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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. |
What is the definition of SME as per current provisions of law?
SME covers micro, small and medium enterprises. A micro enterprise is an enterprise where investment in plant & machinery does not exceed Rs. 25 lakh; a small enterprise is an enterprise where the investment in plant & machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and, a medium enterprise is an enterprise where the investment in plant & machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
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RBI has reduced the pre-shipment and post shipment credit recently. What are the new rates and for whom are these rates applicable?
Until now banks charged interest rate not exceeding BPLR minus 2.5% on rupee pre-shipment credit upto 180 days and rupee post-shipment credit upto 90 days. But, as per the recent RBI guidelines, banks will now charge interest rate not exceeding BPLR minus 4.5% on pre-shipment credit upto 180 days and post-shipment credit upto 90 days on the outstanding amount for the period from April 1, 2007 to December 31, 2007, to all units in SME sector and even large units in nine sectors: Textiles (including Handlooms), Readymade Garments, Leather Products, Handicrafts, Engineering Products, Processed Agricultural Products, Marine Products, Sports Goods, and Toys.
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We are exporters of brass handicraft from Moradabad. Custom department is asking us to produce certificate for non-availment of CENVAT for Drawback, though our product is not covered under excise. We raised this issue in an open house organized by FIEO and we were assured that the issue would be resolved. Please update.
Please refer to Customs Notification No 68/2007 (NT) dated 16TH July 2007 which clearly states that the certificate regarding non-availment of Cenvat facility shall not be required in the case of exports of handloom products or handicrafts (including brassware) or finished leather and other export products which are unconditionally exempt from central excise duty.
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We are a manufacturer-exporter and we are availing Cenvat credit on the purchases of raw material. Can we export under drawback scheme?
Yes, you can claim Drawback (DBK) which has two heads - when CENVAT availed and when CENVAT not availed. You can claim when you availed CENVAT.
I want to know if we have to pay service tax on commission paid to foreign agents.
At the moment you have to pay Service Tax. But we are awaiting notification from the Ministry of Finance as per the announcement made in the Foreign Trade Policy calling for exemption of service tax on services used overseas in connection with exports.
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The Ministry of Commerce has announced relief package to exporters with measures like interest on EEFC Account. But I don’t see any notification in this regard. Is there any notification announced with regard to interest on EEFC account?
Secondly, If I export 1 kg of silk fabrics having a value of Rs. 1000 and if duty drawback rate is 11%, then what will be the value of my drawback?
Issue of interest on EEFC has been taken up by Ministry of Commerce with Finance Ministry but it is yet to come in force as RBI has not issued any guidelines in this regard so far. For silk fabric, with 85% or more silk, full drawback (when CENVAT is not availed) is 10.8% with a cap of Rs 325 which means that on exports of Rs 1000/kg, you will get the drawback of Rs 180.
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We are exporters of agro products and we were claiming 1% DEPB for the packaging material. What is the revised DEPB as per recent notification?
The DEPB rates for products claiming DEPB for packaging material has been raised from 1% to 3%.
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We availed Central Excise rebate under Rule 18. Which CBEC circular should we refer to claim drawback?
If you claim rebate under rule 18 of excise then drawback is not admissible. Please see the relevant drawback rules as given in Customs Notification No 68/2007 (NT) dated 16th July 2007.
Our company exported under A.R.E.I and declared "Goods have been manufactured without availing facility under notification No. 21/2004-Central Excise (N.T)." Can we export under DBK (drawback)?
Please check the fact that whether you availed CENVAT facility or rebate under rule 18. If you availed CENVAT, you are eligible for DBK at lower rate as given in schedule.
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We export medicinal herbs. We receive some herbs by paying lorry freight on road transport. Are we required to pay service tax on lorry freight?
Yes you are required to pay service tax.
Are manufacturer-exporters also required to pay service tax on lorry freight?
Yes manufacturer-exporters are also required to pay this service tax.
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We have started exporting paper products and have set up a unit in Meerut, UP. In UP, we pay entry tax on paper. If we export the material do we still have to pay the entry tax?
State levies are currently not reimbursed by most of the states. But you have to check UP State Export Policy which may be exempting this levy or providing its refund.
If a product manufactured in my factory is exported by another exporter, will I get the excise benefit on the purchase of raw material (paper)?
If your name appears on the shipping bill, you can claim drawback which should offset the element of excise duty paid by you.
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We want to purchase two railway rakes (each having 56 wagons) under Own Your Wagon scheme. We are in the process of placing the order on an indigenous wagon manufacturer. Unfortunately, the wheel sets for the wagon are not available locally and have to be imported. Please advice the most appropriate way of going about the above procurement. How do we get relief from the statutory dues like excise? Can we, or the indigenous wagon manufacturer, get relief from the import duty on wheel sets?
You take an EPCG licence for import of wagon. Take invalidation letter to procure Wagon from indigenous manufacturer. Indigenous manufacturer will get deemed export benefit to get full refund of import duty on wheel used in the Wagon as deemed export drawback and terminal excise duty paid on supply of wagon.
In this case, do we need to pay the excise and claim refund later? If yes, then can we claim the refund immediately or do we have to wait until the fulfillment of export obligation under EPCG license?
The supplier shall get a refund of excise duty as soon as he supplies the wagon to you under EPCG Scheme.
We are also holding Target Plus license. If import duty is applicable, can we use the Target Plus license to pay import duty. In such case, do we need to be the importer of wheel sets or can the wagon manufacturer import by paying duty through our Target Plus license?
I don’t think wagon supplier can be given wheel imported by you under TP as he is not your supporting manufacturer.
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The customs have issued a notification (no. 32/97 dt: 01.04.97) for jobbing - export order goods imported etc. When the customs allow import under bond for export purpose, what is the use to have advance license?
Customs Notification No 32/97 applies when goods are supplied free of cost to you by Foreign supplier with the direction that the resultant product shall either be exported back to supplier or at his direction exported to a third party. In case of advance license, you pay for the imported goods - buyer of the end product and supplier of inputs may not be related.
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What is the policy for import of rough marble blocks or slabs?
The import of rough marble blocks/slabs is restricted and the exim facilitation committee in DGFT considers requests for grant of authorization for import of rough marble/blocks to manufacturing and processing units which have imported these items in previous years when import of such items was allowed under special import licence. Recently, the DGFT has issued policy circular No.1 dated 26.7.2007 on import of rough marble/blocks which can be seen at www.dgft.gov.in
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We are a star export house. We want to import capital goods under EPCG scheme. Our company falls within the definition of Group Company. Can we extend corporate guarantee for them?
As per amended Para 2.20.1 of Handbook of Procedures, a status holder can submit corporate guarantee in lieu of bank guarantee/bond for another company, which is non-status holder, but fall within the definition of group company as given in Paragraph 9.28 of foreign trade policy.
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Public Notice 17 dated 12.7.2007 does not contain any provision regarding applicability of enhanced DEPB rates and therefore we have been told that such rates shall be applicable from 12.7.2007. However, a Press Release issued by Commerce Ministry suggests that the rates are applicable from 1st April 2007. Please clarify?
DGFT has issued Public Notice No.18 dated 13.7.2007 clearly stating that the DEPB rates shall be effective from 1.4.2007 and, therefore, shall apply to all such shipments where let export order date is on or after 1.4.2007.
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We have received export order for export of sugar to EU. We would like to know the policy of export of sugar.
Government has allowed 22626 MTs raw sugar to EU and 10000 MTs to USA. The export can be effected by M/s Indian Sugar Exim Corporation Ltd., New Delhi which is the designated agency for export of sugar to USA and EU under preferential quota.
About the Book Uniform customs classification is one of the pillars of a successful customs regime. However, tariff classification of textiles remains extremely complicated. Firstly, it is the oldest and the biggest industry in the world, so product base is vast and ever expanding. Secondly, the present textile tariff classification system is not well explained. The explanatory notes published by the World Customs Organisation are too intricate and complex. The aim of this book is to demystify and simplify the explanation of the harmonised structure of classification with respect to textiles and textile articles. This book is an effort to synchronize the concepts of textiles within the existing harmonised system of classification with more illustrations and explanations. This book confines the explanation upto 6-digit classification as it is being followed all over the world. Member countries of the World Customs Organization (WCO) can, however, extend 6-digit classification further according to their local requirements. Many countries including India have 8-digit classification whereas US tariff has 10-digit classification. The explanation under each subheading at 6-digit level is exhaustive enough to take care of further sub-classifications at 8 or 10-digit level. The Author The credit of conceiving and implementing the Eight Digit Customs Classification on Textiles in India, which is used day-in and day-out by the entire export-import community, goes to Mr. Ajay Gupta. The extensive research carried out by Mr. Gupta in the process of formulating the eight digit code mentioned above, gave him an unmatched insight into this extremely complicated area. After the dismantling of Quota regime, on many different occasions, Mr. Gupta came across professionals and officials who had too many unanswered questions and he realized that there was a strong need for a clear-cut and easy to understand explanation of the complex and technical jargon relating to product classification. |
