In this article, an attempt has been made to analyse the some of the key proposals related to Customs Laws.

1. Rationalisation of Penalty Provisions:

• Proper Officer under Customs Department may serve SCN for recovery of duties not levied/ short levied for reasons other than that of collusion, wilful mis-statement or suppression of facts, within one year from relevant date1. In case the assessee pays duty with interest, SCN shall not be served.

Now, one proviso is proposed to be inserted to Section 28 (2) of the Customs Act, 1962 for non-imposition of penalty provided full duty along with interest is paid within 30 days from the date of receipt of SCN. Further, it is proposed that in such a case, the proceedings would be deemed to be concluded.

• Further, in cases of short payment/non-payment due to collusion, wilful mis-statement or suppression of facts by the importer or exporter or agents or employees thereof and SCN is already issued, the noticee may pay accepted duty in full or part with interest and penalty @ 25% of the duty amount within 30 days from the date of receipt of SCN2. In such a case, the proceedings are deemed to be concluded for the accepted duty amount.

Now, in the above cases, it is proposed to reduce penalty of 25% of duty amount to 15% of duty amount.

• In view of proposed amendment to penalty provisions, transitional provisions are proposed to be introduced. Accordingly, in cases where SCN is issued but Adjudication Order is not passed before enactment of Finance Bill, 2015, the proceedings would be deemed to be concluded if duty, interest and penalty @ 25% or 15% of duty amount respectively is paid in full within 30 days from the date of enactment of Finance Bill, 2015.

2. Amendment to penalties for improper importation or export of dutiable goods

• If any person deals with goods in a manner that the goods become liable for confiscation or any person acquires possession of or is in any way involved in dealing with goods such as handling, depositing, harbouring, keeping, concealing, selling or purchasing which that person knows or has reason to believe, are liable to confiscation, then such a person is liable for specified penalties3.

• Currently, in case of dutiable goods other than prohibited goods, penalty, not exceeding 100% of the duty sought to be evaded on such goods or
Rs. 5,000/-, whichever is higher, shall be imposed. Now, it is proposed to amend the upper cap for such penalties from 100% to 10% i.e. penalties are proposed to be levied maximum upto 10% of the duty sought to be evaded or
Rs. 5,000/-, whichever is higher.

• Further, it is proposed that if duty alongwith interest on such improper import has been deposited within 30 days from the date of the communication of adjudication order, penalty shall be reduced to 25% of the penalty (i.e. effectively 2.50% of duty sought to be evaded).

• Similarly, in case of improper exports of goods i.e. if any person deals with dutiable goods other than prohibited goods in a manner which would render the goods liable for confiscation, presently, penalty is levied not exceeding 100% of the duty sought to be evaded on such goods or
Rs. 5,000/-, whichever is higher.

• Now, penalty criteria is proposed to be amended as penalty not exceeding 10% of duty sought to be evaded or
Rs. 5,000/-, whichever is higher.

• Yet again, it is proposed that if duty alongwith interest on such improper export has been deposited within 30 days from the date of the communication of adjudication order, penalty shall be reduced to 25%. Of the penalty (i.e. effectively 2.50% of duty sought to be evaded).

3. Amendment to provisions for Settlement Commission:

• Hitherto, Settlement Commission is given power to reopen completed proceedings if the same are connected with the case pending with Settlement Commission with the concurrence of the applicant and pass orders accordingly. The Settlement Commission is not allowed to reopen the case after expiry of 5 years from the date of application made to Settlement Commission.

• Now, the power given to reopen the cases to Settlement Commission is proposed to be withdrawn.

All the above amendments would be effective from the date of enactment of Finance Bill, 2015.

4. Facility of advance rulings extended to resident firms

• Presently, following persons may apply for advance ruling:

• A non-resident setting up a joint venture in India in collaboration with a non-resident or a resident;

• A resident setting up a joint venture in India in collaboration with a non-resident;

• A wholly owned subsidiary Indian company, of which the holding company is a foreign company, which proposes to undertake any business activity in India;

• A joint venture in India;

• A resident in case of imports from Singapore;

• A resident public sector company;

• A resident proposing to import goods under Chapter heading 9801 of the First Schedule to the Customs Tariff Act, 1975;

• A resident public limited company;

• A resident private limited company.

• Now, with effect from 1st March, 2015, even a resident firm has the facility to apply for advance rulings4. The term “firm” means Partnership Firm and includes Specified Limited Liability Partnership (LLP), Sole Proprietorship and One Person Company.

• With the aforesaid amendment, almost all business entities will be eligible to apply for the Advance Rulings.

CA. Prerana (Payal) Shah

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