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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. |
In the present scenario of liberalization, is the submission of monthly export data by an exporter to its respective export promotion council mandatory?
You may see paragraph 2.70 of the Handbook of Procedures, Vol.1 which prescribes submission of such data. It is in a way mandatory.
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We have acquired 50 acres of land and we want to set up a single product SEZ. Is there any freeze on setting up new SEZs? If not, then what are the procedures for getting approval for a new SEZ and how long does it take to notify a new SEZ?
There is no policy bar on approval of single or multi-product SEZ. The Board of Approval, as and when it meets, may consider approving a new SEZ provided it meets the prescribed criteria.
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We are a service provider operating a resort. We had imported capital goods (motorcar). Our foreign exchange turnover for 2006-07 was Rs. 2 crore and we decided to use the same for discharging the EO. In that case will the DGFT deny duty free licence under Served From India scheme as per the new Para 5.4(v) in the policy?
The exports made towards Exports Obligation under EPCG shall not be eligible for benefits under Served From India Scheme.
If we do not opt for discharging EO, shall we still be entitled for full turnover for SFIS or only in excess of the average turnover which was not there while getting EPCG?
If you don’t cover them under EPCG, then you will be entitled for SFIS benefits on such exports.
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We are a new unit. Can the DGFT compute average turnover on the basis of projected figures from my project report?
The fixation of average Export Obligation is based on actual exports in the preceding three licensing years and not on projected figures. Your average will be zero as your export in the preceding three years is nil.
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We imported a motor car under EPCG and got the EO fulfilled. But customs have slapped a SCN Charge stating that we have used earnings from room rent etc. to discharge the EO. According to customs, we have to restrict to hire charges.
There is difference of opinion between the DGFT and the DOR on this matter. Please seek clarifications form the DGFT.
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We are exporting 100% polyester fabrics to Saudi Arabia. Is Focus Market scheme applicable for this country? Moreover, can we avail DFIA with DBK or DEBP for this product?
Focus Market scheme is not applicable for exports to Saudi Arabia. DFIA can be claimed with Drawback as additional customs duty is now payable on the transfer of DFIA. But Drawback will be applicable only in case of transfer of DFIA. Where DFIA is with Actual User condition, drawback benefits will not be available as exemption from additional customs duty on imports shall continue.
I can’t understand what you mean by transfer of DFIA?
If you want to sell or transfer the leftover material after completion of Export Obligation, then the benefit of DBK can be claimed, as exemption continues only for basic duty.
Can you tell us how I can check the DFIA on carbonized polyester fabrics? I am currently availing DBK only and want to avail DFIA along with it.
Please see the norms J1 of product group ‘Textiles’ as given in the Handbook of Procedures (vol2).
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I have some doubts relating to EPCG Export obligation. We have availed 7 EPCG licences for import of spares for our existing plants located in two places. In each of the forwarding letter for these licences, average export obligation mentioned is different, which is licence-specific. Please advise whether we have to fulfill the average export obligation for all licences separately.
The average will run concurrently for all EPCG licences and therefore you are not required to separately fulfill the average export obligation on such licences.
That means, if I have an average of 30 Cr for the Financial Year 2006-07 and if I have got 7 EPCG licences, then we will have to achieve EO equivalent to 7x 30 Cr during block year?
The average of Rs 30 crore will be for all the 7 licences.
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For import of restricted items under EPCG, exporters have to file two applications - one to EFC at headquarters and the other to Licensing Authority for grant of the Licence and thus have to pay the application fee twice. This increases transaction cost as well as transaction time. It is, therefore, suggested that suitable clarification may be issued in this regard.
This issue was raised in an open house organized by FIEO. It was clarified by the DGFT that separate application will be required to be made to EFC as well as to the Licencing Authority but application fee will be payable only once as a single application.
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What are the new services brought under service tax net in the recent Budget 2007-08 and what is the date of applicability of such tax - is it 1st March or 1st April 2007?
The Government has notified 1st June 2007 as the date for applicability of service tax on the new services introduced by the Finance Act, 2007 vide Notification No. 23/2007-ST. The Government has introduced following 7 new services by the Finance Act 2007 on which, now, service tax shall be applicable from 1st June 2007:
a) Telecommunication service
b) Mining service
c) Renting of immovable property service
d) Service involved in the execution of a works contract
e) Development and supply of content service
f) Asset management including portfolio management and all forms of fund management service
g) Design services
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What are the important changes made in service tax rules on export and import of services in the Budget.
The Government has made the consequential changes in the respective rule of export and import of services to incorporate the new services introduced by the Finance Act, 2007. The Government has also made a significant change in the Export of Services Rules, 2007 by which now it is mandatory for every taxable service, which is exported, to have receipt only in convertible foreign exchange. Whereas, prior to the said amendment, the receipt in convertible foreign exchange was mandatory only for those services, which were provided outside India. In other words, the services which are provided in India but treated as export of services, there was no mandatory requirement earlier that the receipt should be in convertible foreign exchange.
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Please let me know about Merchanting Trade under RBI master circular.
Trade between two foreign entities operated by an Indian trader is described as ‘merchanting trade transaction’. In such transactions, it is not necessary to physically import the goods into the country and then re-export the same.
Can we send advance remittance to overseas supplier under Merchanting Trade?
Authorised dealers may allow advance remittances by Indian merchant exporters who are their customers to the overseas suppliers, provided (a) confirmed orders have been received by them from the overseas buyers, (b) authorised dealer is satisfied about the capabilities of the merchant exporter to perform the obligations under the order, (c) the transactions would result in adequate profit to the merchant exporter, and (d) the other conditions stipulated in paragraph 7C.1 are satisfied. Where the amount of advance remittance exceeds US$ 15,000, a guarantee from an international bank of repute outside India should be obtained from the overseas seller. The concerned authorised dealer should also monitor such transactions to ensure that they are completed and proceeds representing cost of goods supplied to the foreign buyer are repatriated to India by the merchant exporter within a period of six months from the date of advance payment.
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We are merchant exporters and our export turnover on CIF basis exceeded Rs. 5 Crore in the previous year. Can we avail the benefit of import under advance licenses without executing Bank Guarantee?
In case you are a regular exporter for the last three years and your exports in the preceding year on FOB basis is Rs 5 Crore or more and you have a good track record, then you can furnish a Bond instead of Bank Guarantee in terms of Customs Circular No. 58/2004 dated 21.10.04
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Can we apply for EPCG License for exclusively importing spares? If yes, then what will be the EO? Is it only 8 times the duty saved or do we need to maintain last 3 year’s average exports also?
You can apply for EPCG licence for import of spares exclusively at concessional duty (5%). In such case, you undertake an export obligation equivalent to 8 times the duty saved in addition to average level of exports maintained by you in preceding three licensing years.
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We are non-status holder exporters. One of our buyers wants documents to be sent directly to him. Can we do so after getting our payment, or do we require routing it through ADs?
You require specific permission from RBI before sending the documents directly. However, even after RBI approval, the payment (realization of export proceeds) must come through banking channel.
We are getting the payment through bank. Some of the bankers suggested that after getting the payment we can send the documents directly. Can we do it?
As per the RBI regulation released on 1-7-06, in case of 100% advance remittance, document in respect of goods exported can be sent by the exporter to the consignee.
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What is the minimum Investment required in Plant and Machinery for an EOU? What is meant by achieving positive net foreign exchange?
Minimum investment is Rs 1 crore, except for agro and allied sector, IT services, brass handicraft and handmade jewellery. Positive Net Foreign Exchange means that you should achieve positive foreign exchange for the country. Your export value should be more than the import value + royalty + commission etc.
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What is the difference between ‘Invalidation Letter’ used for getting the supply from indigenous sources against an Advance License, and ‘AdvanceRelease Order’? How do we choose between the two?
Invalidation letter is normally used when a domestic supplier also wants to import his inputs without paying customs duties. ARO is sought in cases where the domestic supplier wants refund of the duties already paid on the inputs used in the export product.
In case of Invalidation Letter, the domestic supplier gets exemption from excise and import duty free inputs. In case of ARO he will be entitled for refund for duty. Logically it is not very clear. Please elaborate.
It is the choice of the domestic supplier to use either of them. If duty paid inputs exist in his inventory, then he may use ARO and apply for refund. Otherwise, he has the option of duty free import of inputs.
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Short Term Refresher Programme on International Trade
Duration : Five Day Programme (Monday to Friday) Date : 18-22 June, 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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