 |
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 merchant exporter for PA equipment. We have lost 50% of our profit due to appreciation of rupee. Please inform if any benefit has been given by the Government to exporters in the past six months to offset such losses.
The Government has offered certain benefits to offset such losses. 4% Subvention on pre and post export credit has been granted. EEFC has been made an interest bearing account. 11 services have been made eligible for tax refund. DEPB rate has been increased by 2 to 3%. DBK rate has also been increased.
We have imported raw materials under Advance Licence. Due to rupee appreciation we have not confirmed export orders. Can we export through third party?
Yes you can export through third party as per the provisions under Paragraph 2.34 of the Foreign Trade Policy. However, you would be required to adhere to the documentation requirement as given in paragraph 9.62 of the Foreign Trade Policy.
Does the third party lose DEPB/ Excise/ Focus Market benefits?
The DEPB benefit can be claimed by either party based on disclaimer given by the other. Excise relief will go to manufacturer and Focus Market benefit will go to exporter in whose account foreign exchange is realized.
Does Third Party lose DEPB if it exports our products? Our raw materials are imported under our Advance Licence.
If raw materials are imported under advance licence then such raw material should be used in manufacture of goods to be exported under advance licence and the benefit of DEPB will not be available. However, if the export obligation under advance licence has been discharged by use of duty paid raw material and the material under advance licence is subsequently imported and used in manufacture of goods exported under DEPB, then in such case, advance licence holder shall be entitled for DEPB benefit.
If our product is also processed further by the third party and then exported, shall we (Advance Licence holder and the third party who is further adding value to it) get excise benefits?
You can supply under bond to Third Party for further processing without paying excise and final product meant for exports in any case will be exempt from excise.
****
We are exporter of Automobile Lighting. We want to import BMC Mould from Taiwan and export to Iran without bringing the goods to Indian Port. Is it possible? If yes, then how can we do it? Do we have to take any prior permission from any govt. authority for this?
This is third country exports. It is permitted. Please see RBI regulation at www.rbi.gov.in.
We are told that it is a merchant trade and for this it is necessary to get prior permission from DGFT. Is it so?
It is mercantile trade and no permission from DGFT is required. You may have to approach RBI in the matter.
****
We hold a valid IEC code. In case we import in the name of the division of our company, then do we need to incorporate the division details in the IEC?
Yes, you need to incorporate in your IEC the details of the division as well. Only when the division is specifically mentioned in the IEC, Customs will allow filing of Bill of Entry in the name of the Division and in such case the Division will have separate Business Identification Number (BIN)
****
What benefit, other than EPCG, is available to exporters of Menthol BP/USP under Foreign Trade Policy?
The two schemes of Vishesh Krishi and Gram Udyog Yojna (VKGUY) and duty free imports of capital goods for infrastructure meant for agro processing have been provided in the FTP.
(a) VKGUY: For specified agro and their value added products where entitlement is 5% of the fob value of exports (except those using duty free inputs). For Menthol BP/USP, it is available on exports from 1.4.07 onwards. The duty free benefit is freely transferable.
(b) 10% duty free benefit for status holders of agro products: The benefit is confined to status holders and no list of agro product is given thereby implying that all agro exports are eligible for the benefits. However, the credit is with AU condition and can be used for duty free import of specified goods such as cold storage, reefer VAN/container, pack house etc. The exporters using VKGUY will get reduced benefit as benefit under (a) and (b) scheme should not exceed 10%.
****
We are a Korean company and want to set up manufacturing facility in a SEZ in India. Can you tell us the direct tax benefits which will accrue to us?
The SEZ Units are allowed deduction in respect of profits and gains derived from export of articles or things or computer software or services as follows:
Period Deduction
First 5 consecutive A.Y. 100% of the profits
Next 5 consecutive A.Y. 50% of the Profits
Next 5 consecutive A.Y. Any amount transferred to “Special Economic Zone Re-investment
Reserve Account” or 50% of the profits, whichever is lower
What is the purpose for which I can use the money put up in the above Reserve Account?
The Special Economic Zone Re-investment Reserve Account can be utilized only for the following purposes:
-
for acquiring machinery or plant which is first put to use before the expiry of a period of three years following the previous year in which the reserve was created; and
-
until the acquisition of the machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India.
****
We are an EOU procuring raw material on payment of duty. Can we claim CENVAT facility?
Hitherto, EOUs (including STP/EHTP units) are allowed to import as well as procure goods from domestic tariff area without payment of duty. Therefore, there was no necessity for extending CENVAT credit facility to them. However, some EOUs have to procure their inputs on payment of duty also. Therefore, it has now been decided to allow EOUs (including STP/EHTP units) an option either to procure the goods from DTA without payment of duty under CT-3 procedure or to procure the goods on payment of duty and avail CENVAT credit. The credit could be utilized by them as per the Cenvat Credit Rules, 2004, including payment of duty on their DTA sales.
What would be the procedure for availing CENVAT?
For availing CENVAT Credit, the procedure and provisions as specified in CENVAT Credit Rules, 2004, will apply.
****
What is the rate of depreciation for de-bonding of capital goods for an EOU and SEZ units?
EOUs (including EHTP/STP units) were allowed to debond capital goods in DTA on payment of duty at the depreciated value. The rate of depreciation for computer and computer peripheral was 20% per annum and for other capital goods, it was 10% per annum. However, there was no upper limit of depreciation and depreciation upto 100% was allowed. In case of SEZ units, different graded rates of depreciation have been prescribed. The SEZ Rules, 2003, provide for graded rate of depreciation. It has been decided to allow depreciation to EOU/EHTP/STP on the lines of SEZ units. Hence both EOU and SEZ Units are entitled to same rate of depreciation.
****
What would be the tax benefit available to the amalgamating units and demerged unit set up which are transferred to a new unit under SEZ Scheme?
Where any unit situated in a SEZ has been transferred to a new unit by way of Amalgamation or Demerger, then:
-
in case of amalgamation, the amalgamated unit shall be eligible for exemption, however, the amalgamating unit will cease to claim exemption;
-
in case of demerger, the resulting unit shall be eligible for exemption, however, the Demerged unit shall not be eligible for exemption.
****
We are a manufacturer and have procured large order to supply to World Bank aided project. Can we get concessional credit from the banks?
Banks are permitted to extend rupee pre-shipment and post-supply rupee export credit at concessional rate of interest to parties against orders for supplies in respect of projects aided/financed by bilateral or multilateral agencies/funds (including World Bank, IBRD, IDA), as notified from time to time by the Department of Economic Affairs under the Chapter "Deemed Exports" in Foreign Trade Policy, which are eligible for grant of normal export benefits by Government of India. Packing Credit in Foreign Currency may be allowed only for ‘deemed exports’ for supplies to projects financed by multilateral/bilateral agencies/funds. PCFC released for ‘deemed exports’ should be liquidated by grant of foreign currency loan at post-supply stage, for a maximum period of 30 days or up to the date of payment by the project authorities, whichever is earlier.
