Q. In response to our request for extension as per commerce ministry notification no.70 dated February 20, 2014, which states that wherever the holder of any EPCG Authorisation is granted relief under Corporate Debt Restructuring (CDR), then such Authorisation holder may be allowed EO extension of three years from the date of approval of the CDR mechanism/scheme, JDGFT, Mumbai has refused to grant extension on the grounds that the finance ministry has not yet amended notification 102/2009-Cus dated September 11, 2009 giving effect to the said change in the FTP.  How shall we proceed?I am surprised that the commerce ministry notification is disregarded by its own officials and the finance ministry. I suggest that you may take up the matter with the head of that office, DGFT and joint secretary (DBK), CBEC. If they do not respond positively, you may approach the High Court with a prayer for appropriate directions to the concerned JDGFT to follow the FTP and to the finance ministry to giv

'Amount not prescribed for bond for provisional release of seized goods'

Business Standard

This year had started with high hopes of the new Aam Aadmi Party government in the city of Delhi providing a clean administration and making its mark in the general elections to the Lok Sabha. As those hopes crashed in February, the emergence of Narendra Modi as Prime Minister in May boosted fresh hope of quick and all-round development. As the year ends, those hopes, too, are getting dimmed, although the overall mood is to wait and watch.The crash of international oil prices from a high of  $115 a barrel a few months earlier to around $60 a barrel has helped bring down fuel prices, cut oil subsidies and curb the current account and fiscal deficits. Food and commodity prices have also come down, bringing the overall year-on-year inflation to near zero. That has not yet persuaded the Reserve Bank of India to cut interest rates but the expectation is that these will soon begin.Meanwhile, export and industrial production have remained sluggish, causing a fall in revenue collections and mo

Wait continues on high hopes

The notifications were issued on the 11th of this month, amid phased polling in the state and a little over three months after the floodsThe Union finance ministry has exempted excise duty and customs duty on goods meant for relief and rehabilitation of those affected by floods in Jammu and Kashmir (J&K). The notifications were issued on the 11th of this month, amid phased polling in the state and a little over three months after the floods.These require the importer or manufacturer to certify on the relevant clearance documents that the goods are intended to be so donated, free of cost. The goods must be sent to the central or state government or relief agencies approved by either for the purpose.  Within six months (extendable by the authorities) from the date of importation/clearance from the factory, the importer/manufacturer must produce before the relevant customs/excise authorities, a certificate from the district collector of the affected area in the state, that the said go

Levy exemptions for J&K floods

We have an advance authorisation issued in January 2011. We want to club it with an advance authorisation issued in June 2012. Can we do that?Yes. As per para 4.20.3 of the Handbook of Procedures, Vol. 1 (HB-1), you can ask for clubbing of advance authorisations that have been issued within 18 months  from the date of issue of the earliest authorisation that is sought to be clubbed, whether such authorisations are valid or not. However, you must account for all the inputs as per the norms. Value addition of the authorisations so clubbed shall be the average of the minimum value addition prescribed and imposed on individual authorisations. Also, for exports made after the export obligation period of the earlier authorisation, you must pay a composition fee of 0.5 per cent of the shortfall in export obligation, as per para 4.20.4 of the HB-1.Can we adjust a shipping bill used or counted for maintaining annual average of one EPCG authorisation for maintaining the annual average of another

'Advance authorisations dating back 18 months can be clubbed'

For exporters and importers, Budget 2014 gives many statements of intentions and some facilitation but no specific reliefs. They need to remember that the Budget has come within a few weeks of the new government taking over and hope for better days ahead due to several initiatives that are not specific to exporters or importers.The finance minister affirmed his government's commitment to revive Special Economic Zones (SEZs) and investors' interest, to develop better infrastructure and to effectively and efficiently use the available unutilised land. He talked of engaging with states to take  exports to a higher growth trajectory and proposed an Export Promotion Mission to bring all stakeholders under one umbrella. He announced extension of the existing 24x7 customs clearance facility to 13 more airports in respect of all export goods and to 14 more seaports for specified import and export goods. He also spoke of implementing an "Indian Customs Single Window Project" to help importers a

Next Budget should be more reformist

In his 2014-15 Budget speech, the Union finance minister had announced that as an administrative measure, he proposed to set up a high-level committee (HLC) to interact with trade and industry on a regular basis, and ascertain areas where clarity in tax laws was required.Based on the recommendations, the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) were to issue appropriate clarifications where necessary on the tax issues, within two months, he had said. Last week, he set up a three-member committee for that purpose.This consists of a former chief economic advisor at the ministry, a retired member of the Settlement Commission for income tax (I-T) and wealth tax matters, and a retired director-general (audit-customs) of CBEC. It will be assisted by two officers not below the rank of joint secretary/commissioner, one each from the I-T and customs & central excise wings. It may consult experts and tax professionals from outside and invite officer

Will HLC level with reality?

We submitted our application for rebate of excise duty paid on exports within the one-year time limit to our jurisdictional excise authorities. They returned our application as the correct authority is the Maritime Commissioner, but by the time we submitted the application to the correct authority, the one-year time limit had passed. They have rejected our claim on the grounds of limitation. Is there any way to get this refund?You may appeal against the rejection order on the basis of CCE, Ahmedabad vs AIA Engineering Pvt. Ltd.  [2009 (248) ELT 826 (Tri. Ahmd.)]. In that case, the Tribunal held that the original refund claim was filed within time before the wrong authority; as such, subsequent re-filing of the refund claim beyond the limitation period should not be held against the assessee. The department's appeal against the decision was dismissed by the Gujarat High Court [2011 (121) STR 367 (Guj.)], holding that since the original application for refund was filed within time, thoug

'Agent's commission can be remitted, or deducted from invoice value'

The policy hesitation of the commerce ministry seems set to continue till the beginning of next year

Unwanted delay in FTP changes

We bought certain goods on the high seas from an unrelated party, who had bought the goods from their parent company abroad and re-sold to us after loading five per cent on the price at which they had bought. Now, can this transaction between us and the high-seas seller be investigated for examining whether the relationship has influenced the price?CBEC had examined the valuation of goods sold on "high-seas-sales" basis and had issued Circular 32/2004-Customs dated May 11, 2004 [2004 (167) E.L.T. T37], stating that 'taking into account the Advisory Opinion 14.1 of the GATT Valuation Code, which stipulates that if the importer can demonstrate that the immediate sale under consideration took place with a view to export the goods to the country of importation, then such transaction would constitute an international transfer of goods. The later transaction which led to the import would be the relevant transaction for assessment and Rule 4 of Customs Valuation Rules, 1988' (which is now Rul

'Onus of proving high-seas sale is an international transfer is on importer'

We are traders, not registered with Central Excise. We imported certain items on payment of four per cent Special Additional Duty (SAD) and re-sold the same on payment of VAT

'Unregistered dealers permitted to claim refund of Special Additional Duty'

CBEC says Cenvat credit for the service tax paid on outward freight for transportation beyond a factory gate or depot would not be available where the buyer takes over title to the goods from the seller at the factory or depot

Determining when it's a shift in title

We have ordered some goods from France that will first go to China for some processing and then arrive in India. How will the Customs value the goods? Customs will go by the transaction value if the invoice from France represents the full price paid or payable for the goods as presented to the Customs for assessment and you don't make any other remittances in connection with the sale of the goods. However, if you pay the Chinese party separately or bear any other costs in connection with the sale of the goods that are not included in the invoice from France, the Customs will load such amounts, in accordance with Rule 10(1)(e) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.For regularisation of default in our Export Promotion Capital Goods (EPCG) authorisation, can we purchase duty credit scrips issued under Status Holder Incentive Scheme (SHIS) from the market and pay the duty through that scrip?As per Para 3.16.3 of the Foreign Trade Policy (FTP), SHIS scr

'Duty credit scrips can be used to pay customs duties in cases of default'

We have excise registration as a manufacturer. We want to start trading also from the same premises. Do we need to make any change in our registration or get any permission? Do we need to reverse the Cenvat Credit in terms of Rule 6(3)(i) of Cenvat Credit Rules 2004 read with Explanation I to Rule 6 of the said Rules, as trading activity is an exempted service in terms of Section 66D of Finance Act 1994, and we are not maintaining separate accounts for the exempted and non-exempted services?You do not need any permission to receive, retain or store duty paid goods, either manufactured by you or received from others in the factory premises. You may refer to Pune Commissionerate Trade Notice no. 67/2003 dated December 9, 2003 in this regard. As an unregistered dealer, you do not need any registration or change in your existing registration. However, if you want to issue Cenvatable invoices, you must obtain a separate registration as a dealer. In any case, you have to make sure that your

'Manufactured goods and trading goods should not get mixed up'

We have exported certain goods through EDI port under claim of duty drawback at all-industry rates. The Customs allowed the shipment but raised some queries. Due to some problem at our end, we had misplaced the query. When we discovered that the drawback amount has not yet been disbursed, we enquired and learnt about the query from Customs which remains un-replied from our end for the last two to three years. Does this delay make the drawback claim time-barred, as per law?As per Rule 13(5) of the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, where the exporter has exported the goods under electronic shipping bill in Electronic Data Interchange (EDI) under the claim of drawback, the electronic shipping bill itself shall be treated as the claim for drawback and there is no need for filing separate drawback claims. As per Rule 13(2)(a) of the said Rules, "if the said claim for drawback is incomplete in any material particulars or is without the documents specifie

'Electronic shipping bill shall be treated as claim for drawback'

Can you please explain how safeguard duty is calculated? Is it on the basis of value or quantity, or some other parameter?The notifications levying safeguard duty state how much duty is to be levied and how the duty is to be levied. For example, in the notifications relating to safeguard duty on caustic soda lye, phthalic anhydride, electrical insulators, hot-rolled products of stainless steel-304 grade, saturated fatty alcohols and seamless pipes and tubes, safeguard duty has been levied as a certain percentage of the assessable value. However, in the case of 3-dimethyl butyl-N'Phenylenediamine, carbon black and sodium nitrite, the safeguard duty has been imposed as a percentage of the assessable value minus the anti-dumping duty payable. Therefore, as always, the notification must be read very carefully.We bought some goods on the high seas from another party. The goods originated in a country with whom we have a Preferential Trade Agreement. But the Customs are not giving us the ben

'No service element in sale of prospectus, admission forms'

Last week, the Union law ministry asked various ministries not to take their quarrels to courts but resolve these amicably through empowered agencies or arbitration and if necessary, take the matters to the cabinet secretariat or the Prime Minister's Office. It is a good idea but similar earlier initiatives have failed.

Exim Matters: Can govt fights be kept out of court?

On our excisable export product, the All Industry Rate of Drawback is 4 per cent when Cenvat Credit is availed and 5 per cent when Cenvat Credit is not availed. We have been claiming drawback at 5 per cent, without availing Cenvat Credit. Can we now claim service tax refund for the exports made?Under notification no. 41/2012-ST dated June 29, 2012, you have the option to claim refund of the service tax paid on taxable services that have been used beyond the place of removal, for the export of goods, either on the basis of rates specified in the schedule of rates annexed to that notification or on the basis of specified documents. For a claim on the basis of notified rates, you must have made a declaration in the shipping bill. So, on your future exports you can make a suitable declaration and claim the refund at notified rates. On your past exports, you may claim a refund on the basis of actual documents. In both the cases, you have to fulfil the conditions laid down in that notificati

'Service tax refund can be claimed if Cenvat credit has not been availed of'

Foreign Trade Policy does not specifically deal with such a situation. The normal rule of interpretation is that any ambiguity in a beneficial legislation must be resolved in favour of the citizen

'No bar on utilisation of SHIS for the import of second-hand capital goods'

We supplied goods to projects financed by World Bank under contracts awarded under the International Competitive Bidding (ICB) route. We paid terminal excise duty (TED) and cleared the goods. Our claim for TED refund has been rejected on the basis of DGFT Policy Circular no. 16 dated March 15, 2013. Please guide us how we can claim refund of such TED.Since September 1, 2004, the wordings in the Para 8.3(c) of the FTP have remained unchanged, stating "exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given." The Policy Circular no. 16 dated March 15, 2013 only reiterates that position. So, the denial of your claim of refund of TED is fully in accordance with the FTP. The Tribunal vide its majority decision in the case of Reliance Industries Limited [2009-TIOL-530-CESTAT-AHM] has held that plea of revenue neutrality is not sustainable with reference to terminal excise duty. Now, all you can do is to approach th

'Revenue-neutrality plea not sustainable with reference to terminal excise duty'

For our small-scale engineering unit, we imported CNC machines under Export Promotion Capital Goods (EPCG) scheme in 2010. Despite our best efforts, we could not export. Now, we have to pay duty, but is there any way to waive interest at 18 per cent per year, which is very high for us? After paying the duty, can we take Cenvat Credit of CVD and SAD? For regularisation of bonafide default in fulfilling the export obligation under the EPCG scheme, you have to pay the duty saved proportionate to the unfulfilled export obligation plus interest at 15 per cent per year from the date of clearance of the goods, as per the notification no.102/2009-Cus and 103/2009-Cus, both dated 11.09.2009. There is no provision to waive the interest. After duty payment, you can take Cenvat Credit of the CVD and SAD, as per Cenvat Credit Rules, 2004.Is there any scheme for green technology from DGFT?Para 5.16 of the Handbook of Procedures, Vol. 1 lists 16 green technology products. As per Para 5.10 of the Fore

No waiver of interest in cases of export default under EPCG scheme

As per Section 27A of the Customs Act, 1962, for interest payment, the time limit of three months kicks in when the order for refund is made

TNC Rajagopalan