Sr

Sr. No,	Provision (Handbook) Para 3.2.5, 3.2.6 A	Effect
1	The scheme will be applicable to status holders who were also status holders as on 31.3.2003 and who had achieved minimum export turnover of 25 crores in the year 2003-04	What if status certificate has been received after 31/03/2003 on the basis of past export performance? Such exporter should not be denied the entitlement. In case export performance in 02-03 is nil the entitlement will be 10% of the export made in 03-04. For Star & Super Star Trading House to achieve 25% growth is very difficult as the reference level is 1500 Cr. / 6000 Cr. This is against the argument given in PN. / Ntf. issued on 28/01/2004 wherein it is being recognized that status holders will continue playing significant & increasing roll for boosting export.
2	For direct as well as third party exports, the Export documents viz. Export Order, Invoice, GR form, Bank Realization Certificate should be in the name of applicant only.	What if the export documents are in joint name, however all belongs to a specific IEC No.? In such case denial of benefit may not be correct.
3	However for the third party exports, where goods have been procured from a manufacturer, the shipping bill should contain the name of the exporter as well as the supporting manufacturer.	What if goods are purchased through a merchant? Will it be covered under Sr. No. 2 above? Further if the performance of such merchant is nil, what will happen to entitlement?
4	Goods allowed to be imported under this scheme shall have a nexus with the products exported and a declaration in this regard shall be made by the applicant in Appendix 17D.	The meaning of NEXUS & the extent to which it can be applied is not clear. Does it mean that import entitlement should be used in proportion of input material used in manufacture or only input materials need to confirm?
5	The licensing authority shall at the time of issuance of the duty free credit entitlement certificate endorse the name of the associate manufacturer/ supporting manufacturer/job worker on the certificate as declared by the applicant.	In case status holder wants to utilise the material for his own requirement, does it mean that he cannot get the goods manufactured through other supporting manufacturer.
6	Goods imported against such entitlement certificate shall be used by the status holder or his supporting manufacturer/ job worker in proportion to the value of their direct contribution to the entitlement.	Whether status holder is allowed to use the full entitlement for himself or it can be used in proportion to the value of their direct contribution to the entitlement.
7	The last date for filing of such applications shall be 31^st December.	-
8	The duty free credit entitlement certificate shall be issued with a single port of registration.	-
9	For each duty free credit entitlement certificate. Split certificates subject to a minimum of Rs 5 lakh each and multiples thereof may also be issued. A fee of Rs 1000/- each shall be paid for each split certificate. However, a request for issuance of split certificate(s) shall be made at the time of application only and shall not be considered at a later stage	Since the certificate is non transferable the utilization will be by way of job working only. On such job working the status holder will have to pay additional duty & sales tax in cash. The basic custom duty being 20%, this will result into turnover of 8 to 10 times of entitlement value. There is need to introduce co-licencee provision to avoid above.
10	The duty free import entitlement certificate shall be valid for a period of 12 months from the date of issue.	-
11	The status holder shall within one month of the last imports made under this certificate or within one month of expiry of the certificate which ever is earlier, submit a statement of imports/ utilization made under the certificate as per Appendix 17E, to the jurisdictional Regional Licensing Authority who have issued the Certificate with a copy to the jurisdictional Excise authorities.	Appendix 17E has not been amended up till now. The amendment will require, several declaration, undertaking & formats for calculation of entitlement under various permutations & computation. The formats for certification by C.A. & Bank will also need to be prescribed.
12	In terms of Para 3.2.5 of Handbook of Procedures (Volume 1), the following items would not be taken into account for computation of entitlement and export performance under Duty Free Credit Entitlement Scheme for Status Holders:	-
12a	Rough, uncut and semi polished diamonds	For manufactured goods deletion of such products is not justified.
12b	Gold, silver in any form including plain jewellery thereof	For manufactured goods deletion of such products is not justified.
12c	Food grains sourced from central pool maintained by FCI	All over the world incentives are given for agriculture export.
12d	Items exported under free shipping bills	Many time capital goods, equipments, used item and software’s are exported under free shipping bill. Denial to such export is not justified. Export made under EPCG scheme will be considered as free shipping bill or not?
13	In terms of Para 3.2.5 of Handbook of Procedures (Volume 1) the following items would not be allowed for imports under Duty Free Credit Entitlement Certificate for Status Holders: Agricultural products which fall under Chapters 1-24 of ITC (HS) Classification of Export and Import items	What if the export items are manufactured from input materials belonging to chapter 1 to chapter 24 of customs? How the import entitlement will be utilized as they are subjected to NEXUS.

Sr. No.

Provision (Exim Policy) Para 3.2.7.1

Effect

For the purpose of calculating the value of exports, the following exports shall not be taken into account, namely:-

Re-export of imported goods or exports made through transhipment ;

Does it mean that only the goods re-exported without any processing are disallowed?

It is not clear as to whether charges received towards jobbing; processing etc. will be considered for entitlement.

In case the goods are imported and in terms of para 9.30 of Exim Policy or Excise act if some process has taken place within bond, will they be considered for entitlement?

Export turnover of units operating under SEZ/EOU/EHTP/STPI Schemes or products manufactured by them and exported through DTA units;

Units working as manufacturer in such category will be at heavy loss.

At present in comparison to DTA unit they have benefit of IT only, however they are subjected to several other restrictions.

Deemed exports (even when payments are received in Free Foreign Exchange) and payment from EEFC account

Deemed exports were not allowed earlier also.

Service exports

Services being the thrust area, service status house will be deprived from this benefit.

The service providers although may get benefit in term of para 3.8 of Exim Policy, however in the similar line exporter of goods are entitled for DEPB / DFRC / Advance Licence.

The provision at para 3.7.2.1 of Exim Policy should be applicable to all the status holders.

Supplies made by one status holder to another status holder;

How to make documentation, Declaration & Certification, when goods are purchased from several sources?

Whether such supplies include raw material also which have been processed further before export.

Export performance made by one status holder on behalf of other status holder will not be eligible for entitlement under the scheme.

How to make documentation, Declaration & Certification, when goods are purchased from several sources?

This provision seems to be related to disclaimers by third party, which is allowed in Exim Policy & IT both.

Supplies made or export performance effected by a non-status holder (Merchant exporter/Manufacturer with any export performance in 2003-04) to a status holder if the applicant as well as the non status holder have less than 25 per cent incremental growth over their respective previous years direct export turnover.

How to make documentation, Declaration & Certification, when goods are purchased from several sources?

What if the status holder has purchased the goods from 10 non-status holder companies and out of them some have not achieved 25% growth?

What if the non-status holder has although achieved more then 25% growth but transferred to 5 status holders? In such circumstance whether his share will be considered for all 5 status holder or not.

The exports made by an applicant within a group and the group to which it belongs has individually less than 25 per cent incremental growth of export.

Group has not been defined.

What if there is no shifting of export in various Group Companies?

Does it mean that Group will be eligible for this entitlement as one identity only and individual company will not have the option?

Assuming there are 10 companies in a Group, out of which 5 are status holders. They are transfer the export performance and other exporter has also routed export through them. All these companies are located in different part of the country & have different activities, How the entitlement will be worked out

The incremental growth of exports by an exporter shall not, directly or indirectly, be transferred to any other exporters.”

How to make documentation, Declaration & Certification, when goods are purchased from several sources?

This provision seems to be related to disclaimers by third party, which is allowed in Exim Policy & IT both.

Government reserves the right in public interest, to specifiy the export products, which shall not be eligible for calculation of incremental growth/ entitlement.

Under this provision vide PN. 40 Dt. 28/01/2004 some item have been disallowed. Some category of export has been already disallowed under Ntf. No. 28 Dt. 28/01/2004.

Similarly, the government may also notify the list of goods, which shall not be allowed for imports under the scheme.

Under this provision vide PN. 40 Dt. 28/01/2004 Agricultural products which fall under Chapter 1 to 24 have been disallowed.

The utilization is still subjected to risk.

These guidelines will be applicable to the exports made on or after 1.04.2003.

The clarification were pending in DGFT since May 2003.

The delay in clarification has resulted into continuing of practice by misusing the scheme.

The litigation cannot be ruled out.

In the event of decision going against government, there will be huge loss of revenue.

The entitlement will be in terms of duty credit.