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| Monitoring of export obligation a good move |
| TNC Rajagopalan / New Delhi Mar 22, 2010, 00:14 IST |
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There is a good news for the exporters. The Central Board of Excise and Customs (CBEC) has issued fresh instructions for verification and monitoring of export obligation under various export promotion schemes. If properly implemented, the latest instructions would, to a large extent, reduce unnecessary paperwork, harassment and corruption at the ground level.
Under the advance authorisation scheme, duty-free import authorisation (DFIA) scheme, export promotion capital goods (EPCG) scheme etc, duty exemption is granted at the time of imports against a bond to the Customs that specified export obligation (EO) will be fulfilled. The instructions required the authorisation holder to submit documents to prove fulfilment of EO to the licensing authorities that issued the authorisation, as well as to the Customs. The dual monitoring meant additional paperwork and more transaction costs. In numerous cases, the Customs did not discharge the bond on one pretext or the other, even after the issue of export obligation discharge certificate (EODC) by the licensing authorities.
The CBEC Circular (No 5, dated March 16, 2010) now says that in case of advance authorisation, DFIA and EPCG scheme, the EODC issued by the licensing authorities should normally be accepted, unless there is an intelligence suggesting misuse. The circular asks the Customs to make sure that installation certificates are obtained under the EPCG scheme, random verifications are carried out to ensure timely fulfilment of EO and compliance with all the conditions of the authorisation.
In case of duty credit scrips issued under reward schemes, such as Focus Product scheme (FPS), Focus Market Scheme (FMS) etc, the circular says the verification of genuineness of scrips must be done before allowing registration of such scrips. CBEC calls for a quarterly report from field formations, giving details of the discrepancies noticed during the verification and the measures taken to redress such discrepancies. The idea is to review the procedures and operationalise online transmission of duty credit scrips that will obviate the need for additional step of verification.
The CBEC instructions are yet to take effect at the ground level. For example, the public notices issued by the Jawaharlal Nehru Port Customs House at Nhava Sheva call for many documents, including copies of shipping bills, bank certificate of exports, ARE-1 form, central excise certificates regarding utilisation and so on, before redemption of the bond or bank guarantee furnished to the Customs. Hopefully, these instructions will be revised soon and exporters spared of waiting endlessly for bond redemption by the Customs.
Exporters, however, must appreciate that monitoring export obligation is an integral part of export promotion schemes. The right of the Customs to go into details is not taken away. So, selective targetting of victims by the Customs cannot be ruled out. Secondly, the Customs may get fussier about submission of installation certificate under EPCG scheme within six months of completion of imports, monitoring block-wise fulfilment of export obligation under EPCG scheme and submission of EODC within a few months after the EO expiry period. Exporters, such as service providers, who submit installation certificate from chartered engineer under EPCG scheme, must be ready for visits from central excise officers to verify the fact of installation, as the CBEC circular asks for physical verification in at least 50 per cent of such cases.
Overall, CBEC’s positive step promises to bring the much-needed relief to exporters.
Email: tncr@sify.com
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