Page 4 - Exim Matters

Using GST lens to let in more light

'One nation, One tax'. This slogan has gained currency to justify introduction of the proposed national Goods and Services Tax (GST). This catchy slogan is rather misleading but deserves to be taken seriously, as an objective to be achieved in due course.GST as envisaged at present is far from the ideal of a single tax working seamlessly through the supply chain of all goods and services. Many items will be out of its net. Some types of taxes will not be covered. Exemptions will be there. States will have the right to levy new taxes. Taxes levied by local bodies continue. Even so, it is a beginning. In its present form as envisaged, GST promises to widen the base, simplify processes, bring greater compliance and make it easy to carry on business. More important, it gives an opportunity to raise questions regarding continuation of some other exemption schemes.India is fragmented by way of different tax dispensations for special economic zones (SEZ), export oriented units (EOU) and the d

Needed simplifying in EOU schemes

The EOU scheme was launched on December 31, 1980, when the domestic operating environment was highly restrictive

Shifting directives on a fluid dispute

In the light of a judgment, CBEC has said in the case of all bulk liquid cargo import, whether for home consumption or warehousing, the shore tank receipt quantity should be taken as the basis for levy of customs duty

DGFT needs to cut this red tape

Many exporters have a new, not wholly unexpected, problem. Their claims under the Merchandise Exports from India Scheme (MEIS) are being held on the ground that the description of the product in the shipping bill does not exactly match the description given in the MEIS rate schedule.However, it is well known that these cannot always match. Under MEIS, exporters get duty credits at a notified percentage of the free on board value for exports to notified countries. Appendix-3B of the Handbook of Procedures, Vol 1, gives the list of eligible items and the entitlement rates. The list gives the description and classification code under the Harmonised System. Broadly these are aligned with the Customs Tariff. Many exporters, however, cannot use the same description in invoices to their customers.For example, an exporter of a chemical under the classification 29343000 can give the name of his product in the invoice but not describe it as 'compounds containing a phenothiazine ring-system (whe

Duty-free shops and what they should do

The Central Board of Excise and Customs (CBEC) has permitted duty-free shops in Customs areas to accept payment in rupees till a ceiling of Rs 25,000 from those going out of or coming into the country.They will also be required to display the prices in rupees alongside those in foreign currency and the exchange rate adopted.The decision follows the Reserve Bank's notification which revised the limit for export from and import into this country of Indian currency, from Rs 5,000 to Rs 25,000 per person. CBEC has prescribed the procedures to be followed by operators of the duty-free shops for accounting of receipt, storage, operations and removal of goods at their boned warehouses and shops.The Customs Act was amended on May 14 this year, introducing a provision for licensing special warehouses that will be subject to physical control by the Customs.CBEC issued the notification for supply to duty-free shops in a Customs area in the class of goods which shall be deposited in a licensed sp

Seeing some reason after much time

CBEC justified this on the ground that mere filing of an appeal does not operate as a stay or suspension of the order appealed against

Opening of the door over these 25 years

Despite global economic slowdown from 2008 onwards, exports soared from about $63 bn in 2004 to $185 bn by 2009 and $314 bn in 2014, before falling off to $262 bn in 2015-16It was exactly 25 years before when then Commerce Minister P Chidambaram began trade reforms with many far-reaching announcements. Since then, the foreign trade policy has moved in the direction set by him, with less dramatic changes every now and then.On July 4, 1991, Chidambaram abolished cash assistance for exporters and several categories of licences. Till then, most items were not allowed for import without a licence. Chidambaram turned that policy on its head by allowing import of all goods without a licence, except those specifically restricted. Within a year, he had introduced a new Foreign Trade (Development & Regulation) Act and put in place a simpler five-year export and import policy.Chidambaram retained the schemes for free trade zones, export-oriented units, deemed exports, duty-free import of inp

Some suggestions regarding SEIS

It gives duty credit scrips of three or five per cent of net foreign exchange earnings through export of select services

Uncertain liberalising in a changing world

Exports are going down for the past 18 months and, despite imports also going down, the number of protectionist measures like anti-dumping duties, safeguard duties, etc, have gone up

Updating some earlier schemes

CBEC has decided to merge the Accredited Clients Programme and Authorised Economic Operator scheme into a new 3-tier programme

Indirect tax row needs resolution

In his Budget speech, the finance minister had said, "Litigation is a scourge for a tax-friendly regime and creates an environment of distrust, in addition to increasing the compliance cost on taxpayers and administrative cost for the government. There are about 300,000 tax cases pending with the 1st Appellate Authority, the disputed amount being Rs 5.5 lakh crore. To reduce this number, I propose a new Dispute Resolution Scheme."Accordingly, Chapter XI of the Finance Bill proposed an Indirect Tax Dispute Resolution Scheme, taking effect on June 1.The ministry notified the necessary Rules, prescribing the forms and procedures; the Central Board of Excise and Customs (CBEC) has issued the necessary instructions for implementation.The scheme is applicable for all orders in respect of any of the provisions of the Customs Act, Central Excise Act or Chapter V of the Finance Act, 1994 (dealing with service tax), which were under challenge before the commissioner (appeals) as on March 1, 2016

Some rules change at bonded warehouses

Sensitive goods will only be allowed to be brought into or taken out of a special warehouse with the permission and in the presence of the bond officers

This minister hasn't been up to the job

The test of good governance is whether exporters perceive a proper difference while receiving govt services at the operating levels

A halfway house is better than none

From May 4, the benefits are allowed for export to all countries, and landing certificates will not be required for claiming the MEIS duty credits. This will significantly save on costs

An idea whose time has come

In the last week of April, employees of the Directorate General of Foreign Trade (DGFT) and its regional offices observed two days as 'black days' and a one-day 'pen down strike'. They put up notices that they were protesting against the government's decision to transfer the work of DGFT to the Customs department.The first suggestions to administer export promotion schemes through the excise and customs departments were made almost two decades earlier, when the government notified the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. These required the excise department to verify the genuineness of a party's request, get a bond to secure the duty amount and issue a procurement certificate. The role of Customs was limited to releasing the goods at concessional import duty against the procurement certificate. The task of monitoring the end-use of goods and discharge of bond was left to the excise department.Recently, the 1996 Rules wer

Cold comfort for exporters

Many exporters doing projects abroad find the retention money comes in quite late

What RBI could do to help exporters

Last week, the Reserve Bank of India's (RBI) monetary policy report said global economic activity had slackened further and international trade remains subdued, while downside risks had increased. Weak demand and soft commodity prices have rekindled fear of deflation in some key advanced economies, prompting renewed divergence in monetary policy stances. With fragile domestic fundamentals, emerging market economies remain vulnerable to swings in market sentiment and capital outflow, said the report.However, RBI took no specific steps to help exporters in such a difficult situation. Perhaps it feels enough has been done already by extending the interest equalisation scheme on pre-shipment and post-shipment rupee export credit for five years, with effect from April 2015, for micro, small and medium enterprises, and 416 tariff lines.The contraction in merchandise exports ease to a single digit on a year-on-year basis in the March quarter. Net export turned to a positive 0.1 per cent, fall

Another round of wordy ambiguity

Reversal of credit will not be required for service by way of transportation of goods by a vessel from the customs station of clearance in India to a place outside

Easing norms for exim trade

The single window would provide the importers/exporters a single point interface for customs clearance of import and export goods

Recent changes for exim traders

The Bill also proposes to remove from the negative list any services by way of transportation of goods by an aircraft or a vessel from a place outside India up to the Customs station of clearance here