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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 imported some goods under Vishesh Krishi Upaj Yojna Scheme which were found defective. Can we re-export them as they are cleared from Customs?
In terms of Para 3.18.2 and Para 3.19.9 of the Handbook of Procedures, Vol. I, goods imported under Visesh Krishi and Gram Udyog Yojana (VKGUY), which are found defective or unfit for use, may be re-exported as per the guidelines issued by the Department of Revenue. DOR has also issued Customs Circular 21/2006 dated 10th August 2006 to allow the same. Thus you can re-export such defective goods after customs clearance. The circular can be accessed at www.cbec.gov.in.
What are the conditions for such re-exports and how can we get the refund of the duty paid through credit?
In such cases, 98% of the credit amount debited against the VKGUY scrip while clearing such defective goods shall be generated in the form of a Certificate and thus virtually you get the refund of 98% of the duty paid by you. The re-export is permitted by the Commissioner of Customs subject to the following conditions:
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Re-export of goods takes place from the same port from where the goods were imported;
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The goods are re-exported within 6 months from the date of import;
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The Deputy Commissioner/Assistant Commissioner of Customs, as the case may be, is satisfied about the identity of the goods; and
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The goods are not put into use after import.
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We are a manufacturer exporter of Cable and Cable Compounds. We take licence under 4.7 as there is no SION. Being the only manufacturer in India, can we apply for Annual Advance Licence for Intermediate Supply without Norms? We had taken a Licence for Physical Exports but the orders got cancelled. Can we use the same licence for Domestic Supply against invalidation? We have not made any import and the licence quantity is big and there is good demand of this product in domestic market. Please advise.
Annual Advance Licence can be used for export of products for which norms are not fixed, but you need to inform the licensing authority before making shipments in such cases. If the licence has been issued recently, it can be used both for physical exports and for intermediate supplies.
The Annual Advance Licence was issued during May 2006.
Since licences for physical and intermediate supplies are all called advance authorization, no segregation should be made and the facility is inbuilt. Annual Advance Authorisation can be used for 'no norms' cases also but you need to inform the licensing authority before making shipment.
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Exporters pay huge amount of Service tax on Ocean Freight for Exports. You have advised that this cannot be taken back as credit. But we feel that exporters should be allowed to take credit of this to reduce the operational cost.
We have represented to the Commerce as well as Finance Ministries to exempt service tax on overseas services and provide Cenvat on all services, whether on input or on output, used during the manufacturing and/or during the course of exports.
DGFT retains the Original Advance Licence after issue of EODC. But, customs ask for Original Licence for Part-Fand Bond Cancellation. Please advise whether the DGFT should retain the licence with them or should they issue it along with the EODC.
You may ask the DGFT to return the licence after EODC so that you may submit it to Customs for Bond cancellation.
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We are exporters of home textiles and have claimed DEPB benefits. We have been assessed for F.Y.2003-2004 and the ITO has made a demand for income tax on DEPB and has also imposed penalty (interest) thereon. Are we liable to pay income tax on DEPB and interest thereon? Please advise.
In case the credit under DEPB was used for payment of Customs duty on imports effected by your firm/company, no income tax is leviable as per Taxation Law (Second Amendment) Act. However, if you have sold or transferred DEPB and your export turnover is over Rs 10 crore, then you may be taxed on income generated by sale or transfer of DEPB????.
Our turnover exceeds Rs. 10 crore. Can the ITO impose penalty (interest) on the DEPB tax amount?
No penalty can be imposed by IT authorities and (even in the case of such penalty,) the amount is required to be realised in 5 installments.
Do you mean relief on interest amount or tax amount or both?
No interest is payable and in case you get a stay you may not pay the principal also.
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Are the exporters exempt from payment of Education Cess? If yes, please tell us the relevant Income tax notification number.
Exporters are not exempted from education cess as a general principle. However, if they use DFIA or advance authorisation, education cess is exempted on imports effected under such instruments.
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We want to get our Export Obligation Period (EOP) extended for the advance authorization certificate. Can we get it beyond 36 months on payment of composition fee @2% month?
As per the current provision of the Hand Book of Procedure, the extension beyond 36 months can be given in exceptional cases on merit under paragraph 2.5 of the Policy by the extraordinary power vested in the DGFT.
Licensing Authority says that we are not eligible for any EOP extension beyond 36 months even for licences issued prior to September 2004. Can we get the EOP extended?
Yes, you can avail the facility of EOP extension under PN 49 dated 2-9-05 by paying composition fee for each additional month of extension beyond 36 months.
We request you to impress the DGFT to issue a notification allowing the trade to set off the unfulfilled export obligation against Target Plus licenses issued to them. It will be a great relief to all the exporters for regularising their pending closure of licences. We have come to know from the Western Region office of FIEO that the same is under consideration.
We have already proposed to the DGFT to consider debiting Target Plus Licence for payment of customs duty and interest on excess material imported under duty free category licence so that the exporters can utilise the Target Plus Licence and it becomes revenue neutral, but our suggestion has not been accepted so far.
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We have been awarded a contract under a deemed export project. Can we import capital goods through EPCG route? Can we import consumables under duty free authorisation?
You can get EPCG licence for such deemed exports. You can also import consumables under advance authorisation or under DFIA.
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We are planning expansion of our DTA unit and make a 100% EOU from this unit. Can we get Income tax benefit on the whole of the unit or only on the new investment? Up to what time can we get this benefit?
EOU tax benefits are currently available only upto the Assessment Year 2010-11. The benefit is available for new investments only.
In an EOU, can we purchase duty paid goods and take CENVAT credit and use this for domestic sale?
EOUs are eligible for duty free procurement and hence not eligible for CENVAT facility.
If we sell our product in DTA what will be the procedure for payment of duty? Can we pay the duty through CENVAT?
Since you get inputs from DTA free of excise duty, you will not have CENVAT credit and so you would be required to pay duty on DTA sale in cash.
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Can you please explain this anomaly in calculation of duty entitlement? Let us say the value of a consignment is $200. At the present custom conversion rate of Rs. 44.55 its INR value would be Rs. 8,910. However, if the bill is realized, say after a month, when the custom exchange rate is Rs.45.00, my bank would certify the value as (200x45)-Freight. Say in US$, it would be around 188.88 (presuming the freight to be Rs. 500). This $188.88 when converted into INR as per the rate ruling on the LET would be Rs 8405. Thus there is a difference.
As per the application, form you have to adopt the exchange rate as on the date of LEO (?????).
On the DGFT website, in the first module (i.e., the shipping bill details), we fill in data as per the Shipping Bill. In the next module (i.e., the product details module), we have to furnish FOB in foreign currency as appearing in the BRC. That is how the FOB in foreign currency comes in. This foreign currency is, however, converted into Indian Rupees based on the conversion rate as on the date of LEO. Therefore the FOB in the shipping bill and the FOB in the BRC are different.
You should get the exchange rate applicable on the date of LEO and if the foreign currency amount is not changed, your entitlement should match customs requirement.
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We are the importers of Raw Materials and selling them to EOU from Bonded Warehouse. What is the procedure for availing benefits/ incentives/ Drawback/ refund/ DEPB etc. by us or by the EOU? Can we import and clear the goods after paying the duty and sell them to EOU as a deemed exporter? What are the exemptions in duty/VAT or any other taxes/refunds available to a deemed exporter or EOU?
Deemed export benefits are available only for manufactured goods and not for imported goods except in the case of mandatory spares which can be imported if supplied with domestic manufactured capital goods. You can supply to the EOU from the bonded warehouse without charging customs duty and thus you will have no burden of payment of duty which will be required to be refunded.
Are we not entitled for DEPB/Drawback as a merchant exporter when we sell duty paid material to EOU?
You are not entitled for DEPB/DBK on such imported products.
Is a merchant exporter entitled for DEPB/Drawback if it receives payment in convertible currency from EOU?
Yes, provided the goods exported by him are manufactured in India.
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We are merchant exporters and are now buying and exporting steel from manufacturers without payment of duty against CT1. Please let us know if in this case, self-sealing and self-certification of ARE 1 is possible or not. As merchant exporters, can our supporting manufacturer do this self-sealing of ARE1?
Self-sealing facility is for certain manufacturers with a proven track record. You have to see whether your supporting manufacturer fits into it or not.
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Where can we get ‘Aaayat Niyaat’ form for Focus Market Scheme?
The form been notified recently under Public Notice No 76 dated 18th Dec, 2006 and can be accessed at www.dgft.nic.in
Are we required to give any proof of receipt of material in the specific country covered in the list?
You have to submit the proof of landing of export consignment in the form of a copy of bill of entry filed by importer or delivery order issued by port authorities or arrival notice issued by goods carrier.
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We are tour & travel agents. We purchased a vehicle under EPCG scheme during 2002 against bank guarantee. For the release of this bank guarantee, we had to show an earning of foreign exchange. Can the payment made through Credit Cards from abroad (instead of remitting it to the bank) be counted as foreign exchange earnings?
Yes, it can be counted as forex earnings. Please go through the Policy Circular 60 issued on 24-12-98 available at DGFT website under the index "Policy Circular".
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We are a textile and made-up manufacturer exporter. We are facing difficulties with regard to DFIA scheme. We have availed the input stage cenvat credit and exported the goods. Now the customs are asking for non-availment of cenvat certificate. The DFIA has already been made transferable by the DGFT. EODC and transferability letters have already been issued. Now at the time of verification by the customs, they are asking for the cenvat certificate. As per the policy document, there is no para stating that cenvat credit cannot be availed.
Please see the relevant customs notification relating to DFIA. You may see customs Notification No. 40/2006 dated 1-5-2006 which is available at www.cbec.gov.in.
We had one value based advance license issued in 1994. Was an exporter permitted to import without any restriction of quantity (by restricting the value of import within the CIF value of the license) under value based advance licenses?
There were issues of unit value given in the application as per ALC circular 3/95. If the value was correctly shown as per international price of inputs at the time of filing application for Value Based Advance Licence, there was no quantity restriction except for sensitive items specifically given in the list of sensitive items in Handbook of Procedures (Vol. 2).
Under the value based advance license, as per SION book, the minimum value addition required to maintain was 35%. Advance license was issued/applied to us, however, with the value addition of 53%. We maintained value addition of 40%. Will it be OK?
No. Now at this point of time when the scheme is over long back, you would be required to maintain the original value addition of 53%.
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I have started a new firm with the help of a friend and now due to some disputes my friend has left the business. Now I know only some export documents to be prepared. I have one enquiry of stainless steel product. Can you please explain me the documents to be filed before and after export? I have IEC and RCMC.
The primary statutory documents required for exports are invoice, packaging list, shipping bill and bank certificate of exports and realisation.
After shipment, what are the documents to be prepared? Is there any time limit for preparation of such documents?
You should give the documents to the bank for negotiation of the same within 21 days from the date of exports.
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