Sand remains in the Customs grease

The finance ministry has amended the notification relating to re-import of exported goods, giving more time for re-import from Bhutan. The flaws in the notification remain unrectified.

Section 20 of the Customs Act says, "If goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof." However, exemption notification no.94/96-Cus, dated December 16, 1996, gives some relief, subject to certain conditions. For instance, on re-import of indigenously manufactured goods exported under duty drawback, export under bond/rebate claim or under other claim of export incentives, essentially the duties equivalent to the export incentives availed have to be paid, on re-importation.

This notification prescribes some time limits for re-import after exportation. The latest amendment now allows seven years for re-import of machinery and equipment [other than those exported under the Duty Exemption Scheme (DEEC) or Export Promotion Capital Goods Scheme (EPCG) or Duty Entitlement Passbook Scheme (DEPB)], in the case of Bhutan. This period can be extended by three more years by a principal commissioner of Customs or commissioner of Customs, on sufficient cause being shown for the delay.

The notification deals with several situations. One of these, at S.No. 1 (e), deals with goods exported under the duty exemption scheme. The condition against this entry says, 'DEEC book has not finally been closed and export in question is de-logged from DEEC book.' The DEEC book was abolished in 2002 but the condition still continues without rectification.

S.No. 2 of the notification deals with 'goods, other than those falling under S.No.1, exported for repairs and re-import'. S.No. 1 (d) covers 'goods exported without payment of central excise duty'. Now, what happens, when goods are exported for repairs and re-import without payment of excise duty'? As the law stands, if S.No. 1 (d) is invoked, S.No. 2 will not come into play and vice versa. So, either only the excise duty has to be paid [as required under S.No. 1 (d)] or only the duty on cost of repair plus to and fro freight and insurance has to be paid [as required under S.No. 2]. Is that the intention?

Another notification, no. 158/95-Cus dated November 11, 1995, also dealing with re-import of exported goods but for repairs, reconditioning, reprocessing, refining, remaking, etc, is also flawed. It allows duty- free import of re-imported goods, subject to execution of a bond that after carrying out the necessary processes, the goods will be re-exported within six months of re-import. A condition here is that reprocessing, refining, remaking, etc, should be carried out in accordance with Rule 173 MM of the Central Excise Rules. The 1944 Rules were replaced with new Rules, 15 years earlier. Presently, Central Excise Rules, 2002, operate. Except for veterans, few others are likely to know what Rule 173 MM means.

Also, in this notification, the time limit for re-import for repairs and reconditioning (from countries other than Nepal and Bhutan) is three years but only a year for reprocessing, refining, re-making or carrying out any similar process. It is difficult to understand why different time limits are stipulated for similar activities that do the same thing i.e. remove the defects before re-export.

E-mail: tncrajagopalan@gmail.com