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'EOU can clear unused raw materials in DTA, or transfer to another unit'

That trade notice cannot override the FTP notified on December 5, 2017

TNC Rajagopalan 

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Q. We are an EOU and we have raw materials purchased since 2010. Since we don’t have orders we could not utilise them. The shelf life of materials varies from 10 to 15 years. If we have to export (sell) the unutilised raw materials purchased during 2010-2016, do we need to pay duties on them? Do we need to get permission from Customs to export (sell) the raw material?

As per Para 6.15 (a) of FTP (relevant extracts): “In case an EOU/EHTP/STP/BTP unit is unable to utilize goods and services, imported or procured from DTA, it may be: (i) Transferred to another EOU/EHTP/STP/ BTP/SEZ unit; or (ii) Disposed of in DTA with intimation to Customs authorities on payment of applicable duties and/ or taxes and compensation cess. In addition, exemption of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed, if any on the goods, at the time of import will also be payable and submission of import Authorisation; or (iii) Exported.” For re-export of goods, you need not pay duties.

Q: We draw your attention towards the Sabka Vishwas Legacy Dispute Resolution Scheme wherein a Show Cause Notice has been issued under the following: (a) Under Customs Act where the court case has been going for last 35 years and the base amount involvement is less than Rs2 lakh; and (b) Custom duties and penalties under Advance Authorisation, which issued by DGFT for non-fulfillment of exports against imports based on quantity terms whereas there fulfillment in value terms. Matter involved is less than Rs2 lakh.

Please tell us whether these matters can be resolved under the Sabka Vishwas Scheme.

The said Sabka Vishwas Scheme covers the amounts in disputes under the laws mentioned in Section 122 of the Finance (No.2) Act, 2019. These include laws relating to Central Excise, Service Tax and 24 different types of cesses and other levies under various legislations. The scheme includes any other Act, as the Central Government may, by notification in the Official Gazette, specify but till now, the disputes under Customs laws and FTP are not covered under the said scheme.

Q. In case of clearance of goods from an EOU to an advance authorisation holder, can we get benefit of drawback as mentioned in chapter 7 of FTP? If yes, what is the procedure? I understand that it can be done through ARO, but DGFT trade notice dated June 30, 2017, says that ARO shall not be given after implementation of GST. Please clarify.

That trade notice cannot override the FTP notified on December 5, 2017, where Para 4.20 clearly allows issue of ARO and Para 7.03 and 7.04 also allow drawback against ARO. In my opinion, Basic Customs Duty can be rebated through drawback (brand rate) and GST can be refunded through notifications no. 48/2017-CT dated October 18, 2017, read with Rule 89 of CGST Rules, 2017.

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First Published: Mon, September 09 2019. 16:02 IST