17 December 2009
Additional duty of customs under section 3 Section 3 of the Customs Tariff Act (CTA), 1975 is being substituted vide clause 72 of the Finance Bill, 2005. The new section 3, inter alia, also enables the Government to impose an additional duty, at a rate not exceeding 4% ad valorem, to countervail the sales tax, value added tax, local taxes and other charges leviable on like goods on their sale or purchase or transportation in India. Value for the purposes of the said levy would include the assessable value, basic customs duty, any sum chargeable as a duty of customs under section 12 of the Customs Act and the additional duty of customs leviable under sub-section (1) of section 3 of CTA, but shall exclude the countervailing duty referred to in section 9 of CTA, anti-dumping duty referred to in section 9A of CTA and safeguard duty referred to in sections 8B and 8C of CTA. This new levy will not be included in the assessable value for the purposes of levy of education cess on imported goods (notification No. 20/2005- Customs refers). The substituted section 3, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931, has the force of law, and comes into effect immediately w.e.f. 1st March 2005. For the present, this additional duty at 4% has been imposed with immediate effect from 1st March 2005 only on items bound under the Information Technology Agreement, and on specified inputs/raw materials for manufacture of electronics/IT goods. However, IT software and documents of title conveying the right to use IT software will not be subject to this levy. It may be noted that except for these goods, this duty will not apply to any other goods for the present (notification No. 19/2005- Customs refers). The Cenvat Credit Rules, 2004 are being amended to allow domestic manufacturers to take credit of this additional duty of customs for payment of any excise duty on their finished goods. Service providers are not allowed to take credit of this additional duty. Credit of this additional duty can be utilised for payment of excise duty (including special excise duty and additional excise duties) on final products, but not for paying service tax. Credit of this additional duty in respect of capital goods can be taken in one installment (as against two installments in other cases). All provisions relating to Cenvat Credit, including those relating to rebate and refunds are applicable to the this additional duty, as are applicable to the excise duty leviable under the Central Excise Act.
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