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Circular
No. 25/2003.
1st April 2003.
F.NO.605/01/2003-DBK
Government of India
Ministry of Finance
Department of Revenue
Sub: 2003-04 EXIM Policy –
Changes made in Advance License, DFRC, EPCG, DEPB and DEEC Schemes, etc. –
reg.
EXIM Policy for the
year 2003-04 has been announced on 31.3.2003 by Hon’ble Commerce &
Industry Minister and it comes into force on 1.4.2003. On the demand of trade
and industry changes have been carried out in the subject schemes to remove
procedural bottlenecks and to boost export trade. Certain duty free concessions
have also been extended to status holders and service providers with a view to
augment foreign exchange earnings. Details of the new schemes introduced and
changes made in the existing schemes are as follows.
2.1 Duty Free Entitlement
Credit Certificate to Status holders
In terms of Para 3.7.2.1 (vi) of the EXIM Policy, duty free import of capital
goods, office equipments, raw materials, parts, consumables etc. other than
agricultural and dairy products have been permitted to status holders (i.e. to
say Export House, Trading House etc.) who show incremental exports of more than
25% in FOB value of exports during financial year 2002-03 as compared to
financial year 2001-02. Such exporters (both manufacturer exporters and merchant
exporters) would be issued Credit Entitlement Certificates equivalent to 10% of
the incremental growth achieved during 2002-03 permitting duty free import of
the aforesaid goods. The said certificate would be issued by DGFT authorities.
Goods imported against the said Certificate would be exempted from Basic customs
duty (BCD), CVD and SAD subject to the condition that the said Credit
Certificate is produced at the time of clearance before proper Officer of
Customs for debit. The said duty exemption would be available on debiting the
element of BCD,CVD and SAD in the said Certificate. Prior to allowing duty
exemption under this scheme, the genuineness of the said Certificate shall be
verified by the concerned Customs House. Both the said Certificate and goods
imported against it are subject to actual user condition. In case of capital
goods imported under the aforesaid scheme, evidence confirming installation of
the capital goods in the factory/ premises of the importer or factory premises
of supporting manufacturer (in case of merchant exporter) shall be produced by
the licence holder to the concerned Custom House within 6 months. In case of
merchant exporter, the imported goods may also be utilized by the supporting
manufacturer whose name and address is endorsed on the said Certificate. In
order to prevent misuse of the facility import shall be permitted only from
sea-ports, airports, ICDs and LCSs which are specified in the notification.
In order to monitor
revenue outflow under this scheme, the Custom Houses located at the notified
places shall send a monthly report containing details of CIF value of goods
imported and amount of duty foregone under the Scheme on the 10th of
the succeeding month to JS(DBK). Customs
Notification No.53/2003-Cus. dated 1.4.2003 refers in this regard. The
first such report shall be sent by 10th May, 2003.
2.1 Duty
Free Certificate Entitlement Credit Certificate to SERVICE PROVIDERS
In terms of Para
3.8 of EXIM Policy, service providers (other than hotels) have been permitted
duty free import of spares, office equipments and furniture, professional
equipments and consumables but excluding agricultural and dairy products. Such
duty free entitlement shall be equivalent to 10% of the average foreign exchange
earned by the service provider during preceeding 3 years. Hotels shall be
entitled for duty free import of equipments to 5% of the average foreign
exchange earned by them during preceeding 3 years. The said Certificate would be
issued by DGFT authorities. Goods imported against the said Certificate would be
exempted from Basic customs duty (BCD), CVD and SAD subject to the condition
that the said Credit Certificate is produced at the time of clearance before
proper Officer of Customs for debit. The said duty exemption would be available
on debiting the element of BCD,CVD and SAD in the said Certificate. Prior to
allowing duty exemption under this scheme, the genuineness of the said
Certificate shall be verified by the concerned Customs House. Both the said
Certificate and goods imported against it are subject to actual user condition.
In case of professional equipments imported under the aforesaid Scheme, evidence
confirming installation of the equipments in the factory/ premises of the
service provider shall be produced by the license holder to the concerned Custom
House within 6 months. . In order to prevent misuse of the facility import shall
be permitted only from sea-ports, airports, ICDs and LCSs which are specified in
the notification.
In order to monitor
revenue outflow under this scheme, the Custom Houses located at the notified
places shall send a monthly report containing details of CIF value of goods
imported and amount of duty foregone under the Scheme on the 10th of
the succeeding month to JS(DBK). Customs Notification No.54/2003-Cus. dated
1.4.2003 refers in this regard. The first such report shall be sent by 10th
May, 2003.
2.3
Advance License Scheme
Advance License Scheme is contained in Chapter
4 and Paras 4.1
And Paras 4.1.1 to
4.1.7A of the EXIM Policy. The Advance License Scheme announced in 2002-07
Policy (on 31.3.2002) has been continued in the same form. In order to
facilitate Status holders (Export House, Trading House etc.) Advance License
Scheme for annual requirement has been re-introduced. This Scheme is similar to
the scheme which was announced in 1997-2002 EXIM Policy in the year 1999 (vide
Customs Notification No.48/99 dated 29.4.99 and DOR Circular No.45/99-Cus. dated
19.7.99). Under Advance License for Annual Requirement, Advance License would be
issued to status holders so as to enable them to import their requirement of
inputs on annual basis. Both Advance License for Annual requirement and
materials imported against it shall be subject to actual user condition as
earlier. For the purpose of permitting clearance of goods against Annual Advance
License, the procedure specified in DOR Circular No.45/99 shall continue to be
followed.
Customs
Notification No.56/2003-Cus. dated 1.4.2003 has been issued under Advance
License for Annual Requirement Scheme. All other parameters of this Scheme
remain unchanged.
2.3.1
In respect of Advance License issued for supplies to EOU, SEZ, EHTP, STP units,
imports would also be exempted from the whole of anti-dumping duty and safeguard
duty. Sr. No. 4 of Customs Notification No.57/2003-Cus. dated 1.4.2003 refers in
this regard.
2.4
Duty Free Replenishment Certificate (DFRC) Scheme
DFRC Scheme
announced in 2002-07 EXIM Policy has been continued in 2003-04 Policy.
Henceforth supplies made under Deemed Export Scheme in terms of Para 8.2 of the
EXIM Policy would also be entitled for benefit of DFRC Scheme. Import of inputs
against DFRC License (issued against supplies made under Deemed Export Scheme)
shall also be permitted from sea-ports, airports, ICDs and CFSs specified in the
DFRC Notification as usual. For this purpose, DFRC licence issued under Deemed
Export Scheme shall inter-alia contain details of excise certified invoice
number and date with value of supplies in Indian rupees. All other conditions of
the DFRC Scheme remain unchanged.
In order to monitor
revenue outflow under DFRC scheme, the concerned Custom Houses shall send a
monthly report containing details of CIF value of goods imported and amount of
duty foregone under the Scheme on the 10th of the succeeding month to
JS(DBK). The first such report shall be sent by 10th May, 2003.
Sr.No.3 of Customs
Notification No.57/2003-Cus. dated 1.4.2003 refers in this regard.
2.5
Duty Entitlement Pass Book (DEPB) Scheme
DEPB Scheme
announced in 2002-07 EXIM Policy has been continued. In this regard earlier
Customs Notification No.45/2002-Cus. dated 22.4.2002 and DOR Circular
No.24/2002-Cus. dated 6.5.2002 refers. Henceforth, supplies made by DTA units to
units in SEZ would be entitled for DEPB benefits. The area of the Special
Economic Zone shall be a Customs Station and all the functions relating to the
enforcement of the Customs Act shall be controlled by the Commissioner of
Customs with the assistance of proper officers of Customs. The goods entered
into the SEZ from the DTA shall be under the cover of a Bill of Export. This
Bill shall be registered in the SEZ Customs formation and assigned a running
serial number. Thereafter the goods shall be examined by the Customs Officers
posted in the SEZ like a normal export consignment. These goods shall be
eligible for DEPB benefit & the DEPB scrips shall be issued by the licensing
authority to the SEZ Unit receiving supplies from DTA Unit on the basis of a
disclaimer certificate given by the DTA Unit in favour of SEZ Unit. This is
because it has now been decided to treat supplies made by DTA Unit to a unit in
SEZ as exports for the purpose of granting DEPB benefit.
For the purpose of
allowing DEPB benefit against DEPB licenses issued for supplies to SEZ units,
verification of the DEPB license shall be done in the same manner as specified
in earlier DOR Circular No.14/99-Cus. dated 15.3.99 excepting that in case of
supplies made to SEZ units, the Bill of Export and other related documents shall
be verified. Since the port of registration in respect of such DEPB license
would be the place where the receiver SEZ unit is located, import against such
DEPB scrips shall be permitted either from the same Custom House or from any
other place notified in DEPB Custom Notification No.45/2002 against TRA in terms
of para 6 of DOR Circular No.85/99-Cus. dated 23.12.99 and also in terms of DOR
Circular No.66/2001-Cus. dated 19.11.2001 when the Custom House of receiver SEZ
unit is a non-notified place. For this purpose, both Commissioner Incharge of
Customs House (who issues TRA) and the Custom House receiving the TRA shall
follow the procedure as specified in DOR Circular No.66/2001.
Sr.No.2 of Customs
Notification No.57/2003-Cus. dated 1.4.2003 refers in this regard. All
other parameters of the DEPB Scheme shall remain unchanged.
2.6 Export Promotion Credit
Guarantee (EPCG) Scheme
5% Duty EPCG Scheme
has been continued in 2003-04 Policy (Vide Chapter 5). However, export
obligation under EPCG Scheme would now be determined on the basis of quantum of
duty saved by the license holder and his export obligation would be fixed
equivalent to 8 times the quantum of duty saved by him. In respect of license
where duty saved is Rs.100 crores or more or where the license is issued to
units in agri export zone, the export obligation shall be fulfilled within a
period of 12 years instead of 8+2 years. In order to help revival of sick units,
a longer EO period is provided in Para 5.1 of EXIM Policy in respect of such
sick units. Capital goods(CG) required for pre-production, production and
post-production including second hand capital goods upto 10 years old shall be
permitted under EPCG Scheme. The earlier restriction of 20% for import of spares
of capital goods under EPCG Scheme is done away with. In addition, spares of
existing plant and machinery of the license holder shall also be permitted to
enable upgradation/modernization of existing CGs. Units holding licences both as
manufacturer/merchant exporter and service provider shall be permitted to
fulfill export obligation either by export of products specified in the EPCG
License (issued to him as manufacturer/merchant exporter) or by earning free
foreign exchange for services rendered (against EPCG license issued as service
provider). To give an example, if a unit has been issued EPCG License as
manufacturer/merchant exporter specifying EO of $ 100 and EPCG License (as
service provider) specifying EO of $ 200 then the said unit may also fulfill his
total export obligation of $ 300 by exporting resultant product equal to $ 150
and by earning free foreign exchange (on rendering service) equal to $150.
It is reiterated
that redemption of Bond/BG against license issued under EPCG Scheme shall
normally be allowed by the Custom House on the basis of EO Discharge Certificate
issued by DGFT authorities without insisting for production of copies of
relevant export documents including shipping bill etc. This is because the job
of monitoring of export obligation fulfilled under EPCG Scheme is assigned to
relevant DGFT authorities.
All other
procedural requirements of 5% duty EPCG Scheme as specified in DOR Circular
No.24/2002-Cus. dated 6.5.2002 remain unchanged. Customs Notification No.
55/2003-Cus. dated 1.4.2003 refers.
3. Corresponding Trade Notice and
Standing Order may be issued for the guidance of staff and trade.
4. Receipt of this Circular may please be
acknowledged.
R.K.
Talajia
Officer on special duty (DBK)
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