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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 exporters and we supply capital goods to a firm in NSEZ. We need to apply for the Export House certificate to DGFT, New Delhi. Clause (b) of paragraph 8.2 of the current Foreign Trade Policy treats supplies of goods to EOUs or STPs as deemed exports but there is no mention of SEZ units. Please advise whether supplies of goods to NSEZ against which payment realised in Indian Rupees or in freely convertible currency is to be treated as deemed export or not.
Supplies to SEZs are considered as physical exports since SEZ is considered as foreign territory for the purpose of taxes and duties.
Which Chapter or Paragraph of the current FTP says so?
Please see the definition of exports under chapter 1 of SEZ Act 2005.
Does it mean that all our supplies to the SEZ will be treated as physical exports?
Yes. But for claiming DEPB and Drawback benefits, payments for such supply should be received in foreign currency.
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What are the changes made by DGFT recently in the procedure for claiming ‘deemed’ export benefits?
Two important changes have been made in the procedure. (1) The time limit has been increased from 6 months to 12 months from the end of monthly/quarterly/half-yearly option, and (2) TED claim can be filed Invalidation letter/ARO wise against the individual licence within the specified time limit.
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As per Para 5.4.(v) of FTP, if supporting manufacturer having EPCG obligation exports through third party, does the third party lose Focus Product benefits?
Looking objectively at the provision, it seems the intention is to exclude exports effected under EPCG from Focus Product scheme and thus even third party will lose the benefit. However, you may seek final clarifications from the DGFT.
If third party does not have any EPCG obligation, then whose average EO will be counted? Does third party lose any incentives?
The average export of manufacturer in the past three years should be counted and the export made by the manufacturer is either towards the average or additional exports. In this case, such value of exports effected through third party under EPCG may not be counted for the benefit of Focus Product Scheme.
You will agree that EO and export incentives are totally different issues.
I agree. In fact, FIEO has requested to restore the earlier provision as it defeats the objective of Focus Market scheme to offset high freight cost and that of the Focus Product scheme to push employment generation.
Does it mean that EPCG licence holder can not get Focus Product benefits on his own exports?
He may not get the benefit of Focus Product scheme for exports covered under EPCG scheme.
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We are applying for EPCG Licence with DGFT. Please advise – 1. Is Status House Certificate is compulsory for getting EPCG Licence? 2. Is any Bank Guarantee required in custom for import under EPCG or is the Bond sufficient if we have no Status House Certificate?
Status House certificate is not necessary as non-status holders can also get EPCG benefit. The requirement of BG or Bond depends on the status of the licence holder as per the parameters given in a Customs Circular.
As per Paragraph 3.5.2.1 (vii) of the FTP, a status holder shall be eligible for exemption from furnishing of BG. How can a non–status holder get exemption from Bank Guarantee?
There are other categories also which are exempt from furnishing BG. Please see Customs circular 58/2004, dated 21.10.2004.
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What are the documents required for proof of landing under Focus Market Scheme?
As per Public Notice 38 dated 24th August 2007, the following documents are accepted for the purpose of proof of landing: (i) a self attested copy of import bill of entry filed by importer in specified market or (ii) delivery order issued by port authorities or (iii) arrival notice issued by goods carrier or (iv) tracking report from the goods carrier, evidencing arrival of export cargo to destination Focus Market.
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We are exporters of silk fabrics. We want to know the import duty on silk yarns.
The import duty on silk yarn is 10% basic, 4% spl. CVD and 8% addl. Custom Duty. So the total applicable import duty is 24.421%.
We export silk fabrics under drawback tariff item 500701 where credit rate is 10.8% with cap of Rs 325 per kg. when Cenvat facility is not availed. Alternatively, it is 6.6% with value cap of Rs 198.60/kg. After export, custom official asks us to furnish Cenvat certificate, otherwise, he says, drawback will be finalised on merit basis. What should we do?
The drawback rules stipulate that exporter shall declare, and if necessary, establish to the satisfaction of the Assistant Commissioner of Customs or Assistant Commissioner of Central Excise or Deputy Commissioner of Customs or Deputy Commissioner of Central Excise that Cenvat facility has not been availed. Document to prove non-availment of Cenvat may be obtained from jurisdictional excise authorities.
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Does supply of guar-gum from DTA to SEZ qualify for VKGUY scheme if the payment is in Indian Rupees?
Since FTP has no specific provision to cover supplies in Indian Rupee for benefits, you may seek clarifications from DGFT.
If SEZ makes payment in foreign currency then can DTA supplier get VKGUY?
Yes. Since SEZ is a foreign territory for taxes and duties.
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We have to get back some defective parts from the country to which we exported. What is the regulation on re-export? Is there any time limit for re-export of the same goods after repairs?
Please see Customs Notification (No. 158 dated 11-5-1999) which allows re-import of exported product for repairs. Such re-export should take place within six month from re-import; however, the time limit may be extended by the customs.
Is there any duty payable on re-import or re-export?
No. You will have to execute a bond at the time of re-import and satisfy the identity of goods. The bond shall be discharged on re-export.
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We had taken EPGC licence on 17/11/2000 from DGFT which requires us to fulfill export obligation of $90,000. We haven’t been able to do that yet. What will happen?
You will have to pay custom duty saved with 15% interest from the date of import of Capital Goods under EPCG till you deposit the duty.
We are required to fulfill export obligation within 8 years. Can a third party fulfill our obligation by putting the name of our company in the shipping bill?
You have to be manufacturer of export goods. You can use a third party for exports only and not for manufacturing.
Is there any provision for extending the period for fulfilling export obligation?
You had block wise period of EO and you have already crossed three blocks wherein the EO was 0%, 15% and 35%, so now you have to pay the duty on 50% of the exempted amount of duty with interest.
We do job work for exporters. Can our name be put in shipping bill?
In the shipping bill your name should appear as a manufacturer and your EPCG Licence should be mentioned.
Does it make any difference if the third party is a manufacturer or trader?
Third party can be a merchant or manufacturer but actually manufacturing has to be done by you as you got EPCG licence as a manufacturer and third party can only act as a trader for such shipments.
If we pay 50% duty along with interest, then shall our export obligation be reduced to 50%?
Yes, Export Obligation will be reduced to 50% which you will have to fulfill in 8 years from the date of licence. You can get further extension as per Para 5.11 of the Handbook of Procedures.
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We are importing dual use pharmaceutical raw materials for food products which are exempt from registration requirement under Drug Controller Circular No. 6-2/2004-DC dt. 13.12.2005 for actual users. We are getting our product manufactured on job work. Are we actual users?
Yes. As per the definition in Foreign Trade Policy, you are the actual user.
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A 100% EOU sources an item from a supplier, who does not manufacture this item but procures from a manufacturer. Can the manufacturer avail duty free imports, excise duty exemption, etc.?
As per Para 8.6.1 of the FTP, a sub-contractor can make a supply to a main contractor and such supplies are eligible for deemed export benefits. The sub-contractor can be a manufacturer and the main contractor a merchant. Thus the case suggested by you can be covered. However, Paragraph 8.4 of the Handbook of Procedures does not make it very clear as to whether the arrangement of main contractor and sub-contractor is only confined to Para 8.2 (d) (e) (f) (g) (i) and (j) of the Policy or all categories of deemed exports. Please seek clarification from DGFT in this regard.
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We are carpet exporters and want to import Persian hand-knotted carpets for repair. How can we import such carpets without payment of duty?
Import of carpets on duty free basis for re-export after repair is allowed under paragraph 1B.1 (ii) (d) of the Foreign Trade Policy. You may also see serial number 167(c) of Customs Notification No.21/2002 dated 1.3.2002 (as amended).
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OPPORTUNITY TO SHOWCASE YOUR PRODUCTS & SERVICES IN OMAN |
"INDIA SHOW" From 13 to 19 February 2008 at Muscat, Sultanate of Oman
For participation, please contact: MRD Division Federation of Indian Export Organisations Niryat Bhawan, Rao Tula Ram Marg, Opp. Army Hospital Research & Referral, New Delhi-110057 Tel:011-46042114,46042136-38, 46042222, 26150101-04; Fax:011-26148194 Email: fieo@nda.vsnl.net.in; fieomrd@yahoo.co.in; anandpseth@fieo.org Website: http://www.fieo.org |
