'Commerce Ministry unaware EOUs are not bonded warehouses'

Q. We have an Export Oriented Unit (EOU) and a Domestic Tariff Area (DTA) unit. When we send goods from our DTA unit to a unit in the Special Economic Zone (SEZ), we make an invoice in accordance with the Goods and Services Tax (GST) laws and file a bill of export at the SEZ Customs Station. For sending goods from our EOU, we have to follow the procedure prescribed at Rule 30(12) of the SEZ Rules, 2006. It means that first the SEZ unit must file a bill of entry at the SEZ Customs station, and then we make an ex-bond shipping bill and send the goods to the SEZ unit under a GST invoice. Can we follow a simpler procedure?

The SEZ Rules, 2006, were notified when the EOUs were required to function under the bonded warehouse provisions at Chapter IX of the Customs Act, 1962. However, EOUs were de-licensed as warehouses under Customs Act, 1962, with effect from August 13, 2016. They have to adhere to the provisions of Notification 52/2003-Customs, dated March 31, 2003, FTP, HBP and other applicable notifications.

Apparently, the Commerce Ministry is not yet aware of these changes, and so, the SEZ Rules, 2006, remain unchanged. I suggest you write to the Commerce Ministry drawing its attention to the CBEC Circular no.35/2016-Cus dated June 2, 2016.

Q. We had made two advance remittances for imports of goods from China and Saudi Arabia, without bank guarantees from the foreign parties’ banks, in accordance with Para C.1.1 of the RBI Master Directions on Imports of Goods and Services. Both parties have not shipped the goods. The Chinese vendor has shut down his business and is untraceable. The party in Saudi Arabia says that their Customs authorities are not allowing exports due to some technicalities and is refusing to return the advance. What are our options?

First, these are commercial disputes, so you must consult a suitable lawyer and explore legal options to recover the money you remitted as advance payment for goods. Second, you can file a complaint with the government in accordance with the provisions of Chapter 8 of the Foreign Trade Policy (FTP) and follow the procedures prescribed in Chapter 8 of the Handbook of Procedures, Vol.1 (HBP).

Please note that this mechanism only provides an additional window for resolution of complaints/disputes. The idea is to make efforts to resolve the complaints amicably and expeditiously. It does not preclude your option to pursue any other course of action, including legal action, against the erring party. Third, you must immediately inform your bank of the circumstances leading to non-shipment against your advance, and your failure to get back the advance.

Q. Can we change the name of the buyer/consignee after an export shipment?

Yes. Please refer to Para C.18 of RBI Master Direction no.16/2015-16 dated January 1, 2016, on Import of Goods and Services.

 

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