EXTRACT OF THE FINANCE ACT, 2020

No. 12 OF 2020

An Act to give effect to the financial proposals of the Central Government for the financial year 2020-2021.

BE it enacted by Parliament in the Seventy-first Year of the Republic of India as follows:-

CHAPTER I

PRELIMINARY

1. Short title and commencement.

(1) This Act may be called the Finance Act, 2020.

(2) Save as otherwise provided in this Act,-

(a) sections 2 to 104 shall come into force on the 1st day of April, 2020;

(b) sections 118 to 131 and section 134 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

CHAPTER IV

Indirect Taxes Customs

107. Amendment of section 11.

In section 11 of the Customs Act, 1962 (52 of 1962.) (hereinafter referred to as the Customs Act), in sub-section (2), in clause (f), for the words "gold or silver", the words "gold, silver or any other goods" shall be substituted.

108. Amendment of section 28.

In section 28 of the Customs Act, for Explanation 4, the following Explanation shallbe substituted and shall be deemed to have been substituted with effect from the 29th day of March, 2018, namely:-

"Explanation 4.- For the removal of doubts, it is hereby declared that notwithstanding anything to the contrary contained in any judgment, decree or order of the Appellate Tribunal or any Court or in any other provision of this Act or the rules or regulations made thereunder, or in any other law for the time being in force, in cases where notice has been issued for non-levy, short-levy, non-payment, short-payment or erroneous refund, prior to the 29th day of March, 2018, being the date of commencement of the Finance Act, 2018 (13 of 2018.), such notice shall continue to be governed by the provisions of section 28 as it stood immediately before such date.".

109. Amendment of section 28AAA.

In section 28AAA of the Customs Act, in sub-section (1),-

(a) for the words "by such person", the words "or any other law, or any scheme of the Central Government, for the time being in force, by such person" shall be substituted;

(b) after the words "the rules", the words "or regulations" shall be inserted;

(c) in Explanation 1, for the words "with respect to", the words, figures and letter "or duty credit issued under section 51B, with respect to" shall be substituted.

110. Insertion of New Chapter VAA

After Chapter VA of the Customs Act, the following Chapter shall be inserted, namely:-

'CHAPTER VAA

Administration Of Rules Of Origin Under Trade Agreement

28DA. Procedure regarding claim of preferential rate of duty.

(1) An importer making claim for preferential rate of duty, in terms of any trade agreement, shall,-

(i) make a declaration that goods qualify as originating goods for preferential rate of duty under such agreement;

(ii) possess sufficient information as regards the manner in which country of origin criteria, including the regional value content and product specific criteria, specified in the rules of origin in the trade agreement, are satisfied;

(iii) furnish such information in such manner as may be provided by rules;

(iv) exercise reasonable care as to the accuracy and truthfulness of the information furnished.

(2) The fact that the importer has submitted a certificate of origin issued by an Issuing Authority shall not absolve the importer of the responsibility to exercise reasonable care.

(3) Where the proper officer has reasons to believe that country of origin criteria has not been met, he may require the importer to furnish further information, consistent with the trade agreement, in such manner as may be provided by rules.

(4) Where importer fails to provide the requisite information for any reason, the proper officer may,-

(i) cause further verification consistentwith the trade agreement in such manner as may be provided by rules;

(ii) pending verification, temporarily suspend the preferential tariff treatment to such goods:

Provided that on the basis of the information furnished by the importer or the information available with him or on the relinquishment of the claim for preferential rate of duty by the importer, the Principal Commissioner of Customs or the Commissioner of Customs may, for reasons to be recorded in writing, disallow the claim for preferential rate of duty, without further verification.

(5) Where the preferential rate of duty is suspended under sub-section (4), the proper officer may, on the request of the importer, release the goods subject to furnishing by the importer a security amount equal to the difference between the duty provisionally assessed under section 18 and the preferential duty claimed:

Provided that the Principal Commissioner of Customs or the Commissioner of Customs may, instead of security, require the importer to deposit the differential duty amount in the ledger maintained under section 51A.

(6) Upon temporary suspension of preferential tariff treatment, the proper officer shall inform the Issuing Authority of reasons for suspension of preferential tariff treatment, and seek specific information as may be necessary to determine the origin of goods within such time and in such manner as may be provided by rules.

(7) Where, subsequently, the Issuing Authority or exporter or producer, as the case may be, furnishes the specific information within the specified time, the proper officer may, on being satisfied with the information furnished, restore the preferential tariff treatment.

(8) Where the Issuing Authority or exporter or producer, as the case may be, does not furnish information within the specified time or the information furnished by him is not found satisfactory, the proper officer shall disallow the preferential tariff treatment for reasons to be recorded in writing:

Provided that in case of receipt of incomplete or non-specific information, the proper officer may send another request to the Issuing Authority stating specifically the shortcoming in the information furnished by such authority, in such circumstances and in such manner as may be provided by rules.

(9) Unless otherwise specified in the trade agreement, any request for verification shall be sent within a period of five years from the date of claim of preferential rate of duty by an importer.

(10) Notwithstanding anything contained in this section, the preferential tariff treatment may be refused without verification in the following circumstances, namely:-

(i) the tariff item is not eligible for preferential tariff treatment;

(ii) complete description of goods is not contained in the certificate of origin;

(iii) any alteration in the certificate of origin is not authenticated by the Issuing Authority;

(iv) the certificate of origin is produced after the period of its expiry,

and in all such cases,the certificate of origin shall be marked as "INAPPLICABLE".

(11) Where the verification under this section establishes non-compliance of the imported goods with the country of origin criteria, the proper officer may reject the preferential tariff treatment to the imports of identical goods from the same producer or exporter, unless sufficient information is furnished to show that identical goods meet the country of origin criteria.

Explanation.- For the purposes of this Chapter,-

(a) "certificate of origin" means a certificate issued in accordance with a trade agreement certifying that the goods fulfill the country of origin criteria and other requirements specified in the said agreement;

(b) "identical goods" means goods that are same in all respects with reference to the country of origin criteria under the trade agreement;

(c) "Issuing Authority" means any authority designated for the purposes of issuing certificate of origin under a trade agreement;

(d) "trade agreement" means an agreement for trade in goods between the Government of India and the Government of a foreign country or territory or economic union.'.

111. Amendment of heading of Chapter VIIA.

In Chapter VIIA of the Customs Act, in the heading, after the word "LEDGER", the words "AND ELECTRONIC DUTY CREDIT LEDGER" shall be inserted.

112. Insertion of new section 51 B.

After section 51A of the Customs Act, the following section shall be inserted, namely:-

"51B. Ledger for duty credit.

(1)The Central Government may, by notification in the Official Gazette, specify the manner in which it shall issue duty credit,-

(a) in lieu of remission of any duty or tax or levy, chargeable on any material used in the manufacture or processing of goods or for carrying out any operation on such goods in India that are exported; or

(b) in lieu of such other financial benefit subject to such conditions and restrictions as may be specified therein.

(2) The duty credit issued under sub-section (1) shall be maintained in the customs automated system in the form of an electronic duty credit ledger of the person who is the recipient of such duty credit, in such manner as may be prescribed.

(3) The duty credit available in the electronic duty credit ledger may be used by the person to whom it is issued or the person to whom it is transferred, towards making payment of duties payable under this Act or under the Customs Tariff Act, 1975 (51 of 1975.) in such manner and subject to such conditions and restrictions and within such time as may be prescribed.".

113. Amendment of section 111.

In section 111 of the Customs Act, after clause (p), the following clause shall be inserted, namely:-

"(q) any goods imported on a claim of preferential rate of duty which contravenes any provision of Chapter VAA or any rule made thereunder.".

114. Amendment of section 156.

In section 156 of the Customs Act, in sub-section (2), after clause (h), the following clause shall be inserted, namely:-

"(i) the form, time limit, manner, circumstances, conditions, restrictions and such other matters for carrying out the provisions of Chapter VAA.".

115. Amendment of section 157.

In section 157 of the Customs Act, in sub-section (2), after clause (j), the following clause shall be inserted, namely:-

"(ja) the manner of maintaining electronic duty credit ledger, making payment from such ledger, transfer of duty credit from ledger of one person to the ledger of another and the conditions, restrictions and time limit relating thereto;".

Customs Tariff

116. Substitution of new section for section 8B.

For section 8B of the Customs Tariff Act, 1975 (51 of 1975.) (hereinafter referred to as the Customs Tariff Act), the following section shall be substituted, namely:-

'8B. Power of Central Government to apply safeguard measures.

(1) If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any article is imported into India in such increased quantity and under such conditions so as to cause or threaten to cause serious injury to domestic industry, it may, by notification in the Official Gazette, apply such safeguard measures on that article, as it deems appropriate.

(2) The safeguard measures referred to in sub-section (1) shall include imposition of safeguard duty, application of tariff-rate quota or such other measure,as the Central Government may consider appropriate, to curb the increased quantity of imports of an article to prevent serious injury to domestic industry:

Provided that no such measure shall be applied on an article originating from a developing country so long as the share of imports of that article from that country does not exceed three per cent. or where the article is originating from more than one developing country, then, so long as the aggregate of the imports from each of such developing countries with less than three per cent. import share taken together, does not exceed nine per cent. of the total imports of that article into India:

Provided further that the Central Government may, by notification in the Official Gazette, exempt such quantity of any article as it may specify in the notification, when imported from any country or territory into India, from payment of the whole or part of the safeguard duty leviable thereon.

(3) Where tariff-rate quota is used as a safeguard measure, the Central Government shall not fix such quota lower than the average level of imports in the last three representative years for which statistics are available, unless a different level is deemed necessary to prevent or remedy serious injury.

(4) The Central Government may allocate such tariff-rate quota to supplying countries having a substantial interest in supplying the article concerned, in such 55 manner as may be provided by rules.

(5) The Central Government may, pending the determination under sub-section (1), apply provisional safeguard measures under this sub-section on the basis of a preliminary determination that increased imports have caused or threatened to cause serious injury to a domestic industry:

Provided that where, on final determination, the Central Government is of the opinion that increased imports have not caused or threatened to cause serious injury to a domestic industry, it shall refund the safeguard duty so collected:

Provided further that any provisional safeguard measure shall not remain in force for more than two hundred days from the date on which it was applied.

(6) Notwithstanding anything contained in the foregoing sub-sections, a notification issued under sub-section (1) or any safeguard measures applied under sub-sections (2), (3), (4) and (5), shall not apply to articles imported by a hundred per cent. export-oriented undertaking or a unit in a special economic zone, unless,-

(i) it is specifically made applicable in such notification or to such undertaking or unit;

(ii) such article is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area, in which case, safeguard measures shall be applied on the portion of the article so cleared or used, as was applicable when it was imported into India.

Explanation.- For the purposes of this section, the expressions "hundred per cent. export-oriented undertaking", and "special economic zone" shall have the same meaning as assigned to them in Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944).

(7) The safeguard duty imposed under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force.

(8) The safeguard measures applied under this section shall, unless revoked earlier, cease to have effect on the expiry of four years from the date of such application:

Provided that if the Central Government is of the opinion that the domestic industry has taken measures to adjust to such injury or threat thereof and it is necessary that the safeguard measures should continue to be applied, it may extend the period of such application:

Provided further that in no case the safeguard measures shall continue to be applied beyond a period of ten years from the date on which such measures were first applied.

(9) The provisions of the Customs Act, 1962 (52 of 1962). and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short-levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act.

(10) The Central Government may, by notification in the Official Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing power, such rules may provide for,-

(i) the manner in which articles liable for safeguard measures may be identified;

(ii) the manner in which the causes of serious injury or causes of threat of serious injury in relation to identified article may be determined;

(iii) the manner of assessment and collection of safeguard duty;

(iv) the manner in which tariff-rate quota on identified article may be allocated among supplying countries;

(v) the manner of implementing tariff-rate quota as a safeguard measure;

(vi) any other safeguard measure and the manner of its application.

(11) For the purposes of this section,-

(a) "developing country" means a country notified by the Central Government in the Official Gazette;

(b) "domestic industry" means the producers,-

(i) as a whole of the like article or a directly competitive article in India; or

(ii) whose collective output of the like article or a directly competitive article in India constitutes a major share of the total production of the said article in India;

(c) "serious injury" means an injury causing significant overall impairment in the position of a domestic industry;

(d) "threat of serious injury" means a clear and imminent danger of serious injury.

(12) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total 5 period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be issued, the notification shall thereafter have effect only in such modified form or be of 10 no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.'.

117. Amendment of First Schedule.

In the Customs Tariff Act, the First Schedule shall,-

(a) be amended in the manner specified in the Second Schedule; and

(b) be also amended in the manner specified in the Third Schedule.

THE SECOND SCHEDULE

[See section 115 (a)]

In the Customs Tariff Act, in the First Schedule,-

(1) in Chapter 8, for the entry in column (4) occurring against tariff item 0802 32 00, the entry "100%" shall be substituted;

(2) in Chapter 38, for the entry in column (4) occurring against tariff item 3824 99 00, the entry "17.5%" shall be substituted;

(3) in Chapter 64,-

(i) for the entry in column (4) occurring against all the tariff items of headings 6401,6402, 6403, 6404 and 6405, the entry "35%" shall be substituted;

(ii) for the entry in column (4) occurring against all the tariff items of heading 6406, the entry "20%" shall be substituted;

(4) in Chapter 67, for the entry in column (4) occurring against all the tariff items of heading 6702, the entry "20%" shall be substituted;

(5) in Chapter 69, for the entry in column (4) occurring against tariff items 6911 10 11,6911 10 19, 6911 10 21, 6911 10 29, 6911 90 20, 6911 90 90, 6912 00 10, 6912 00 20, 6912 00 40 and 6912 00 90, the entry "20%" shall be substituted;

(6) in Chapter 70,-

(i) for the entry in column (4) occurring against all the tariff items of heading 7013, the entry "20%" shall be substituted;

(ii) for the entry in column (4) occurring against tariff item 7018 10 20, the entry "20%" shall be substituted;

(7) in Chapter 71, for the entry in column (4) occurring against all the tariff items of heading 7118, the entry "12.5%" shall be substituted;

(8) in Chapter 73, for the entry in column (4) occurring against all the tariff items of heading 7323, the entry "20%" shall be substituted;

(9) in Chapter 74, for the entry in column (4) occurring against all the tariff items of sub-heading 7418 10, the entry "20%" shall be substituted;

(10) in Chapter 76, for the entry in column (4) occurring against all the tariff items of sub-heading 7615 10, the entry "20%" shall be substituted;

(11) in Chapter 83,-

(i) for the entry in column (4) occurring against tariff items 8301 10 00, 8301 30 00, 8301 40 10, 8301 40 90, 8301 50 00, 8301 60 00 and 8301 70 00, the entry "20%" shall be substituted;

(ii) for the entry in column (4) occurring against tariff item 8304 00 00, the entry "20%" shall be substituted;

(iii) for the entry in column (4) occurring against all the tariff items of headings 8305, 8306 and 8310, the entry "20%" shall be substituted;

(12) in Chapter 84,-

(i) for the entry in column (4) occurring against tariff item 8414 30 00, the entry "12.5%" shall be substituted;

(ii) for the entry in column (4) occurring against tariff items 8414 51 10, 8414 51 20 and 8414 51 30, the entry "20%" shall be substituted;

(iii) for the entry in column (4) occurring against tariff item 8414 51 40, the entry "10%" shall be substituted;

(iv) for the entry in column (4) occurring against tariff item 8414 51 90, the entry "20%" shall be substituted;

(v) for the entry in column (4) occurring against tariff items 8414 59 10, 8414 59 30 and 8414 59 90, the entry "10%" shall be substituted;

(vi) for the entry in column (4) occurring against tariff item 8414 59 20, the entry "20%" shall be substituted;

(vii) for the entry in column (4) occurring against tariff item 8414 80 11, the entry "12.5%" shall be substituted;

(viii) for the entry in column (4) occurring against tariff items 8418 10 10, 8418 30 10, 8418 30 90, 8418 40 10, 8418 40 90, 8418 50 00, 8418 61 00, 8418 69 10, 8418 69 20, 8418 69 30, 8418 69 40, 8418 69 50 and 8418 69 90, the entry "15%" shall be substituted;

(ix) for the entry in column (4) occurring against tariff item 8419 89 10, the entry "10%" shall be substituted;

(x) for the entry in column (4) occurring against tariff items 8421 39 20 and 8421 39 90, the entry "15%" shall be substituted;

(13) in Chapter 85,-

(i) for the entry in column (4) occurring against tariff items 8504 40 10, 8504 40 21, 8504 40 29, 8504 40 30, 8504 40 40 and 8504 40 90, the entry "20%" shall be substituted;

(ii) for the entry in column (4) occurring against tariff items 8509 40 10, 8509 40 90 and 8509 80 00, the entry "20%" shall be substituted;

(iii) for the entry in column (4) occurring against tariff items 8510 10 00, 8510 20 00 and 8510 30 00, the entry "20%" shall be substituted;

(iv) for the entry in column (4) occurring against tariff items 8515 11 00, 8515 19 00, 8515 21 10, 8515 21 20, 8515 21 90, 8515 29 00, 8515 31 00, 8515 39 10, 8515 39 20, 8515 39 90, 8515 80 10 and 8515 80 90, the entry "10%" shall be substituted;

(v) for the entry in column (4) occurring against tariff items 8516 10 00, 8516 21 00, 8516 29 00, 8516 31 00, 8516 32 00, 8516 33 00, 8516 40 00, 8516 60 00, 8516 71 00, 8516 72 00, 8516 79 10, 8516 79 20, 8516 79 90 and 8516 80 00, the entry "20%" shall be substituted;

(vi) for the entry in column (4) occurring against tariff item 8517 70 10, the entry "20%" shall be substituted;

(14) in Chapter 94, for the entry in column (4) occurring against all the tariff items of headings 9401, 9403, 9404 and 9405, the entry "25%" shall be substituted;

(15) in Chapter 95, for the entry in column (4) occurring against all the tariff items of heading 9503, the entry "60%" shall be substituted;

(16) in Chapter 96,-

(i) for the entry in column (4) occurring against all the tariff items of heading 9603, the entry "20%" shall be substituted;

(ii) for the entry in column (4) occurring against tariff item 9604 00 00, the entry "20%" shall be substituted;

(iii) for the entry in column (4) occurring against all the tariff items of headings 9615 and 9617, the entry "20%" shall be substituted.

THE THIRD SCHEDULE

[See section 115 (b)]

In the Customs Tariff Act, in the First Schedule,-

THE FOURTH SCHEDULE

[See section 141]

The rules for interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the Section Notes, Chapter Notes and the General Explanatory Notes of the said First Schedule shall apply to the interpretation of this Schedule.

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 5th April, 2020/Chaitra 26, 1942 (Saka)

CORRIGENDA THE FINANCE ACT, 2020 No. 12 of 2020

In the FINANCE ACT, 2020 (12 OF 2020) as published in the Gazette of India, Extraordinary, Part II, Section 1, Issue No. 20 dated the 27th March, 2020, -

Dr. G. Narayana Raju,

Secretary to the Govt. of India.