SME: 'Ad hoc norms valid for 3 yrs or till March 31, whichever is later'

We have been taking advance authorisation under Para 4.07 of HBP based on ad hoc norms approved by the Norms Committee in 2017 for one export product, and in 2020 for another export product. How long can we continue to do so?

As per para 4.12 (vi) of HBP, “Norms ratified by any Norms Committee (NC) in the o/o DGFT on or after 01.04.2015 in respect of any Advance authorisation obtained under paragraph 4.07, shall-be valid for the entire period of the Foreign Trade Policy i.e. up to 31.03.2022 or for a period of three years from the date of ratification, whichever is later. Since all decisions of the Norms Committees are available in the form of minutes on the DGFT website, all other applicants of Advance Authorisation are also eligible to apply and get their authorisations based on such ratified norms on repeat basis during validity of these norms. This para is not applicable for authorisations applied for items listed under Appendix 4P”.

So, the norms approved in 2017 will be valid till 31.03.2022 and the norms approved in 2020 will be valid for three years from the date of approval.

This is about a case of a shipment sent overseas, where freight is paid in India. The overseas customer is asking for a separate freight invoice, not to be added in the main invoice. How can we declare the inward remittance amount received on account of freight paid and charged to the customer, and not show it in the custom invoice? Is this legally correct? At present we add it in the invoice, but the customer wants to avoid this, maybe due to the duty payable there.

In a CIF contract, you must raise the invoice for the full value, including the freight and insurance, as the price is inclusive of those elements. In future, you can enter into a CIP contract and pay the freight separately as a “pure agent”.

In that case, you can claim reimbursement of the freight actually paid through a separate invoice. However, it means that the buyer has to bear the risk of any variation in freight. To understand the role of “pure agent”, refer to Rule 33 of the CGST Rules, 2017.

We want to import certain capital goods under the EPCG scheme. Is it alright if the foreign supplier’s Indian agent buys the goods in foreign currency and then sells it to us on a high-seas sales basis, in Indian rupees?

Yes. You can buy the goods in Indian rupees on a high-seas sales basis and file a B/E at the price at which you bought from the high-seas seller, and seek clearance under your EPCG authorisation. You must show the AD Code of the high-seas seller in the B/E, since he will be the person remitting foreign exchange to the supplier abroad. Of course, the export obligation will be on the basis of duty saved.

Business Standard invites readers’ SME queries related to GST, export and import matters. You can write to us at smechat@bsmail.in