35 E by the department has been further
extended to 30 days.
14. Section 35F required appellant to make a pre-deposit of demand and penalties for
appealing against a decision or order, it also gave commissioner (appeals) or appellate
tribunal to dispense with the requirement of pre-deposit if it causes undue hardship
on appellant. Section 35F has now been substituted with a new provision requiring the

Amount to be pre-deposited

Commissioner (appeals) for orders passed Appellant has to deposit seven and a half
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Order appealed to

appellant to deposit amounts as under:

by a Central Excise Officer lower in rank percent of the duty demanded or penalty
than a commissioner

imposed or both;

Appellate tribunal for orders passed by

Appellant has to deposit seven and a half

Commissioner of Central Excise

percent of the duty demanded or penalty

imposed or both;

Appellate tribunal for orders passed by

Appellant has to deposit ten percent of the

Commissioner(appeals) u/s 35A

duty demanded or penalty imposed or

both;

Note:
! However, amount to be pre-deposited under this section shall not exceed Rs. 10
crore.
! The provisions of this section shall not apply to the stay applications and appeals
pending before any appellate authority prior to the commencement of the
Finance (No.2) Act, 2014.
15. Sub-section(2) to section 35L shall be inserted wherein an appeal to supreme court
relating to an order passed by the appellate tribunal pertaining to any question having
a relation to the rate of duty shall include the determination of taxability or
excisability of goods for the purpose of assessment.
16. If any Central Excise Officer has not filed an appeal in pursuance of the orders under
sub-section (1) of section 35R due to fixing of monetary limit for regulating the filing
of appeals by Central Excise Officers then in lieu of this amendment apart from
appellate Tribunal and court even Commissioner (appeals) hearing such appeal can
have regard to the circumstances under which appeal was not filed by the Central
Excise Officer in pursuance of such orders.
17. In the Pan Masala Packing Machines (Capacity Determination and Collection of Duty)
Rules, 2008, rule 8, for the first proviso has been amended to provide that where a

the highest retail sale price for the whole month.

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prices during a month, he shall be liable to pay the duty applicable to pouch bearing

manufacturer uses an operating machine to produce pouches of different retail sale

18. As per sub-section (1) of section 5A of the Central Excise Act, NotificationNo.5/2006Central Excise, dated the 1st March, 2006 has been amended to include the following
serial number and entries shall be exempted:
(a) Under sl. no. 2C, with effect from 29th June, 2010 to 16th March, 2012 (both days
inclusive) namely:
(1) Polyester staple fibre or polyester filament yarn manufactured from plastic
scrap or plastic waste including waste polyethylene terephthalate bottles [chapter
54 or 55]
(2) Tow manufactured and captively consumed within the factory of its production
for the manufacture of goods specified in entry (1) [chapter 54 or 55]
(b) Under sl.no. 24 against Chapter no.71, with effect from 1st March, 2011 to 16th
March, 2012 (both days inclusive) namely:
(I) Articles of (a) gold, (b) silver, (c) platinum, (d) palladium, (e) rhodium, (f)
iridium, (g) osmium, or (h) ruthenium, not bearing a brand name.
Also the refund shall be made of all duty of excise which has been collected but
which would not have been so collected. For the purpose, the refund application shall
be made within 6 months from date on which Finance bill 2014 receives the assent of
President.
19. As per sub-section (1) of section 5A of the Central Excise Act, Notification No.
12/2012-Central Excise, dated the 17th March, 2012, has been amended to include the
following serial number and entries shall be exempted:
(i)

serial number 81 and the entries relating thereto, the following serial number and
entries shall be substituted and shall be deemed to have been substituted with
effect from 8th February,2013 to 10th July, 2014 (both days inclusive)
on liquefied propane and butane mixture, liquefied butane and liquefied

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domestic exempted category (NDEC) customers by the Indian Oil Corporation

petroleum gases (LPG) for supply to house hold domestic consumers or to non-

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Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum

Corporation Limited;
(ii)

serial number 172A and the entries relating thereto, the following serial number
and entries shall be substituted and shall be deemed to have been substituted
with effect from m 17th March, 2012 to 10th July, 2014 (both days inclusive)
(1) Polyester staple fibre or polyester filament yarn manufactured from plastic
scrap or plastic waste including waste polyethylene terephthalate bottles
(2) Tow manufactured and captively consumed within the factory of its
production for the manufacture of goods specified in entry (1);

Also the refund shall be made of all duty of excise which has been collected but
which would not have been so collected. For the purpose, the refund application shall
be made within 6 months from date on which Finance bill 2014 receives the assent of
President.
20. There are changes in MRP provisions wherein certain products are added and some
are substituted as per schedule seven of finance bill, 2014.

Abatement in MRP provisions

Abatement extended to certain goods valued under MRP provisions Notification No. 17/2014-Central Excise (N. T.)
Abatement @ 35% shall apply to any other type of centrifuges, including centrifugal dryers;
filtering or purifying machinery and apparatus, for liquids of gases valued at retail sale price.

Amendment in Advance Ruling provisions

Advance ruling provisions extended to Resident private limited companies Notification No. 18/2014-Central Excise (N. T.)
Advance ruling provisions are extended to the resident private limited companies wherein
private limited companies shall have the meaning assigned to it u/s 2(68) of the companies act,

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with sub-section (3) of section 6 of the Income-tax Act, 1961.

2013 and resident shall have the same meaning assigned to it in clause (42) of section 2 read

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Amendment in Central Excise Rules, 2002

Electronic payment of duty is mandatory - Notification No. 19/2014-Central
Excise (N. T.)
As per rule 8 of Central Excise Rules, 2002 Every assessee shall electronically pay duty through
internet banking w.e.f 1st October 2014 unless otherwise allowed through any other mode by
assistant commissioner or deputy commissioner.
Further sub-rule (3A) of Rule 8 of Central Excise Rules, 2002 has been substituted whereas, If
the assessee fails to pay the duty declared as payable by him in the return within a period of
one month from the due date, then the assessee is liable to pay the penalty at the rate of one per
cent on such amount of the duty not paid, for each month or part thereof calculated from the
due date, for the period during which such failure continues. The erstwhile provision requiring
the assessee to pay duty for each consignment without utilizing CENVAT credit till the whole
duty along with interest is paid has been done away with.

Amendment in Central Excise Valuation (Determination of

Price of Excisable Goods) Rules, 2000
Sale of Excisable goods at a price less than its manufacturing cost where price
is not the sole consideration - Notification No. 20/2014-Central Excise (N. T.)
Where price is not the sole consideration for sale of excisable goods and if they are sold at a
price less than manufacturing cost and profit, and no additional consideration is flowing
directly or indirectly from the buyer to such assessee, the value of such goods shall be deemed
to be the transaction value. No such provision was there prior to amend.
The amendment would nullify the judgment of Supreme Court in case of M/s. Fiat India Ltd
wherein it was held that in circumstances of sale of goods below manufacturing cost, the
revenue could reject the transaction value declared under section 4 and invoke the provisions of
the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to assess
Central Excise duty.

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This change would be effective from the date of publication in the official gazette.

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Amendments in CENVAT Credit Rules, 2004

Place of Removal - Notification No. 21/2014-Central Excise (N. T.)
Input service definition and reversal of CENVAT Credit under Rule 6(3) gives the reference to
place of removal which was not defined earlier. However, the same has been now been
defined under Rule 2(qa) of CENVAT Credit Rules, 2004 which is as under:
! A factory or any other place of production of excisable goods;
! a warehouse or any other place where goods are deposited without payment of duty;
! a depot or premise or place of consignment agent from where excisable goods are sold
after clearance from the factory.
This Rule is effective from 11th July 2014.

CENVAT Credit on the basis of Invoice - Notification No. 21/2014-Central

Excise (N. T.)
Manufacturer and Output service provider were allowed to avail CENVAT Credit on the basis
of invoice, irrespective of the date of invoice, now with the insertion of third proviso to Rule
4(1) of CENVAT Credit Rules, 2004 the same has to availed within six months from the date of
invoice, bill or challan as specified rule 9.
The Rule is effective from 1st September 2014.
Immediate Action
The manufacturers and service providers shall ascertain the CENVAT credit missed out in the
past period, if any and avail the credits immediately before 1st September 2014. It is important
to note the chances are that the limit of six months would be applicable only on the invoices
which are issued on or after 1st September 2014.

Eligibility for availing CENVAT Credit in case of reverse charge/joint charge Notification No. 21/2014-Central Excise (N. T.)
Under Reverse Charge Mechanism, expenses were whole of the service tax liability has to be
discharged by service recipient (such as sponsorship service, legal services, import of services

thereon.

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where CENVAT can be availed only on or after payment of both value of service and service tax

etc.), CENVAT credit can be availed on or after payment of Service tax itself unlike earlier

Further, cases where the service tax liability has to be discharged by service provider or
manufacturer has not been discharged within 3 months from the date of invoice along with
value of service, then the amount of CENVAT credit availed on the basis of invoice or challan as
the case may be, has to be reversed. In case the same has been paid CENVAT Credit can be
availed provided six months has not lapsed from the date of invoice earlier to the amendment
there was no such criteria of six months from the date of invoice was specified and the same can
be availed any time.

CENVAT credit when export consideration received/not received Notification No. 21/2014-Central Excise (N. T.)
Prior to amendment, in case of export of services, if foreign currency is not received for a period
of six months or extended period allowed by RBI from the date of provision, the same will be
considered as exempted service and reversal of CENVAT credit as per Rule 6(3) of CENVAT
Credit Rules,2004 has to be made but now if the same is received after extended period but
within one year from such period, service provider can avail the amount of CENVAT credit
reversed subject to documentary evidence of such receipt which was not allowed earlier.

Procedure and facilities for large tax payer (LTU) - Notification No. 21/2014-
Central Excise (N. T.)
Rule 12A of CENVAT Credit Rules, 2004 has been amended stating that the credit taken, on or
before the 10th July, 2014, by one of his (LTU) registered manufacturing premises or premises
providing taxable services could be transferred to other units.
After this amendment, LTU would not be in a position to transfer the credits claimed from 11th
July 2014 from one unit to other unit.
This Rule is effective from 11th July 2014.

Changes in duty payable on pan masala and pan masala containing

tobacco based on production capacity - Notification No. 22/2014-Central
Excise (N. T.)
Rules, 2008, new table as follows has been inserted. This change would be effective from the

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date of publication in the official gazette.

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In Form 2 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty)

(For private circulation to clients of Hiregange & Associates and Chartered Accountants only)

Sl.

Duty

No.

Duty ratio for Duty paid

Duty ratio for pan

Duty paid

pan masala

masala containing

(in rupees)

(in rupees)

tobacco
1

The

duty

leviable

the

Central

under

0.3453

0.7903

0.1294

0.0677

0.4962

0.1129

0.0194

0.0194

0.0097

0.0097

Excise Act, 1944

2

The additional duty

of

excise

leviable

under section 85 of
the Finance Act, 2005
3

National

Calamity

Contingent
Duty leviable under
section 136 of the
Finance Act, 2001 4
4

Education

Cess

leviable
section

under
91

of

the

Finance Act, 2004

5

Secondary
Higher

and
Education

Cess leviable under

section 136 of the
Finance Act, 2007

Disclaimer: This is a summary and our analysis of the budget changes this cannot be
considered as our opinion/advice, Hiregange and Associates would not be responsible for
any action taken based on this note without further consultation with Hiregange and
Associates.

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or sudhir@hiregange.com)

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