Imports under FTAs can be cleared under the provisional assessment

Rajagopalan answers readers' SME queries related to GST, export and import matters

We import our raw materials under the free trade agreements. We find that invariably the Customs raise some query or the other and the clearance gets delayed.  This results in demurrage and even our production schedule gets disrupted sometimes. Is there any way we can avoid that?

 

The CBIC has issued comprehensive guidelines for provisional assessments vide Circular No. 38/2016- Customs dated 22.08.2016. This circular has been revised after the implementation of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (referred to as the CAROTAR, 2020) issued vide Notification No. 81/2020-Customs (N.T.) dated 21st August, 2020. The latest CBIC Circular prescribing guidelines for provisional assessment are provided in Circular 19/2021-Customs dated 16.08.2021. So, you can seek provisional assessment and clear the goods avoiding demurrage and delays. If your imports are frequent, you may request the CBIC to issue instructions for acceptance of a mother bond backed by BG, where necessary, that can be debited whenever you import the goods under the trade agreements, instead of furnishing a bond/BG each time you import.

 

Our customer has rejected on the grounds of quality a consignment we exported against which we have already received the payment.  He is sending back the rejected goods and he wants a free replacement urgently. Our problem is that we will get no incentives against free replacement and we will have to surrender the export incentives when the original consignment is re-imported also. How to save the export incentives at least against one shipment as we have received the payment?

 

If the buyer agrees, you can send the replacement consignment against an invoice on outright sale basis and ask him to make the payment after you refund him the payment received against the original consignment that he has sent back. You may ask your bank to refund the export proceeds after you re-import the rejected consignment by surrendering the export incentives. That way you can get the export incentives against the replacements that you send.

 

We refer to Para 2.48 of the FTP, which says that ‘Goods or parts thereof, except restricted under ITC (HS), on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent re- export. Such goods shall be allowed clearance without an authorisation and in accordance with the relevant customs notification. To that extent the exporter shall return the benefits/ incentive availed on the returned goods’. Our CHA says thatwe have to only furnish a bond to the Customs that we will repair and re-export the goods and that we need not surrender any export incentives. What is the correct position?

 

Your CHA is correct because the notification 158/95-Cus dated 14.11.1995 requires you to only furnish a bond and not to surrender any export incentives.    Business Standard invites readers’ SME queries related to GST, export and import matters. You can write to us at smechat@bsmail.in