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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 are a multinational company which is eager to open office in India.In what forms can a foreign entity conduct business in India?
Foreign companies can operate in India by setting up liaison/representative office, project office, branch office, 100% wholly owned subsidiary or joint venture with an Indian entity. In case of direct foreign investments, however, they are required to be incorporated under Indian Companies Act with the Registrar of Companies and all Indian operations are required to be conducted through the incorporated business entity only.
What is the investment policy for trading companies?
Trading is permitted under automatic route with FDI up to 51%, provided it is primarily into export activities and the undertaking is an export house/trading house/super trading house/star trading house. However, under the FIPB route, 100% FDI is permitted in case of trading companies for exports, bulk imports with ex-port/ex-bonded warehouse sales, cash and carry wholesale trading, other import of goods or services provided at least 75% is for procurement and sale of goods and services among the companies of the same group and not for third party use or onward transfer/distribution/sales.
What is excise duty? Is it collected by the State Government or the Central Government?
Excise duty is levied on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called "State Excise" duty. The Excise duty on rest of the goods is called "Central Excise" duty and is collected by the Central Government in terms of Section 3 of the Central Excise Act, 1944. Sales Tax is different from Excise duty. Sales Tax is levied on the sale of goods.
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What categories of business entities/persons are required to be registered with the Central Excise department?
The following categories of business entities/persons are required to get themselves registered with the Central Excise department - (i) every manufacturer of dutiable excisable goods; (ii) first and second stage dealers or importers desiring to issue Cenvatable invoices; (iii) persons holding bonded warehouses for storing non-duty paid goods; (iv) persons who obtain excisable goods for availing end-use based exemption.
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We are setting up an SSI unit in Haryana.Is there any duty exemption for small scale industrial units?
Small Scale Units, which manufacture goods and fulfill the conditions specified in such exemption notifications, are exempt from payment of excise duty as per table given below:
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How investments can be made in 100% Export Oriented Units (EOUs)?
There are four schemes for such units. They are the 100% EOUs, Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Special Economic Zones (SEZ). FDI/NRI/OCB investment up to 100% in these units is eligible for automatic route subject to the fulfillment of prescribed parameters.
We are a local chamber of commerce in Punjab. Can we issue Certificate of Origin?
No. Only those chambers can issue Certificate of Origin which have been authorized by the DGFT to do so.
Where from can I get the list of agencies authorized to issue Certificate of Origin?
Handbook of Procedure (Vol 1) enlists such authorized agencies under three categories.
Appendix-35: Agencies authorized to issue GSP
Appendix-35A: Agencies authorized to issue CO for SAPTA and Bangkok Agreement
Appendix-35B: Agencies authorized to issues Non-Preferential Certificate of Origins
What official formalities are required to be fulfilled by a manufacturer while stuffing goods in the factory at the time of export?
The manufacturer is required to inform to the Central Excise Office 24 hours in advance about the proposed consignment of export. The Central Excise officer remains present while stuffing the goods in the container. After completion of the stuffing, the container is sealed with the Central Excise seal in presence of the said officer. Necessary documents such as ARE-1, invoice, packing list are also signed by the said officer. Self-sealing facility is also available under which the manufacturer himself stuffs the container and takes clearance thereof.
What is an STP code for a service provider?
The STP code stands for Service Tax Payer Code. It is used by the computer as a unique identifier for the record of the assessee. The department is currently allotting 15 digit STP codes to individual assessees, irrespective of the number of services offered by the assessee.
Is PAN a must for issuing a 15 digit STP code?
The Central Excise through its circular No. 35/3/2001 CX.4 dt.27.08.2001 has instructed that every Service Tax Payer should be allotted a PAN based code. However, since some assessees are still not having PAN numbers, a provision has also been made in the Computer System for issuing a 15 digit temporary STP code. In this case however, an assessee is required to immediately inform the Central Excise as soon as he gets his PAN number.
We are an EOU based in Kolkata. Can we debond under STPI Scheme?
YES. An EOU may apply to Director, STPI through the Development Commissioner, EPZ concerned, for converting into a STP unit .
We have exported under DEPB but buyer has only remitted 85% of invoice value. What happens if an exporter does realize export proceeds and avails DEPB benefits on 100% of invoice value?
If the export proceeds are not realised within six months or such extended period as may be allowed by RBI, the DEPB holder shall pay in cash an amount equivalent to the duty free credit utilised on imports against such exports with 15% interest from the date of import till the date of deposit. In such cases, where the amount realised in foreign exchange is less than the amount on which DEPB credit has been obtained, the holder of DEPB shall pay, in cash an amount proportionate to the duty free credit utilised on imports, with 15% interest from the date of import till the date of deposit.
We are using petroleum in manufacturing on which VAT is paid. Can input tax credit be availed on use of petroleum products?
No. Tax on petroleum products cannot be availed as input credit. The input tax credit on petroleum products is covered by Schedule E which provides the circumstances under which input tax credit on petroleum products and natural gas can be taken.
What is the scheme of Apparel Park?
Government of India has launched "Apparel Park for Exports" scheme for imparting focused thrust for setting up of apparel manufacturing units of international standards at potential growth centers. The Apparel Parks for Exports Scheme has come into operation w.e.f. 23.3.2002.
| Sl.No. | Aggregate value of Clearence in a Financial Year | Rate of Duty |
| A | SSI Units not availing CENVAT scheme | - |
| 1 | First Clearances upto Rs.100 Lakhs |
NIL |
| 2 | Clearences above Rs.100 Lakhs |
Normal Rate of Duty |
| The exemption is optional. A manufacturer is free to pay duty at normal rate. Option once exercised is final for that financial year. | ||
| B | SSI Units Availing CENVAT Scheme - | - |
| 1 | First Clearances upto Rs.100 lakhs | 60% of Normal rate of Duty |
| 2 | Clearances above Rs.100 Lakhs | Normal Rate of Duty |
