Re-import of steel cylinders should be exempted from SIMS registration

We export gases in cylinders that are manufactured in India. The cylinders are returned to us by our customers for further refilling. Every time, we re-import the cylinders, the Customs ask us to get the registration under the Steel Imports Monitoring System (SIMS) on the grounds that it applies to all items falling under chapters 73, 73 and 86 of the ITC (HS).  For every registration under SIMS, we have to pay fees of Rs 1 per thousand on the CIF value of the cylinders, subject to a minimum of Rs 500/- and a maximum of Rs 1 lakh.  This increases our cost of doing business. We want to know if the SIMS procedure is applicable for Indian origin material also.

The Commerce Ministry notifications no.17/2015-20 dated 5th September 2019 and 33/2015-20 dated 28th September 2020 make no exception for registration under SIMS for re-import of steel items. In reply to a question ‘Do Indian origin goods processed in a foreign country need a license when re-entering India?’ the FAQ on SIMS issued by the DGFT says. ‘Yes, all steel products that are entering into India require prior registration before imports’. In your case, no processing is done abroad. I see no reason to cover re-imports of such Indian origin goods under SIMS. I suggest you represent the matter to the DGFT, the Commerce Ministry and the Steel Ministry. 

Two months back, we imported certain capital goods under EPCG authorisation. Now, we want to send the same to our own SEZ unit. Can we do it in accordance with DGFT Public Notice no.31 dated 29th August 2018?

In my opinion, that PN applies for shifting the capital goods from one DTA unit to another DTA unit. Sending goods from DTA unit to SEZ unit is treated as exports. As per Para 5.25(a) of HBP, ‘Capital Goods imported under EPCG scheme, which are found defective or unfit for use, may be re-exported to foreign supplier within three years from the date of clearance by Customs of such goods, with permission of RA/Customs Authority. Consequently, EO would be re-fixed’. This provision applies for goods found defective or unsuitable for use. Also, it allows re-export only to the same supplier and not to any other party. So, you may approach the EPCG Committee for permission to transfer the capital goods to your own SEZ unit. Alternatively, you may pay the full duty and re-export the goods to your own SEZ unit under claim of duty drawback under Section 74 of the Customs Act, 1962. 

In that case, you need no permission.

Appendix 3D of HBP allows SEIS for R&D services on natural sciences against the CPC Provisional Code 851.What are the services covered under this head?

That Heading covers R&D services on physical sciences, chemistry and biology, engineering and technology, agricultural sciences, medical sciences and pharmacy and other natural sciences. For the subclass codes for each of these services within the Code 851, you may refer to this link: https://www.dgft.gov.in/CP/?opt=central-product. 

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