EXIM Matters: Deferred duty payment scheme extended to eligible importers

Now, CBIC has prescribed the eligibility criteria not only for manufacturers but also for traders who send imported goods to job-workers registered under the Goods and Services Tax (GST) laws

In her Budget speech last month, the finance minister announced that deferred payment of import duty will be made monthly and that a new class of eligible importers will be created by amending the Deferred Payment of Import Duty Rules, 2016. The Rules were amended on the same day allowing monthly (instead of fortnightly) payment of duty by the 1st of next month, except for March when the due date for payment would be March 31, and including ‘eligible manufacturer importers’ (EMI) as a class of importers eligible for the facility.

 

Now, the Central Board of Indirect Taxes and Customs (CBIC) has prescribed the eligibility criteria not only for manufacturers but also for traders who send imported goods to job-workers registered under the Goods and Services Tax (GST) laws. The eligibility criteria are not too demanding. Importers holding recognition as Authorised Economic Operators Tier-1 and Tier-2 (AEO-T1 and AEO-T2) are already eligible for the facility. 

Manufacturers and traders running their business for at least two years and who have filed at least 25 bills of entry in the previous year and have a turnover of at least ₹5 crore can apply for the facility. Micro, small and medium enterprises (MSME) are eligible even if they have filed only 10 bills of entry in the previous year.  They must be solvent and must have filed all returns due under the GST laws. Applicants who have collected the GST, excise duty or service tax from customers but not deposited the same with the government and firms whose director/partner/proprietor has been arrested, prosecuted or convicted under any law will be ineligible. The applications for recognition must be submitted electronically on the web portal www.aeoindia.gov.in. When the application is approved, the Customs will update the details in the customs automated system and thereafter, the importers recognised as EMI can exercise the option for deferred payment while filing the bill of entry from the beginning of next month. 

The deferred duty payment scheme takes away the important step of duty payment before clearance of imported goods for the eligible importers. Thus, the Customs clearance of their imported goods will be faster. Secondly, it will improve the cash flow of eligible importers, since import duties — often around 5-30% of the CIF value of goods — need not be discharged before clearance of the goods. The scheme for EMI is available till March 31, 2028.  It is expected that within that time, such approved EMI will be able to obtain AEO T2/T3 accreditations and get assured facilitation, priority treatment and other benefits available to AEO T2/T3. The existing benefits of AEO accredited entities will also be expanded.

 

The expansion of the deferred duty payment scheme must be seen in the context of implementation of measures to grant auto goods registration and auto ‘out of charge’ of the imported consignments, auto goods registration for electronic sealed  export cargo and auto ‘let export order’, introduction of system based e-scheduling  for  examination of cargo and mandatory use of body-worn cameras during examination of import cargo and onboarding of five partner government agencies that are also involved in clearance of imported goods under allied laws so that importers get a single touchpoint for filing their documents. These technology-driven, trust-based measures can make imports much easier and faster.  Email: tncrajagopalan@gmail.com