FROM
EXIMKEY.COM : MINI EXIM POLICY
Special
strategic package for Status Holders :
Under sub-para 3 of para 3.8 Service Providers were allowed duty free import in line similar to Status Holders. The provisions for implementation of this scheme have been now notified. Some new categories have been added.
Under duty exemption scheme provisions have been made to allow import of Fuel under DFRC scheme. Import of fuel under DFRC with A.U. conditions may not benefit to Merchant Exporters and Small Exporters due to less quantity and therefore less bargaining abilities and difficulties in import. After dismantling of APM for Petroleum Products and giving marketing rights to Petroleum Products to private companies also there was merit in allowing the import with transferability. This would not have resulted into any revenue loss also. It is perhaps linked with canalizing of Import Policy of Petroleum Products which allows such import through STE only. In the sensitive list of import under DFRC at para 4.31 bearings, cables, ICs, diodes, PCBs, capacitors, tungsten filament, carbon black, printing ink, pigment, paint, varnish, catalysts, resin, resionid, timber, wood, and veneer have been deleted.
For Annual Advance Licence against Intermediate Supplies by Invalidation, although the provisions at para 4.13 of Handbook of Procedures have been amended to include DFRC also, suitable amendments need to be made at para 4.1.1.(b) of Exim Policy to cover DFRC.
The provisions related to clubbing of Advance Licences at paras 4.20.3 and 4.20.4 have been made transparent to clarify that the facility of clubbing is available only for Advance Licences where there is a shortfall of export obligation and such licences, if it sought to be clubbed with another licence, that licence should be valid for import. The provisions that export affected 36 months after the issuance of the earlier licence shall not be considered for clubbing will provide the flexibility for clubbing of the licences issued within 36 months, subjected to other terms and conditions.
The amount of computation fees payable for extension in export obligation period is now related to duty saved amount on all unutilized import items in place of shortfall in export value. This will give exporters major relief. However, with existing provisions now at the cost of 7% interest exporter is able to import duty free material for 30 months and utilise the same for manufacture and sell to DTA also. The exporter can also export under DEPB and import under Advance Licence simultaneously. In between he can either fulfill the export obligation by local procurement or import with payment of duty. In this process he not only gets the interest free financial accommodation for 30 months at the cost of 7% but also benefits due to possible reduction in customs duty in future. In the present international competitive environment it is necessary to stop such type of unintended financial accommodation and gains by reducing the original export obligation period from 18 months to 6 months.
The time period for submission of application for DFRC and DEPB will now be counted from the date of realization in respect of all shipments or supplies in place of date of realization / export / supply reckon from the last date of realization / export / supply in respect of shipments / supplies for the DFRC / DEPB is being claimed. At present the exporters were able to claim such benefits for their previous shipments also in case such claims were accompanied with recent shipments and now this facility has been withdrawn.
Under DEPB scheme at present the net realization to the exporter is 87 to 88% only by considering premium of 92% and ST of 5.4%. The DEPB rates will be adjusted shortly on the basis of recent reduction in customs duty, considering DEPB rate of 13%, the net realization to exporter will be upto 11.5% only. This could have been stopped by making DEPB, a CENVATABLE instrument. This step will also help to make DEPB more WTO compatible.
EPCG Scheme :
The true high light of the Mini Exim Policy is simplification in EPCG scheme. In one stroke the requirement of nexus under EPCG scheme has been replaced with AU condition. The licences upto Rs.50.00 crores of duty saved amount will not require to be considered by any Committee. The scheme also covers the import of refractories, catalysts and consumables for plant and machinery. The fulfillment of export obligation is also simplified and the licence holder is now allowed to fulfill the export obligation by export of alternate products of manufacture or services rendered by him or by his group company. In respect of licences issued upto 31.3.2003 also not only above facility has been extended but also they are allowed to refix export obligation on the basis of duty saved amount in place of CIF value of import earlier. Clubbing provisions of EPCG scheme may now result into export obligation period of 12 years in place of 8 years for big projects. The fulfillment of export obligation for service providers is now allowed even if they receive service charges in rupees.
The above provisions may need to define group companies under Chapter 9 of Exim Policy. The exporter need to be careful while submitting the application for amendment in the value of export obligation and export description both as accordingly they will have impact on average export performance. There is further scope of clarifying the matter related to export of value added products by supporting manufacturer under 3rd party export provisions and allowing payment of additional duty in cash.
In respect of licences where the value added products have been endorsed with 50% extra obligation. The value of export obligation can be reduced by not only removal of requirement of 50% but also export obligation value to be refixed on the bases of duty saved amount. Under present provisions the fulfillment of export obligation is possible without installation of the capital goods and immediately after installation redemption can be obtained. The provisions related to extension of export obligation period for BIFR units will also be helpful in revival as acquiring company may now expect some relief from DGFT.
E. Deemed Export :
On Deemed Export front the policy lacks initiatives. After reduction of customs duty and removal of SAD indigenous industry has the risk of losing competitive edge unless credit of CST, local taxes, duties and levies on input material used in manufacture is not allowed. The procedure for claiming of deemed export benefits still remains complicated. Small exporters face lot of difficulties in rebate / refund / reimbursement of excise duty paid on input materials. The excise law requires maintaining separate account. After allowing supply of goods to any purpose in respect of which Ministry of Finance permits the import of such goods at zero duty, the provisions at para 8.2 (a), (b), (g), (h), (i) and (j) could have been deleted. At present under Project Import, the imports for Fertilizer Projects, Coal Mining Projects, Power Generating Project (excluding Captive Power Plant), Barge Mounted Plant are allowed at 5% customs duty. The duty on power transmission, sub-transmission or distribution project and all other projects having investment on plant and machinery of more than Rs.5.00 Crores is now reduced to 10%. There is a need to provide deemed export benefits to all such supplies for balancing tax and duty incidence on input materials for which credit / refund cannot be given.
DGFT need to take up pending matters with Ministry of Finance and other Administrative Ministry for notifying suitable provisions while announcing full Policy in Mid June 2004. The corresponding Customs Notification also needs to be issued immediately.
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