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FIEO offers you an opportunity for Online Chat every Wednesday between 3 to 5 pm (IST) with Mr. Ajay Sahai, Director General (FIEO) on issues related with foreign trade. Mr. Sahai has served many important offices in various capacitites. As Jt. DGFT (Policy), during 1996-2003, he was closely associated with the formulation of the Exim Policy. Feel free to seek clarifications/advices from Mr. Sahai on issues related with foreign trade. All that you need to do is to just click ‘FIEO On-Line Chat Service’ at www.fieo.org. Some portions of the Chats held last weeks are reproduced here. |
We exported a shipment on 12 February 2007 from IGI airport under DEPB. The DGFT has issued the DEPB. Are we required the verification of the DEPB before effecting imports?
The physical verification of DEPB in respect of shipments effected from Electronic Data Interchange (EDI) ports has been dispensed with. Such DEPBs are issued on the basis of the EDI Shipping Bills transmitted electronically by the customs to DGFT and DEPBs are also sent to the customs through electronic message systems. However, till the system stabilizes, the importer is required to produce the hard copy of the DEPB to the customs house at the port of registration before utilizing the DEPB.
Is there any notification issued by the Customs in this regard?
Department of Revenue has issued Circular No. 11/2007-Customs dated 13th February 2007 dispensing with physical verification of DEPBs issued in respect of Shipping Bills passed under EDI Systems.
Are we required verification for Shipping Bills passed from a non-EDI ICD?
In respect of DEPBs issued against a non-EDI Shipping Bill, the procedure prescribed under Customs Circular No. 14/99, dated 15.3.99 will continue.
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We have received an order for exports of garments for which interlining is supplied free of cost by our buyer. Are we eligible for brand rate of drawback in respect of export of garments?
You are eligible for brand rate of drawback even where the materials are supplied free of cost because customs duty is payable even on materials which are supplied free of cost. You may refer to customs circular No. 25/2006 dated 19the Sept., 2006.
If we add the value of free of cost material to our CIF value, the export results in negative value addition as the FOB value of exports is less in such cases since the buyer is not paying for the cost of interlining which is supplied free of cost.
For calculation of value addition, the notional value of imported material supplied free of cost by the foreign buyer should be added both to the CIF value of inputs as well as to the FOB value of exports. For example, if the value of other material is Rs. 100 and the notional value of free of cost material is Rs.40, the CIF value should be treated as Rs. 140. In case, you are realizing Rs.130 for exports of garments, you should add Rs. 40 (value of duty free material) to the FOB value so that it becomes Rs. 170. With this calculation your value addition will be positive.
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Customs at Kandla is insisting that we should pay 4% Special Additional Duty in respect of capital goods being imported by us under the EPCG Scheme. Our consignments are being held up for last 15 days.
Special Additional Duty of 4% is not leviable for imports under EPCG Scheme. You may invite the attention of the customs to their Circular bearing No. 18/2006 dated 5th June 2006.
What are the schemes in which 4% Special Additional Duty is levied and which are the schemes under which the same is exempted?
In terms of Customs Notification 20/2006, all goods where basic and additional customs duties are exempted, 4% Special Additional Duty is also exempt. Thus imports by SEZ, EOU units, imports under advance authorization and DFIA are exempt from special additional duty, whereas imports under DEPB, Target Plus, Served from India and Vishesh Krishi and Gram Udyog Yojna are subject to 4% duty.
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What are the procedures for investment of foreign shareholders in Indian companies? If we apply for IEC, will there be any need to give declaration to fill in Aayat Niryat Form?
In case, the Non-resident investment is non-repatriation basis, you have to give a declaration to this effect. However, if the non-resident interest is on repatriation basis, you have to enclose an approval from the Reserve bank of India to this effect while applying for IEC.
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I have started exports of musical instrument parts made of wood and metal. It does not include any Sandal or Red-Sandalwood items as I know these are banned items. In 2005-2006 I made exports of about 7,500 USD (fob) and in 2006-2007 it would be about 11,500 USD (fob) approx. Do I have to file any export returns? And how do we do that?
Normally export returns are required to be filed with the export promotion council. You may file such returns with CAPEXIL in the format prescribed for the same.
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Lots of cases are being taken up through FIEO against the provision of collecting service tax on commission paid to foreign agent in foreign currency and I am told that currently the matter is subjudiced in the Supreme Court. Kindly clarify.
FIEO has already represented to the Ministries of Finance and Commerce seeking exemption from Service Tax on services procured outside India. So far as Court cases are concerned, individual exporters and few export associations have filed such cases in their respective High Courts and in certain cases, stay has been obtained by the exporters. To the best of our knowledge, the case has not been filed in the Supreme Court.
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We are availing DEPB as per S.NO. 22 D under the group of miscellaneous products. Additionally, we are also entitled for benefit of Vishesh Krishi Upaj Yojana (VKUY) as per paragraph 3.8 of the Foreign Trade Policy. Are we entitled for the benefits of VKUY @ 3.5% or 5.0% under Para 3.8.2 of the Policy?
The VKUY at the reduced rate is only applicable in cases where the inputs are imported. Therefore, reduced rate will apply only in cases of advance authorization and duty free import authorization. Exporters availing DEPB will be eligible for 5% entitlement under VKUY.
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Which kind of gauze product can get all-industry duty drawback? Where can I find this information?
For
seeing the all industry duty drawback rate, you have to refer to index
"drawback" at the website:www.cbec.gov.in.
We import raw material
required for finished goods - that are both sold in India and also exported.
Is there any possibility to get back a value of custom duty which we have
already paid while importing raw materials? Otherwise when we export goods
we pay twice for the value of raw materials.
You can get a brand rate of drawback fixed for your company for the products exported which will refund the customs and excise duty paid by you on inputs used in exports. If you can segregate the exports, you may use a certificate issued by DGFT for duty free imports of such inputs required for manufacturing of export products.
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Is it possible to transfer all the status of the existing IEC to New IEC on the surrender of existing IEC?
The number of new IEC will be different but rest of information can be shifted to new IEC.
We have a Duty Drawback account in a Port. Few years back we erroneously closed that account. Now we have opened a new account in same bank. But Customs data base shows the Old account Number and customs have advised us to get new IEC. Kindly advise.
In your IEC which was issued prior to 1999, it seems that PAN details were not included in the IEC. Hence Business Identification Number (BIN) cannot be generated at the customs end. You may approach the licensing authority to see whether they can update the PAN details in your existing IEC and send the data online to customs with BIN. If it is not possible, you may surrender the IEC Number and apply for a new IEC.
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As per public notice no. 15/2006 dated 27/06/2006, export of pulses is prohibited upto 31-03-2007. It was allowed only under advance licence issued prior to 23/06/2006 or under LC received before 23/06/2006. Kindly let us know whether we are entitled for benefits under paragraph 3.8. of the policy.
Since exports have been prohibited from 27-6-2006, as per paragraph 3.8.2.1 of the FTP, no VKUY benefit will be available for goods exported on or after 27.06.20006.
But as per notification no. 15, the amendment shall not apply to imports already effected against advance licences issued prior to the date of issue of this notification.
The objective of the scheme is to promote Vishesh Krishi products but once government decides to put ban on the export of a product, its continuance under VKUY would be self contradictory. Hence in our view, benefit of VKUY will not be available for such exports.
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We understand that central excise duty will not be payable if an EPCG Licence holder procures the capital goods indigenously, since this supply to EPCG Licence holder by the domestic manufacturer will amount to "deemed export ". Also please clarify the notifications of central excise in this respect.
The supplier gets the refund of terminal excise duty from DGFT and hence he does not charge the terminal excise duty from EPCG licence holder. But it depends on whether you are in seller or buyers market. Alternatively, you can pay the excise duty, charged by the supplier while supplying under EPCG license and after taking a no objection from supplier, take a refund of such duty from DGFT.
We are an EPCG licence holder and have got capital goods sourced indigenously. Now our supplier has received a notice from Central Excise asking him to pay excise duty at 5% as they are of the opinion that 5% excise duty is payable even if capital goods are sourced indigenously. But we say that this 5% is customs duty and excise duty is fully exempt.
This is a grey area. DGFT earlier issued a clarification that 5% duty is payable on domestic procurement but subsequently withdrew the clarification. The final view on this matter is still pending.
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Please inform if the amount realised on sale of VKUY Licence is Taxable under Income Tax for exporter with less than Rs 10 crore turnover?
From Assessment Year 2004-05, the income tax relief is not applicable to exporting units (other than EOU/SEZ Units) and hence all companies irrespective of their status will be taxable for the benefit of VKUY and other export incentives.
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We are putting up a five star hotel. We had entered into management contract with a leading hotel chain. Our relationship can be best termed as Managed Hotel (as per Para 9.36 of the policy). We intend to import various goods under EPCG in our own name. Can Bank Guarantee condition be waived in our case under the corporate guarantee of the chain hotel group? We regularly export Kaolin (value added china clay). We consume various imported chemicals. No SION has been fixed for this. Can we, after fixing the SION, apply either of the Advance import Authorization or Duty Free Import Authorization? Once norms have been fixed can a exporter claim DEPB (without fixing the rate by Government) @1%under residual head?
For advance authorization you can apply without having SION but for DFIA facility, SION should be fixed. Yes, you can claim DEPB under miscellaneous product group for such products for which SION are fixed but no DEPB rate exists.
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DGFT Kolkata will not accept manual application under the focus scheme until the online system application is uploaded by DGFT. But as per CLE Chennai’s information, DGFT Chennai is accepting manual application under Focus Product scheme as per sub section 10B. Please take up the matter with DGFT Delhi to kindly address the issue.
We are in touch with DGFT and your zonal JDGFT has also spoken to the concerned officer. We have requested for extension of date and online application. The manual application is not a solution as you have to file double application fee as fee concession is only meant for electronic submission of application.
Kindly let us know the
tentative date when online application for focus product scheme would be
made available on the DGFT Website?
There are chances that the last date for filing application for focus market and focus product scheme will be extended. The online application form shall be made available in the meantime.
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We are merchant exporters and we export goods mainly plywood and steel on DEPB basis. Now we are facing some problem in transferring DEPB license. We would like export availing duty drawback facility. Being merchant exporter can we avail Duty Drawback?
Yes you can avail drawback as merchant exporter.
Any formalities for this?
Only on shipping bill, drawback Serial Number is to be mentioned. No separate drawback claim is to be filed as shipping bill itself serves as Drawback claim.
Short Term Refresher Programme on International Trade
Duration : Five Day Programme (Monday to Friday) Date : May 2007 Time : 2.15 p.m. to 5.30 p.m. Venue : Indian Institute of Foreign Trade (IIFT), IIFT Campus, B-21 Qutub Institutional Area, New Delhi Participation Fee : Rs. 3,000 per participant The Programme will cover:
Specialists from IIFT, trade-related Ministries and FIEO will constitute the faculty. A Certificate will be given on completion of the Programme. Interested
executives may send Demand Draft/Cheque for Rs. 3,000/- made out in favour
of the Federation of Indian Export Organisations, New Delhi to Jt. Deputy
Director General, FIEO (Northern Region), Niryat Bhawan, Opp. Army
Hospital Research & Referral, Rao Tula Ram Marg, New Delhi 110057, Phone
: 26150114, 26150101-04, Fax : 011-26148194, Email : fieo@nda.vsnl.net.in,
Website: http://www.fieo.org
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