Differential export rule ends for Nepal

Export to Nepal would be on par with that to other countries with effect from March 1 for the purpose of removal without payment of excise duty or for removal under claim of rebate of excise duty or for procurement of inputs required for the purpose. The finance ministry issued the notifications on December 5.

Notification no. 20/2004-CE(NT) dated 6.9.2004 issued under Rule 18 of the Central Excise Rules, 2002, prescribed the procedure for sanction of rebate of excise duty on goods exported to Nepal. This stands rescinded with effect from March 1.

Under the same Rule 18, notification 19/2004-CE(NT) dated 6.9.2004 gives the procedure for export of goods under a rebate claim. This notification was available for export to all countries, except Nepal and Bhutan. From March 1, Bhutan would be the only exception. Similarly, notification no. 21/2004-CE(NT) dated 6.9.2004, issued under the same Rule 18 prescribes the procedure for procurement of inputs required for manufacture of export goods under a rebate claim. This notification includes rebate on countervailing duty paid on imported inputs and it was available for export to all countries, except Nepal and Bhutan. From March 1, this notification applies for exports to all countries, except Bhutan.

Under Rule 19 (1) of these Rules, notification 42/2001-CE(NT) dated 26.6.2001 prescribes the procedure for removal of export goods without duty payment. This notification was available for exports to all countries, except Nepal and Bhutan. From 1.3.2012, this notification will not apply to only Bhutan. Under the same Rule 19(1), notification no. 45/2001-CE(NT) dated 26. 6.2001 prescribed the procedure for removal of export goods without duty payment to Nepal and Bhutan; it would also only apply to Bhutan from that date.

Similarly, under Rule 19(2) of the said Rules, notification no. 43/2001-CE(NT) and 44/2001-CE(NT) dated 26.6.2001 were available for export to all countries except Nepal and Bhutan. These dealt with procurement of inputs without duty payment for export production. These notifications will now be available for exports to Nepal.

The ministry has also exempted, with immediate effect, the four per cent additional customs duty on all goods imported from Nepal and covered under tariff notification no 104/2010-Cus dated 1.10.2010, subject to compliance with the conditions in that notification. Simultaneously, the notification no. 78/2006-Cus dated 8.8.2006 granting exemption from the four per cent additional duty to specified goods imported from Nepal has been rescinded.

The initiative to shift away from special treatment for Nepal goods and pave the way for greater integration through the South Asian Free Trade Agreement is a welcome move, that will lead to greater simplification and reduction in transaction costs.

Email: tncr@sify.com