New FTP clarifications to benefit Customs, excise officials

The Central Board of Excise and Customs (CBEC) has issued Circular number 26/2009-cus dated September 30, 2009, clarifying various changes made consequent to announcement of the new Foreign Trade Policy (FTP). Exporters must take note of the following:

1. Under advance authorisation, export obligation (EO) can be fulfilled by exporting goods manufactured from inputs in respect of which, Cenvat Credit has been taken. In that case, at the time of import after discharge of EO, the importer must pay additional duty of Customs (CVD) or furnish a bond that the imported goods shall be utilised in the manufacture of dutiable products and that a certificate to that effect will be produced from jurisdictional central excise authority or specified chartered accountant (CA). Cenvat Credit of the countervailing duty (CVD) paid can be taken.

2. Under advance authorisation, EO must be fulfilled by exporting goods from inputs in respect of which, facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002, has not been availed.

3. Under annual advance authorisation, the position is similar to that for advance authorisation as mentioned above but EO must be fulfilled by exporting goods from inputs in respect of which, facility under rule 18 or sub-rule (2) of rule 19 of the Central Excise Rules, 2002, has not been availed.

4. Under the Duty Free Import Authorisation (DFIA) scheme, EO may be fulfilled by exporting goods from inputs in respect of which, Cenvat Credit has been taken or facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002, has been availed. In that case, at the time of import after discharge of EO, the importer must pay additional duty of Customs (CVD) or furnish a bond, as mentioned above for advance authorisation.

5. Under advance authorisation for deemed exports, the position will be similar to the DFIA scheme, as mentioned above.

6. Separate notifications have been issued to cover imports under advance authorisation and advance authorisation for deemed exports, but there is no notification covering annual advance authorisation for deemed exports.

7. Finished parts or components required to manufacture final goods, which are fully exempted from payment of terminal excise duty in terms of a central excise notification (for supplies against International Competitive Bidding) and imported under advance authorisation for deemed exports, can be taken directly from the port to the project site, under intimation to central excise authorities.

8. The time limit for re-export of goods imported under the duty exemption scheme and found defective is reduced to six months.

9. Status holders who avail the benefits under or the zero-duty Export Promotion Capital Goods (EPCG) scheme in a particular year shall not be eligible for 1 per cent Status Holders Incentive Scrips for (SHIS) that year.

10. Benefits under the zero-duty EPCG scheme shall be available only if the importer does not avail the benefit under 1 per cent SHIS in the year of import of the goods.

The Customs and excise field formations, the audit parties, officials in the Department of Revenue Intelligence and Preventive wings of Customs will welcome the notifications and clarifications, as they will benefit quite a bit.

E-mail: tncr@sify.com