Enabling IGCRS rules for EOUs electronically to cut transaction costs

Export-oriented units (EOUs) can now use the facility of electronically filing their bond, giving intimation of goods to be imported, intimating any shortage in receipt of imported goods, filing the monthly returns, and taking credit in the running bond account under the Customs (Import of Goods at Concessional Rate of Duty or for Specific End Use) Rules, 2022 (IGCRS Rules).

EOUs are allowed to import their requirement of raw materials, components, consumables, capital goods, spares etc. without payment of any duty under the Customs exemption notification no.52/2003-Customs dated March 31, 2003. Initially, the notification stipulated that for availing of the exemption, the EOUs should follow the procedures prescribed in the  Customs  (Import  of  Goods  at Concessional  Rate  of  Duty  for  Manufacture of  Excisable  Goods)  Rules,  1996. These rules gave way to new rules by the same name in March 2016 and then, when the goods and services tax (GST) regime was introduced, to Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules). In December 2021 and February 2022, the government introduced significant changes by simplifying and automating the procedures in the IGCR Rules and making available the online functionality in the Customs portal, Indian Customs Electronic Gateway (ICEGATE). However, the Central Board of Indirect Taxes & Customs (CBIC) said in its circular no.04/2022-Customs dated February 27, 2022 that the system architecture with respect to above rule in respect of EOUs is under development and that till it is developed, procurement certificates can continue to be submitted by the EOUs for import of goods in lieu of generating the unique IGCR identification number (IIN) in the system. In September 2022, the government superseded the IGCR Rules and introduced the IGCRS Rules, vastly expanding the coverage, but the EOUs continued with the existing procedure.  

On the 25th of last month, the CBIC circular no.11/2024-Customs said that necessary developments have since been completed on the system and that automation in the IGCRS Rules for EOUs will be implemented from the 1st of this month. However, the system did not work properly and the director general of the export promotion council for the EOUs took up the matter strongly with the CBIC, and the CBIC decided to postpone implementation of its instructions till the 17th of this month. Last week, the CBIC decided to further postpone the implementation of its instructions till the 25th of this month. 

In the meantime, ICEGATE has issued a set of draft frequently asked questions (FAQs) on the enablement of IGCRS Rules for EOUs. There are 36 questions and answers in the FAQs dealing with several situations. From these FAQs, it appears the IIN has to be generated unit-wise i.e., for each Letter of Approval/ Permission to set up EOU, a separate IIN has to be obtained. Secondly, a continuity bond has to be furnished every year, regardless of the B-17 bond that is already furnished. The FAQs also says that the credit or re-credit of bond happens at the officer’s end, which is quite unclear to many EOUs. On some points the FAQs say that the CBIC will clarify the matter.

Enabling IGCRS Rules electronically for imports by EOUs is a significant step forward that will reduce the transaction costs. The EOUs should quickly familiarise themselves with the new procedures and raise any doubts/difficulties with the CBIC and ICEGATE, preferably before the coming Wednesday. 

Email : tncrajagopalan@gmail.com