'Manufactured capital goods can be exported without paying duty'

Two years ago, we had assembled capital goods in our factory from bought-out components on which duty was paid and we had taken Cenvat Credit on this. Now we want to sell them in the domestic market. Do we have to reverse Credit by 2.5 per cent per quarter? What if we want to export them?
The capital goods are manufactured by you and you can remove the goods in the local market on payment of excise duty at the prevailing rate on the value determined under Section 4 of the Central Excise Act, 1994. If you want to export the goods, you may remove the goods without duty payment under UT1 or on duty payment under rebate claim.

 

In your Q & A column dated 2nd November 2010, you have mentioned that the Foreign Trade Policy (FTP) grants status recognition on the basis of performance but the procedures bar us from counting exports for which payment is not realised. Can we not take a view that procedures cannot override the Policy?
As per Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, it is the Central Government that has the powers to notify the FTP. The Director General of Foreign Trade (DGFT) cannot make the Policy. As per Section 6(2) of the said Act, the DGFT shall advise the Central Government in the formulation of the export and import policy and shall be responsible for carrying out that policy. Thus, the DGFT can advise the Government on formulation of the Policy. He can notify procedures to implement the Policy. He can even issue binding clarifications. But, the restriction imposed by DGFT that only exports for which payment is realised will count for export house recognition is beyond his jurisdiction, as the restriction amounts to amending the FTP. You can challenge his actions in the Courts.

Are we required to pay education cess on anti-dumping duty and similar duties also?
No. As per Section 94 of the Finance (No.2) Act, 2004, you are not required to pay education cess on anti-dumping duty or the safeguard duty or the anti-subsidy countervailing duty or the education cess. The cess must be paid on basic customs duty and additional duty of customs (CVD).

Can you tell me since when the Reserve Bank of India has allowed a time limit for realisation of export proceeds of up to 12 months instead of six months? If you can give the references and tell me up to what date this liberalisation is permitted, that will help.
RBI extended the period for realisation of export proceeds to 12 months through its AP (DIR) Circular no. 50 dated June 3, 2008. The liberalisation was for a period of one year. The liberalisation was extended till June 30, 2010 through AP (DIR) Circular no. 70 dated June 30, 2009. The liberalisation has been further extended till March 31, 2011 through AP (DIR) Circular no. 57 dated June 29, 2010.

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