Staying Updated
Customs, FTP and WTO newsletter
June 2013: Volume 16 Issue 3
In the issue
•
Customs
Notifications and circulars
Foreign Trade Policy
Direct movement of goods from a
Gateway port to a CFS in another
customs station, and vice-versa, allowed
on compliance with prescribed
procedure
Notifications and circulars
•
Not mandatory to re-export of defective
parts originally exported from India and
thereafter imported exclusively for
undertaking testing purpose
•
Risk Management System in exports to
be introduced from 15 July 2013 in
customs locations which have EDI
system
•
One new pre-shipment inspection
agency notified for the purpose of
certification of imported goods
•
24x7 customs clearance from 14 new air
cargo complexes for specified categories
of imports and exports, starting from 01
June 2013
•
In the issue
Customs
Foreign trade policy (FTP)
Refund claim of SAD of Customs filed
after one year from date of payment of
tax liable to be rejected
Contacts
Case law
Case law
•
Exemption from payment of SAD
available on stock transfer of goods
from SEZ to DTA
•
Custom authorities have no jurisdiction
to decide whether the imported goods
which are covered under LOP are
required for authorized operations of
SEZ unit or not
Valuation
•
Royalty paid not includible in the value
of imported goods unless it has nexus
with the imported goods
Others
•
Refunds arising as a consequence of
finalization of provisional assessment
made before July 2006 allowable
without the test of unjust enrichment
Free Trade Agreement (FTA)
•
Concessional rate of basic customs duty
will be available on import of specified
goods from Republic of Haiti
Customs
Notifications and circulars
In the issue
Customs
Foreign trade policy (FTP)
Contacts
• The Central Government has increased
the Countervailing duty payable in lieu of
excise duty (CVD) from 4% to 6% on
specified gold ores and concentrates and
specified gold-ore bars. Furthermore, the
Basic Customs Duty (BCD) has been
increased from 6% to 8% on specified
gold bars, specified gold coins and
platinum.
(Notification No. 31/2013 dated 5 June,
2013)
• The Central Government has allowed
direct movement of goods from a
Gateway port to a Container Freight
Station (CFS) of another Customs Station
,and vice-versa, under a prescribed
procedure. However, this facility shall be
extended only to a CFS that is at a
considerable distance from the Inland
Container Depot (ICD).
(Circular No. 22/2013 dated 24 May,
2013)
• The Central Government recently
decided to introduce Risk Management
System (RMS) in exports, from 15 July
2013 onwards, in customs locations
where an Electronic Data Interchange
(EDI) system is operational. Initially,
export RMS will be introduced at ICD
Mulund and ICD Patparganj. Some of the
important features of export RMS are:
2
1. Allows low risk consignments to be
cleared based on self assessment of
the declarations by exporters.
2. Contributes to the reduction in
dwelling time, thereby reducing the
transaction cost and making the
business more competitive.
3. The present practice of routine
verification of self-assessment and
examination of shipping bills will be
discontinued.
4. After issuing of the Let Export Order,
there will be a post-clearance audit
of the selective shipping bills for
scrutiny of declarations with
reference to export incentives, duty
drawbacks, etc.
(Circular No. 23/2013 dated 24 June,
2013)
• The Central Government has extended
24x7 customs clearance from identified
air cargo complexes, effective 01 June
2013, for the following categories of
imports and exports:
1. Facilitated Bills of Entry where no
examination and assessment is
needed; and
2. Factory-loaded export containers
and export consignments covered by
Free Shipping Bills
June 2013 - Volume 16 Issue 3
The air-cargo complexes are:
In the issue
Customs
Foreign trade policy (FTP)
Contacts
Sl. No.
Air Cargo Complex
Sl. No.
1
Ahmadabad
8
Goa
2
Amritsar
9
Hyderabad
3
Bangalore
10
Vishakhapatnam
4
Cochin
11
Indore
5
Calicut
12
Jaipur
6
Thiruanantapuram
13
Nashik
7
Coimbatore
14
Vishakhapatnam
Furthermore, the 24x7 Customs
clearance facility from the Air Cargo
Complexes at Chennai, Delhi, Mumbai
and Bangalore will cover export of all
goods from 1 June, 2013.
(Instruction No. 2/2013 dated 31 May,
2013)
Case law
Valuation
• In Auto Stores v CC (2013-TIOL-791CESTAT-MUM), the Tribunal held that
the assessable value of parts that do not
have a brand name and are duplicates,
could not be re-determined on the Retail
Sale Price (RSP) at which parts of wellknown brands are sold, as the goods were
not comparable.
3
Air Cargo Complex
• The Bombay High Court, in Forbo
Siegling Movement Systems India Pvt
Ltd v Union of India & Ors (2013-TIOL458-HC-MUM), held that the transaction
value could not be rejected by the Special
Valuation Branch of Customs without
apprising the importer about the grounds
of doubting the Transaction Value and
granting reasonable opportunity of
hearing, as to do so would be to violate
the principles of natural justice.
• In CC v Max Atotech Ltd (2013-TIOL893-CESTAT-MUM), the Tribunal held
that where royalty was paid on the net
sale price for manufacturing operations
in India, excluding the landed value of
imported goods, such a royalty was not
includible in the assessable value of
imported goods as it was not a condition
of sale.
June 2013 - Volume 16 Issue 3
In the issue
Customs
Foreign trade policy (FTP)
Contacts
• The Tribunal, in Johnson & Johnson
Ltd v CC (2013 (292) ELT 111), held that
where technical know-how was for
value-addition in India and not in
respect of raw materials imported,
payment for it was not includible in the
assessable value of imported goods as it
was not a condition of sale.
• In CC v Vee Kay Polycoats Ltd (2013
(292) ELT 254), the Tribunal held that
the transaction value could not be
rejected by the custom authorities in the
absence of any proof of payment to the
overseas supplier over and above the
invoice value.
Others
• In Napino Auto & Electronics v CC
(2013-TIOL-861-CESTAT-DEL), the
Tribunal held that refunds arising as a
consequence of finalization of
provisional assessment made before
July, 2006 were allowable without the
test of unjust enrichment, as the
principle was not applicable prior to
then.
• The Madras High Court, in Vijay Anand
v CESTAT, Chennai (2013-TIOL-442HC-MAD), held that once an appeal was
filed against an original order, it was
mandatory to pay the amount ordered,
as a condition of precedent for taking up
the appeal.
• In CC v Himja Impex (2013-TIOL-919CESTAT-KOL), the Tribunal held that
the limitation period in the case of
4
review applications before the
Commissioner of Customs (Appeals) by
the Customs Department, was to be
reckoned from the date of the order and
not from the date of assessment of the
Bill of Entry.
• The Tribunal, in Samalkot Power Ltd v
CC (2013 (197) ECR 0106), held that
where another company was the
owner/developer of a proposed power
plant, it could not be considered as
substantial expansion of an existing
power plant owned by a separate
company for the purpose of securing
Project Import benefit on the import of
products by the owner of the proposed
plant.
• In Global International v CC (2013
(292) ELT 102), the Tribunal held that
refund claims of Special Additional
Duty (SAD) of Customs filed over one
year from the date of payment of tax
were liable to be rejected as they did not
fulfil the conditions prescribed in the
relevant notification.
• The Tribunal, in M B Enterprises v CC
(2013 (292) ELT 451), held that the
refund of SAD could not be denied
where the duty element was not shown
separately on the invoice and the
importer had submitted a CA certificate
stating that duty had not been passed on
to the customers and fulfilled other
specified conditions, in the absence of
any evidence to the contrary.
June 2013 - Volume 16 Issue 3
Foreign Trade Policy
Notifications and circulars
In the issue
Customs
Foreign trade policy (FTP)
Contacts
• The Central Government has asserted
that it is not mandatory to re-export
defective parts/spares originally
exported from India and thereafter reimported exclusively for undertaking
root cause analysis, testing and
evaluation in India.
(Notification No. 24/ (RE 2013) /200914 dated 19 June, 2013)
• The Central Government has asserted
that goods imported against payment of
freely convertible currency may be
exported to notified countries against
the realization of export proceeds in
Indian currency, subject to the
achievement of a minimum value
addition of 15%. Currently, exporters
may take advantage of this scheme
when dealing with Iran, which has been
notified by the Director General of
Foreign Trade.
(Notification No. 16/ (RE 2013) /200914 dated 6 June, 2013 and Notification
No. 17/ (RE 2013) /2009-14 dated 10
June, 2013)
• The Central Government has clarified
certain points in relation to the deemed
export benefits available under Chapter
8 of the FTP, such as:
Mega Power Projects;
− Deemed export benefits available
under para 8.2(f) of FTP are available
only if supplies are under
International Competitive Bidding
(ICB), except for Mega Power
projects. For Mega Power projects
the supplies could be under ICB or
not. If supplies are under ICB, then
such supplies are exempted from
payment of Terminal Excise Duty
(TED), and if not then such supplies
are eligible for refund.
(Circular No. 1 (RE-2013)/2009-2014
dated 29 May, 2013)
• The Central Government has notified a
new Pre-shipment Inspection Agency,
SNG Inspection Services, with its head
office located at Uttar Pradesh, India
and branch offices in Malaysia and
Vietnam for the purpose of certification
in relation to imported goods under the
FTP.
(Public Notice No. 15 (RE-2013)/20092014 dated 3 June, 2013)
• The DGFT has announced the
constitution of a second Task Force on
transaction costs which aims to reduce
the transaction costs associated with
exports. The purposes of this task force
are:
− Deemed export benefits are not
available for supplies made to Non5
June 2013 - Volume 16 Issue 3
− To identify reasons for high
transaction costs in exports.
In the issue
Customs
Foreign trade policy (FTP)
Contacts
− To identify areas causing
administrative impediments.
− To compare procedural complexities
in exports between India and its
major competitors.
− To suggest steps to remove
procedural complexities by adopting
global best practices.
− To suggest steps to reduce paperless
processing by adopting digital
platforms.
The task force has been directed to
submit its report to DGFT within six
months. Suggestions from stakeholders,
Government and Trade & Industry have
also been invited by the task force. The
resultant decision of the task force may
be formulated in the next annual
supplement to the FTP, which will be
issued next year.
(Trade Notice No. 02/2012 dated 20
May, 2013)
Case law
• The Authority of Advance Ruling, in GE
India Industrial Pvt Ltd v CC (2013TIOL-01-ARA-CUS), held that
exemption from payment of SAD was
available to goods stock transferred
from Special Economic Zone (SEZ) to
Domestic Tariff Area (DTA) following
Notification No. 45/2005 ,dated 16
May, 2005, as stock transfer of goods
6
was not construed as sale and was
therefore exempt from levy of Value
Added Tax (VAT)/Central Sales Tax
(CST).
• The Tribunal, in the case of Adinath
Trade Link v CC (2013- TIOL-874CESTAT-AHM), held that refund of
SAD paid on supply of goods from a SEZ
to DTA was allowable on the ground
that such supplies were construed as
imports in terms of section 30 of the
SEZ Act 2005 ,in compliance with the
condition of ‘import’ as defined under
the Customs Act, 1962.
• The Madras High Court, in Shrishti
Digital Solution v Add CC (2013- TIOL495-HC-MAD-CUS), held that secondhand digital multifunction print and
copying machines were freely
importable without obtaining any
import license from DGFT if the
importer was able to satisfy that the
machines, though restricted under the
previous FTP, were imported in
compliance with condition prescribed in
the Hand Book of Procedures.
• In CC v Gopi Chand Krishan Kumar
Bhatia (2013-TIOL-920-CESTAT-DEL),
the Tribunal held that customs duty
could not be demanded & a penalty
could not be invoked against the
transferee importer availing benefit
under the Duty Entitlement Pass Book
(DEPB)
June 2013 - Volume 16 Issue 3
In the issue
Customs
Foreign trade policy (FTP)
Contacts
scheme where the DEPB script was
obtained by the original license holder
by fraud or misrepresentation and the
importer had no knowledge about the
fraud committed by the original license
holder.
• The Tribunal, in Hindustan Platinum
Ltd v CC (2013 (292) ELT 444), held
that delay in producing Export
Obligation Discharge Certificate before
the custom authorities was merely a
procedural lapse and benefits provided
under an exemption notification issued
in relation to importation of goods
under an advance license could not be
denied on this ground.
Commissioner (DC) of SEZ were
required for authorized operations of
the SEZ unit or not, as such jurisdiction
was vested with the DC.
Foreign Trade Policy
Notifications and circulars
• The Central Government has added the
Republic of Haiti to the schedule of
Least Developed Countries, and
accordingly the concessional rate of
BCD will be available on imports of
specified goods from there.
(Customs Notification No. 33/2013
dated 19 June, 2013)
• The Karnataka High Court, in Amritsar
Swadeshi Woolen Mills v Add DGFT
(2013 (292) ELT 183), held that benefits
available under DEPB scheme could not
be denied to an exporter in respect of
the goods exported prior to the issuance
of general instructions by the DGFT
authorities for excluding certain
products exported by an exporter under
this scheme, as such instructions were
applicable prospectively.
• In Jindal Fibres v CC (2013 (292) ELT
52), the Tribunal held that the customs
authorities had no jurisdiction to decide
whether the imported goods covered
under the Letter of Approval (LOP)
granted by the Development
7
June 2013 - Volume 16 Issue 3
Contacts
In the issue
Customs
Foreign trade policy (FTP)
Contacts
Delhi
Vivek Mishra/R. Muralidharan
Ph: +91(124) 3306000
Hyderabad
Ananthanarayanan S
Ph: +91(40) 6624 6394
Mumbai
Dharmesh Panchal/S Satish
Ph: +91 (22) 6689 1000
Chennai
Harisudhan M
Ph: +91(44) 4228 5000
Kolkata
Rajarshi Dasgupta/Gopal Agarwal
Ph: +91(33) 2357 9100/ 4404 6000
Pune
Nitin Vijaivergia
Ph: +91(20) 4100 4444
Bangalore
Pramod Banthia
Ph: +91(80) 4079 6000
Ahmedabad
Dharmesh Panchal/Niren Shethia
Ph: +91 (22) 6689 1000
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