Workshop on
Foreign Trade Policy
2009-2014
[Annual Supplement 2010-11]
Faculty:
Sudhakar Kasture
Director, Exim Institute
Agenda
X Policy in Retrospect
X Issues listed by Task Force with respect to FTP
X Para by Para Study of Foreign Trade Policy & Procedures
X Updates of Special Economic Zones
2
1
Policy in
Retrospect
Policy in Retrospect
X This being the annual updation of Foreign Trade Policy 2009 – 14
(which was announced on 27th August, 2009) one cannot expect too
many changes.
X The recession is said to be over and therefore additional fiscal
support by way of incentives would be for those sectors only which
are still lacking behind.
X Exports have increased compared to 2008 – 2009 and 2009 – 2010.
But, the growth is moderate compared to earlier years, 2002 – 2007.
X The excise duties have been increased from 8% to 10% in the last
Budget and the revenue receipts for the year 2010 – 2011 as
presented in the Union Budget 2011, read as under
4
2
Revenue Receipt
(Rs. in Crore)
2009-2010
Budget
Estimates
2009-2010
Revised
Estimates
2010-2011
Budget
Estimates
REVENUE RECEIPTS
1. Tax Revenue
Gross Tax Revenue
641079
633095
746651
Corporation tax
256725
255076
301331
Income tax
112850
131421
128066
Other taxes and Duties
425
511
603
98000
84477
115000
106477
102000
132000
65000
58000
68000
Taxes of the Union Territories
1602
1610
1651
Less - NCCD transferred to the
National Calamity Contingency Fund
/ National Disaster response fund
2500
3160
3560
Less States' Share
164361
164832
208997
Net Tax Revenue
474218
465103
534094
Customs
Union Excise Duties
Service Tax
5
Revenue Foregone in financial years 2008-09 and
2009-10
(Rs. in crore)
Revenue
Foregone
in 2008-09
Revenue
Revenue
Revenue
Foregone Foregone Foregone
as a per
in 2009as a per
cent of
10
cent of
Aggregate
Aggregate
Tax
Tax
Collection
Collection
in 2008-09
in 2009-10
Corporate Income-tax
66901
11.08%
79554
12.60%
Personal Income-tax
37570
6.22%
40929
6.48%
Excise Duty
128293
21.25%
170765
27.04%
Customs duty
225752
37.39%
249021
39.43%
Total
458516
75.95%
540269
85.56%
44417
7.36%
37970
6.01%
414099
68.59%
502299
79.54%
Less Export credit related
Grand Total
6
3
X Notes:
‰ Aggregate Tax Collection refers to the aggregate of net direct
and indirect tax collected by the Central Government.
‰ The figure of Aggregate Tax collection for 2008-09 is at actuals
and that for 2009–10 is based on revised estimates.
X To conclude, the amount of revenue foregone continues to
increase year after year. As a percentage of aggregate tax
collection, revenue foregone remains high and shows an increasing
trend as far as Corporate Income-tax is considered for the financial
year 2008-09. In case of indirect taxes the trend shows a significant
increase for the financial year 2009-10 due to reduction in customs
and excise duties. Therefore, to reverse this trend expansion in the
tax base is called for.
7
Revenue Foregone on Account of Export Promotion
Concessions
(Rs. in crore)
Sr.
Name of the Scheme
No.
2008-09
(Provisional)
2009-10
(Estimated)
1
Advance License Scheme
12389
10682
2
EOU/EHTP/STP
13401
8015
3
EPCG
7833
5574
4
DEPB Scheme
7092
8806
5
SEZ
2324
3204
6
DFRC
7
Duty Free Import Authorization Scheme
8
Duty Free Entitlement Credit Certificate
9
Target Plus Scheme
10
Vishesh Krishi and Gram Udyog Yojana
(VKGUY)
2059
3886
111
43
1268
1646
418
206
1220
265
8
4
Revenue Foregone on Account of Export Promotion
Concessions
(Rs. in crore)
Sr.
No.
Name of the Scheme
2008-09
(Provisional)
2009-10
(Estimated)
11
Served from India Scheme
531
526
12
Focus Market Scheme
408
769
13
Total
49053
43622
14
Less Revenue Foregone on account of
incentive schemes mentioned at sl. nos. 8
to 12
4636
5652
15
Revenue Foregone on account of input
tax neutralization or exemption schemes
to be reduced from Gross Revenue
Foregone on account of Customs Duty
44417
37970
9
N.B.:
These aforesaid estimates of revenue foregone do not include revenue
foregone on account of adhoc exemption orders issued under section 25
(2)* of Customs Act, 1962, that relates to circumstances of an
exceptional nature.
*Section 25 (2) reads as under:
“If the Central Government is satisfied that it is necessary in the public
interest so to do, it may, by special order in each case, exempt from
the payment of duty, under circumstances of an exceptional nature to
be stated in such order, any goods on which duty is leviable.”
10
5
Revenue & Exports
S.
No.
Name of the Scheme
Revenue forgone
amount for the
year 2009-10
(Estimated)
[In Rs. Crore]
% of total
exports –
Rs.
845506/crore
% of indirect tax
collection
[Cus.+ C.Ex.+
Service Tax=
Rs.244477/crore]
1
Advance License
Scheme
10682
1.263
4.369
2
EOU/EHTP/STP
8015
0.948
3.278
3
EPCG
5574
0.659
2.280
4
DEPB Scheme
8806
1.042
3.602
5
SEZ
3204
0.379
1.311
6
DFRC
43
0.005
0.018
7
DFIA Scheme
1646
0.195
0.673
8
DFCE Certificate
206
0.024
0.084
9
Target Plus Scheme
265
0.031
0.108
10
VKGUY
3886
0.460
1.590
11
11
Served from India Scheme
526
0.062
0.215
12
Focus Market Scheme
769
0.091
0.315
13
Total
43622
5.159
17.843
14
Less Revenue Foregone on account
of incentive schemes mentioned at
sl. nos. 8 to 12
5652
0.668
2.312
15
Revenue Foregone on account of
input tax neutralization or
exemption schemes to be reduced
from Gross Revenue Foregone on
account of Customs Duty
37970
4.491
15.531
To conclude:
The provisions made by finance ministry for release of funds towards export
promotion would ultimately decide the future of all promotional schemes.
Hence, one should not expect too much on actual incentives.
12
6
Understanding
Policy
Export Promotion Schemes for
import/procurement of Inputs
Duty
Exemption
Duty
Neutralisation /
Remission
Rewards/
Incentives
by way of Duty
Credit
14
7
Duty Exemption
Adv. Autho.
Transferable
DFIA
EOU
Import
Import
All Import duties
including Antidumping duty and
safeguard duty are
exempted.
Domestic
Procurement
Excise Duty is
exempted and
domestic
manufacturer
gets Deemed
Exports benefits
Basic Customs
Duty exempted
[CVD is payable,
however,
importer can get
Cenvat Credit]
15
Duty Neutralisation / Remission
DEPB
Neutralisation of BCD
on inputs as per
SION. It can be
debited for payment
of any Customs Duty
on permissible
imports
Drawback
If Cenvat
Credit
is availed
If Cenvat
Credit
is not availed
Drawback is
limited to
customs duty
only
Drawback is
available for
Customs +
Excise duties
paid
Exemption and Neutralisation / Remission
are mutually exclusive
16
8
Rewards/Incentive Schemes
administered by DGFT
Served
from India
Scheme
[SFIS]
Vishesh
Krishi and
Gram Udyog
Yojana
[VKGUY]
Focus
Market
Scheme
[FMS]
Focus Product
Scheme [FPS]/
Market Linked
Focus Products
Scrips [MLFPS]
Duty Credit
Scrip of 10%
Duty Credit
Scrip of 5%
Duty Credit
Scrip of 3%
Duty Credit
Scrip of 2%
Duty credit scrips are Transferable, they can be
sold and premium can be earned [except SFIS]
17
Schemes specifically for
import/procurement of Capital Goods
EPCG
Scheme
‘Zero Duty
EPCG
Scheme’
for
specified
sectors
‘3% EPCG
Scheme’
for all
sectors
Status Holder
Incentive
Scrip
Works as
“zero” duty.
Applicable
only for status
holders of
specified
sectors
EOU
Scheme
“Zero” duty
for EOU/
EHTP/
STP/BTP units
18
9
Issues listed by
Task Force with
respect to FTP
Sr. Issues listed by Task Force
No.
Whether
implemented (9)
or pending (±)
1.
Application fee for export promotion-related licenses
(e.g., DEPB, Advance Authorization, EPCG) should not
be charged on ad-valorem basis
±
2.
EDI and other IT-related issues with DGFT should be
resolved
Online application facility should be provided for status
holder certification
±
Offline software facility should be provided for filing
applications on DGFT server
9
Message exchange with Customs should be implemented
for Chapter 3 FTP schemes
±
Message exchange with Customs should be implemented
for other variants of Advance License i.e. Annual
Advance License and DFIA
9
Status of redemption of licenses should be available on
DGFT server
±
EDI system should be developed for issuance of ARO /
Invalidation under Advance/EPCG Licenses
±
20
10
3.
Requirement of submission of Chartered Engineer
Certificate with Para 4.7 applications may be removed
9
4.
Adhoc norms should apply to all cases for the same export
product upto one year in retrospect
9
5.
Requirement of submission of Proforma Invoice for issue of
import license for restricted items may be done away with
±
6.
Requirement of submission of export order for issue of
export license may be done away with
±
7.
Requirement of separate Legal Undertakings for each
license and each organization may be should be done away
with
±
8.
Priority treatment should be given to Status Holders while
processing applications in DGFT and Customs
±
9.
Requirement of submission of hard copies of DEPB EDI
shipping bills should be done away with
±
10.
Import of spares should be permitted without restriction,
with a corresponding export obligation
±
21
11.
Time for submission of installation certificate by EPCG holders
should be relaxed in case of delays by Central Excise
±
12.
MDA assistance should be company-specific and not individualspecific
±
13.
Time taken for redemption of Advance Authorization / EPCG licenses
should be reduced through better monitoring and self-certification
±
14.
Duplicate verification of documents by Customs after redemption of
licenses to be done away with
±
15.
The monthly exchange rate notified by Customs may be allowed to
be used for converting shipping bills into FFE, in the EPCG scheme
±
16.
Passport copy of the applicant should be accepted for issuance of IEC
±
17.
Requirement of submission of Chartered Engineer Certificate for
issuance of EPCG licenses may be removed
±
18.
An annual EPCG license scheme should be devised, specially for the
service sector
9
19.
The norms for calculating average export obligation value under
EPCG scheme need to be revised
±
20.
SION for fashion related goods need to be revised at regular intervals
and self-certification should be allowed for para 4.7 cases
±
22
11
Suggestions by Sudhakar Kasture as a
member of Task Force
21. DEPB application should be modified to include
FMS/FPS percentage also. Fees for DEPB to be
abolished.
±
22. Para 3.12.8 of FTP: Procurement from Domestic
±
Sources - Local procurement is allowed under the
Served from India Scheme [SFIS]. It was recommended
to extend such facility for other Duty Credit Scrips
viz. FMS, FPS and VKGUY as well.
23. Simplification of Invalidation of Authorisations –
Invalidation process should be made simpler. Instead
of issuing ARO etc., a simple endorsement should be
done on the body of authorization.
±
24. DEPB Rate Schedule to be aligned to ITC HS
Classification for Export & Import Items
±
23
25.
Clubbing of Advance Authorisation:
As per Para 4.1.3 of FTP there are no separate categories for
Advance Authorisation any more.
However, operationally, RAs treat Advance Authorisations issued
for intermediate supply and Deemed Exports separately and this
leads to unnecessary trouble and confusion.
Even in guidelines for applicants given in the application format
for clubbing, ANF 4D, prescribes that clubbing of Advance
Authorisation and Annual Advance Authorisation is not
permitted. This seems to be anomaly, as the basic provisions of
Clubbing [Para 4.20 of HBPv1] do not contain such provision.
It was therefore recommended that A clause should be included in clubbing provisions as well as
Export obligation provisions that Export or Deemed Export will
qualify for discharge of export obligation against any
authorisation howsoever, issued subject to time limit of 36
months for exports, and 30 months for imports.
Also the condition mentioned in ANF 4D for clubbing of Advance
Authorisation and Annual Advance Authorisation should be
deleted.
9
24
12
Para by Para Study
of Foreign Trade
Policy &
Procedures
Chapter 1B-FTP
Special Focus
Initiatives
13
PARA 1B.1 - Special Focus
(ii) Technological Upgradation:
X
At the end of sub-point (a) following sentence is added, which is as
under:
“This scheme is being expanded to cover more export product groups
including marine products, sports goods, toys, rubber & rubber products,
additional chemicals / allied products and additional engineering
products. The scheme is also being extended upto 31.3.2012.”
Remarks:
Addition of more products.
X
New point at sr.no.(c) is added, which is as under;
“(c) The facility of EPCG Scheme for Annual Requirement is being
introduced to reduce documentation and transaction time.”
Remarks:
Good provision.
27
(iii) Support to status holders
X In the para, Bold sentence is added.
“The Government recognized ‘Status Holders’ contribute approx.
60% of India’s goods exports. To incentivise and encourage the
status holders, as well as to encourage Technological upgradation of
export production, additional duty credit scrip @ 1% of the FOB
value of past export shall be granted for specified product groups
including leather, specific sub-sectors in engineering, textiles,
plastics, handicrafts and jute. This duty credit scrip can be used for
import of capital goods by these status holders. The imported
capital goods shall be subject to actual user condition. The status
holder incentive scrip scheme is being expanded to cover more
export product groups including marine products, sports goods,
toys, specified chemicals and allied products and additional
engineering products. The scheme is also being extended upto
31.3.2012.”
Remarks:
Welcome provision.
28
14
(iv) Agriculture and Village Industry
Sub-point (f) of Agriculture and Village Industry is
substituted as under:
Substituted point –
“(f) Additional flexibility for agri-infra scrip by way of
limited transferability to other status holders and the
units in Food Parks allowed.”
Old point –
“(f) Certain specified flowers, fruits & vegetables are
entitled to a special duty credit scrip, in addition to the
normal benefit under VKGUY.”
Remarks:
Transferability expanded to Food Park units.
29
(v) Handlooms
X Following new sub point is added
“(a) 2% bonus benefits under focus product scheme.”
X Bold sentence is added
“(c) Duty free import entitlement of specified
trimmings and embellishments is 5% of FOB value of
exports during previous financial year. Handloom
made-ups have also been included for the
entitlement.”
(vi) Handicrafts
New sub point (h) is added, which is as under:
“(h) In addition to above, 2% bonus benefits under
Focus Product Scheme for Handicraft exports.”
30
15
(vii) Gems & Jewellery
Bold words are added in sub point (b) under Sector (vii)
Gems & Jewellery, which reads as under:
“(b) Duty Free Import Entitlement (based on FOB value
of exports during previous financial year) of
Consumables, Tools and additional items allowed for:
1. Jewellery made out of:
(a) Precious metals (other than Gold & Platinum) – 2%
(b) Gold and Platinum – 1%
(c ) Rhodium finished Silver – 3%
2 . Cut and Polished Diamonds – 1%”
31
(viii) Leather and Footwear
Following two new sub points are added
“(a) Additional 2% bonus benefits under Focus Product Scheme.
(b) Finished Leather exports to be incentivized under Focus
Product Scheme.”
Underlined words are replaced by bold words in sub para (i)
Re-export of unsold hides, skins and semi finished leather shall be
allowed from Public Bonded warehouse (OLD- at 50% of the
applicable export duty) without payment of export duty.
32
16
(ix) Marine Products
X
Sub point (e) is amended as under:
New Para –
“(e) Marine products are incentivized at special higher rate under
VKGUY scheme.”
Old Para –
“(e) Marine products are considered for VKGUY Scheme.”
X
Following new sub point (f) is added:
“(f) Marine sector included for benefits under zero duty EPCG
scheme.”
(x) Electronics and IT Hardware Manufacturing Industries
Two new sub points are added
“(a) Export of electronic goods to be incentivized under Focus
Product Scheme.
(d) Electronics Sector included for benefits under SHIS scheme.”
33
(xi) Sports Goods and Toys
Two new sub points are added
“(e) In addition to above, 2% bonus benefits under
Focus Product Scheme for Sports Goods & Toys.
(f) Sports goods & Toys included for benefits under zero
duty EPCG and SHIS schemes.”
General Remarks for point nos. (v), (vi), (vii), (viii),
(ix), (x) and (xi):
Additional benefits are granted for various sectors.
34
17
Chapter 1-HBP
Introduction
PARA 1.1 – Notification
Underlined words are replaced by bold words
In pursuance of the provisions of paragraph 2.4 of FTP,
the Director General of Foreign Trade (DGFT) hereby
notifies the compilations known as HBPv1, HBPv2 and
Schedule of DEPB rates. These compilations, as amended
from time to time, shall remain in force until 31st
March, 2014, except DEPB scheme, which shall continue
to be operative till 31st, December 2010 or till a
replacement scheme is announced, whichever is earlier
30th June, 2011.
Remarks:
DEPB scheme extended upto 30th June, 2011.
36
18
Chapter 2-HBP
General Provisions
Regarding Imports
and Exports
PARA 2.49 – Application for Grant of Export Licence/ Certificate /
Permission –
In the first sentence of para mentioned after Point NO. IV of
‘procedure/guidelines for filing/evaluation of applications for
entering into an arrangement or understanding for site visits, on-site
verification and access to records /documentation’ - words “for
export of any other item which is not restricted or prohibited for
export” are substituted by words “for export of items not covered
under Drugs &Cosmetics Act, 1940, which have usage in
hospitals, nursing homes and clinics, for medical and surgical
purposes and are not prohibited for export.”.
Substituted words “for export of items not covered under Drugs &
Cosmetics Act, 1940, which have usage in hospitals, nursing homes
and clinics, for medical and surgical purposes and are not prohibited
for export” were appearing in the FTP earlier, which were replaced
by PN No. 64 Dtd. 18.05.2010 and now are reintroduced.
Remarks:
Reintroduction of earlier provision.
38
19
PARA 2.70.6 - New EDI Initiatives – Deleted
Deleted para reads as under:
To further improve quality of services some new EDI
initiatives are being taken by DGFT:
Electronic Message Exchange between Customs and
DGFT in respect of incentive schemes under Chapter 3
will become operational by 31st December, 2009.
Remarks:
In practice, Customs demand certificate of
genuineness from DGFT, which defeats the purpose of
EDI initiatives otherwise also.
39
Chapter 3-FTP
Promotional
Measures
20
PARA 3.12.6- Imports Allowed
Second sub-para of para 3.12.6 amended, which reads as under:
“Utilization of Duty Credit scrip earned shall be permitted for
payment of duty in case of import of only those vehicles, which are
in the nature of professional equipment to the service provider.”
Old para
“Utilization of Duty Credit scrip earned shall not be permitted for
payment of duty in case of import of vehicles, even if such vehicles
are freely importable under ITC (HS).”
Remarks:
These would be vehicles similar to golf carts, battery operated
vehicles used to carry equipments in studios etc. (mainly off the
road vehicles)
41
PARA 3.13.4 - Agri. Infrastructure
Incentive Scrip
i) In the first para, Para no. ‘3.7.2 of HBPv1’ is replaced by Para no.
‘3.4 of HBPv1’.
Remarks:
Para 3.4 of HBPv1 deals with ‘refusal/suspension/ cancellation
of status certificate’ and Para 3.7.2 of HBPv1 is relating to Agri.
Infrastructure Incentive Scrip.
This is an error, will be corrected subsequently.
ii) In last sub-para of para 3.13.4 following bold words are added:
“However, for import of Cold Chain Equipment, this Incentive Scrip
shall be freely transferable amongst Status Holders as well as to
Units (the term ‘Units’ shall not include Developers) in the Food
Parks.”
Remarks:
Limited additional transferability provided.
42
21
PARA 3.15.2- Entitlement
[Focus Product Scheme (FPS)]
Following sub-para is added at the end of para 3.15.2
New sub-para:
“Further, Focus Product(s) / sector(s) that are notified
under Table 7 of Appendix 37D shall be granted
additional Duty Credit Scrip equivalent to 2% of FOB
value of exports (in free foreign exchange) over and
above the existing rate for that product / sector from
the admissible date of export / period specified in the
public notice issued to notify the product / sector.”
Remarks:
BONUS
43
PARA 3.16.1- (Status Holders Incentive Scrip)
X Bold words in first para are added:
“With an objective to promote investment in
upgradation of technology of some specified sectors as
listed in Para 3.16.4 below, Status Holders shall be
entitled to incentive scrip @1% of FOB value of exports
made during 2009-10, 2010-11 and during 2011-12, of
these specified sectors, in the form of duty credit.”
X New sub-para added:
“The Status Holders of the additional sectors listed in
the Para 3.10.8 of HBPv1 2009-14 (RE-2010) shall be
eligible for this Status Holders Incentive Scrip on exports
made during 2010-11 and 2011-12.”
44
22
PARA 3.16.1- (Status Holders Incentive Scrip)
Remarks:
‰ Status holder incentive scrip is further extended for
one more year for 2011 – 2012 exports.
‰ The benefits of the scheme have been extended to
additional sectors such as “Chemical & Allied products,
paper, paperboard and articles thereof, ceramic
products, re-fractories, glass & glassware, rubber &
articles thereof, plywood and allied products,
electronics products, sports goods and toys and
additional engineering products”. Such additional
sectors shall be entitled for the benefit only on exports
made during 2010-11 and 2011-12.
45
PARA 3.16.4
Following sub-para added at the end of para 3.16.4:
“The Status Holders of the additional sectors listed in
the Para 3.10.8 of HBPv1 2009-14 (RE-2010) shall be
eligible for this Status Holders Incentive Scrip on exports
made during 2010-11 and 2011-12.”
Remarks:
The additional sectors shall now enjoy the benefit of
Status Holders Incentive Scrip.
46
23
Chapter 3-HBP
Promotional
Measures
PARA 3.7.2 – (VKGUY)
Third para of Para 3.7.2 of HBPv1 is amended, which reads as
under:
“Applications received after the last date shall be summarily
rejected, as Para 9.2 [OLD- Para 9.3] and Para 9.3 [OLD-Para 9.4]
shall not be applicable.”
Remarks:
Para 9.3 of HBPv1 is related to imposition of late cut, Para 9.4
of HBPv1 is related to supplementary claims.
Here also there is an error, as Para 9.2 of HBPv1 is about
Denomination of Import Authorisation / Licence / Certificate /
Permissions.
48
24
PARA 3.10 - Procedure for Status
Holders Incentive Scrip
Para 3.10.3 amended to read as under:
Amended Para:
“The last date of filing the application shall be 31st March
2011/2012/2013 for SHIS scheme for exports made during 200910/2010-11/2011-12 respectively.
Further, in view of fourth sub-para of Para 5.1A of HBPv1:
a) Para 9.3 of HBPv1 shall not be applicable for SHIS Scheme in
cases where the SHIS application (say for exports made during
2009-10) has been filed after the prescribed date (i.e. after
31st March 2011) and Zero Duty EPCG Authorisation has been
issued to the applicant by any RA during the year 2010-11 (from
1.4.2010 till 31.3.2011).
49
b) Similarly for SHIS Applications for exports made during 2010-11
& 2011-12 filed late (i.e. after the prescribed dates of 31st
March 2012/2013 respectively), Para 9.3 shall not be applicable
in cases where Zero Duty EPCG Authorisation has been issued to
the applicant by any RA during the year 2011-12 (from 1.4.2011
till 31.3.2012) or 2012-13 (from 1.4.2012 till 31.3.2013) as the
case may be.
c) In case SHIS Application is filed within the prescribed date
(for exports made during 2009-10/2010-11/2011-12 as the
case may be, including any supplementary claim under Para
9.4 of HBPv1) and where Zero Duty EPCG Authorisation has
been issued to the applicant by any RA during the relevant
year (i.e. during 2010-11/2011-12/2012-13 respectively, as
the case may be), SHIS application shall be summarily
rejected in view of fourth sub-para of Para 5.1A of HBPv1.”
Old para 3.10.3:
“The last date of filing the application shall be 31st March 2011 for
SHIS Application on exports made during 2009-10 (and 31st March
2012 for SHIS Application on exports made during 2010-11).”
50
25
Remarks:
‰ Date of filing of application would be within one year
of the year of exports effected.
‰ Duty credit scrip applications shall not be considered:
− In case, it is filed beyond prescribed last date of
application.
− In case, Zero Duty EPCG Scheme is availed in the
particular period i.e. 2010–11, 2011–12 & 2012–13.
‰ Provision of late cut is not applicable, which please
note.
51
PARA 3.10.8 – New para added
X The following additional sectors shall be eligible for
Status Holders Incentive Scrip on exports made during
2010-11 and 2011-12:
Contd…….
52
26
Sl.
No.
Products / Product Groups
ITC(HS)
1
Chemical & Allied Products (other than Bulk minerals,
Granite/Stones, Processed minerals, Cement, Clinkers and
asbestos)
(i) Rubber products,
4001 to 4010,
4014 to 4017
(ii) Paints, Varnishes & Allied Products
3208, 3209, 3210
(iii) Glass and glassware
Chapter 70
(iv) Plywood and allied products
Chapter 44
(v) Ceramics / refractories
Chapter 69
(vi) Paper, Paper Boards & Paper products
Chapter 48
(vii) Books, Publications & Printings
(viii) Animal By-products (Codes 35030030,
05079010, 05079020, 05079050, 23011010,
96062910 and 96063010)
(ix) Ossein & Gelatine
Chapter 49
05069099, Various codes
23011090,
Codes 05061039 and
35030020
(x) Graphite Products (Codes 3801, 85451100 and 85451900) & Various codes
Explosives (Codes 3601, 3602 and 3603)
(xi)Misc. Products (Codes 3201, 32029010, 32030010, 3604, Various codes
3605, & 38021000)
2
Electronics Products
3
Sports Goods and Toys
4
Engineering products for the three groups
Chapter 72
indicated below
53
Contd……
Chapter 95 and Codes
420321, 650610
(i) Iron and Steel
(ii) Pipes and tubes
(iii) Ferro Alloys
Remarks:
SHIS is now extended to above mentioned additional sectors.
54
27
PARA 3.11 - Common procedural features for
promotional schemes, applicable to all schemes in
this chapter, unless specifically provided for:
PARA 3.11.8 - Declaration of Intent on Free Shipping Bills
Bold paras are reintroduced which were deleted and replaced vide
PN.82 dtd.16.07.2010 and other paras are newly introduced:
“For export shipments filed under Free Shipping Bill category,
for exports of products / to markets eligible under Chapter 3 of
FTP (Appendix 37A, 37C, 37D), the exporter shall state the
intention to claim benefits under Chapter 3 of FTP by declaring
on the Free Shipping Bills as under:
‘I/We, hereby, declare that I/We shall claim the benefits, as
admissible, under Chapter 3 of FTP’.
This declaration shall not be required for export shipments under
any of the schemes of Chapter 4 (including drawback) or Chapter
5 of FTP.
Contd……
55
Further for products, markets notified during the year, this
declaration shall be necessary for exports under Free Shipping
Bills, only after a grace period of one month from the date of
relevant public notice.
Moreover for exports made prior to date of notification of
products / markets, such a declaration will not be required, since
export shipments under Free Shipping Bills have already taken
place.
Newly introduced paras are :
For exports made w.e.f 1st January 2011, the above Paragraph shall
be replaced as under:
‘For products/markets listed in Appendix 37A, 37C, 37D that are
eligible for benefit under Chapter 3 of FTP, exporters shall declare
their intention to claim benefit by stating in all categories of
Shipping Bills as under:
‘I/We, hereby, declare that I/We shall claim the benefits, as
admissible, under Chapter 3 of FTP’.
Contd……
56
28
This declaration shall also be required on export shipments under
any of the Schemes of Chapter 4 or Chapter 5 or Chapter 6 of FTP as
well as on Bills of Exports filed for Supply to SEZ. No claim under
Chapter 3 shall be admissible without this declaration. However,
Schemes names are not required to be mentioned in the declaration
of intent.
Further, for products / markets notified during the year, the
declaration of intent shall be necessary for exports under all
categories of Shipping Bills only after a grace period of one month
from the date of relevant Public Notice which notifies such product
/ market. For exports made prior to date of notification (i.e. the
date of the relevant Public Notice which notified such product /
market), such a declaration will not be required since export
shipments have already taken place.’”
Remarks: Procedural clarification.
57
Chapter 4-FTP
Duty Exemption &
Remission Schemes
29
PARA 4.1.10- Advance Authorisation
for Annual Requirement
Sentence in bold is added in first sub para. Remaining
sub paras remain unchanged.
“Advance authorisation can also be issued for annual
requirement. Imports are exempted from payment of
basic customs duty, additional customs duty,
education cess, antidumping duty and safeguard duty,
if any.”
Remarks:
This is just compliance, which was otherwise due;
since goods imported are not meant for domestic
consumption.
59
GEMS AND JEWELLERY
PARA 4A.1.1 –
Word in bold is deleted from the sentence
“Replenishment authorisation may also be issued for
consumables & tools as per paragraph 4A.28 of HBP v1.”
Remarks:
Tools are not “inputs” and hence this deletion.
60
30
Chapter 4-HBP
Duty Exemption &
Remission Schemes
PARA 4.7.1 - Entitlement
i) Words in bold are added in the second sub para
“However, in cases where NC has already ratified norms
for same export and import products in respect of an
authorization obtained under paragraph 4.7, such norms
shall be valid for a period of one year, both with
retrospectively as well as prospectively, reckoned from
the date of ratification.”
Contd……
62
31
PARA 4.7.1 - Entitlement
ii) Sentence in bold is added at the end of third sub para
“In such cases Authorisations shall be issued by RA concerned under
"Adhoc Norms Fixed" category and application copies need not be
forwarded to NC for fixation / ratification of norms. Where the
application has already been forwarded before the ratification of
Norms, the RA shall finalise the case as per the norms
subsequently ratified by NC in a similar case.”
Remarks:
This would solve the problems of pending cases for redemption
purposes, provided the provision is implemented in true spirit.
63
PARA 4.20 - Facility of Clubbing
Sentence in bold is added at the end of the para
“Facility of clubbing shall be available only for redemption
/regularisation of cases and no further import or export shall be
allowed. For this facility, authorisations are required to have
been issued under similar Customs notification even pertaining
to different financial years. However in case of Authorisations
issued in 2004-09 period and thereafter, Advance Authorisations
with different customs notification can be clubbed. Advance
authorisation for annual requirement can also be clubbed
with the advance authorisation.”
Remarks:
Long overdue amendment – finally approved.
64
32
PARA 4.21 - Enhancement/ Reduction in the value of
Authorisation
Bold words are deleted, in the first sentence of this para
“In respect of an Advance Authorisation, RA concerned (as
per their financial powers) may consider a request for”
Remarks:
All enhancement / reduction to be carried out by
regional authority, only – procedural simplification.
65
GEMS AND JEWELLERY
PARA 4A.28 - Replenishment Authorisation for Import of
Consumables etc.
Words in bold are added in the first sub para
“A replenishment authorization for duty free import of
Consumables, Tools and other items namely, Tags and labels,
Security censor on card, Staple wire, Poly bag (as notified by
Customs) for Jewellery made out of precious metals (other than
Gold & Platinum) equal to 2% and for Cut and Polished Diamonds
and Jewellery made out of Gold and Platinum equal to 1% of FOB
value of exports of the preceding year, may be issued on production
of Chartered Accountant Certificate indicating the export
performance. However, in case of Rhodium finished Silver
jewellery, entitlement will be 3% of FOB value of exports of such
jewellery. This Authorisation shall be non- transferable and subject
to actual user condition.”
Remarks:
Good Provision
66
33
Chapter 5-FTP
Export Promotion
Capital Goods
Scheme
PARA 5.1 – Zero duty EPCG Scheme
i) The additional products are added in second sub para.
The added products are marked in bold.
“The scheme will be available for exporters of
engineering & electronic products, basic chemicals &
pharmaceuticals,
apparels
&
textiles,
plastics,
handicrafts, chemicals & allied products, leather &
leather products, paper & paperboard and articles
thereof, ceramic products, refractories, glass &
glassware, rubber & articles thereof, plywood and
allied products, marine products, sports goods and
toys subject to exclusions as provided in HBP Vol. I.
Contd………
68
34
ii) In third sub para, the operational period of “Zero duty
EPCG Scheme” is extended for the further period of one
year. The old and new sentence is as under:
Old sentence of third sub para:
The zero duty EPCG scheme will be in operation till
31.3.2011.
New sentence of third sub para:
The zero duty EPCG scheme will be in operation till
31.3.2012.
Remarks:
Zero Duty EPCG scheme has been extended by one
more year till 31.03.2012.
69
PARA 5.2D – EPCG Authorization for Annual
Requirement
X New para added, which reads as under:
“EPCG Authorization can also be issued for annual
requirement to Status Certificate Holders and all other
categories of exporters having past export performance
(in preceding two years), both under zero duty and 3%
duty Schemes. The annual entitlement in terms of duty
saved amount shall be upto 50% of FOB value of Physical
Export and / or FOR value of Deemed Export, in
preceding licensing year.”
70
35
PARA 5.2D – EPCG Authorization for Annual
Requirement
Remarks: Good provision.
‰ Exporter shall now have the flexibility to get a high value
EPCG authorisation by filing application on Annual basis,
instead of multiple individual applications.
‰ It will reduce paper work against filing of multiple
applications and monitoring thereof.
‰ It will also reduce transaction time and cost.
‰ It is applicable only to the Status Holder AND other
categories of exporters having export in atleast preceding
two years.
‰ The upper limit of duty saved amount for the purpose of
EPCG authorisation is limited to 50% of preceding year’s
exports.
71
Chapter 5-HBP
Export Promotion
Capital Goods
Scheme
36
PARA 5.1A – Exclusions under Zero
Duty EPCG Scheme
Second and third sub paras are amended. The amended
paras are as under:
“Chapters 1, 2, 4 to 24, 25 to 27, 31, 43, 44 (except
plywood and allied products), 45, 47, 68, 71, 81 (metals
in primary and intermediate forms only), 89, 93, 97, 98.
ITC(HS) 4011 to 4013, ITC(HS) 7401 to 7406, 7501 to
7504, 7601 to 7603, 7801,7802, 7901 to 7903, 8001, 8002
and 8401. However, zero duty EPCG Scheme will be
available for handicraft exports under Chapters 5, 68,
97.”
73
Remarks:
‰ Benefit of the scheme is expanded to cover paper & paperboard and
articles thereof, ceramic products, refractories, glass & glassware,
rubber & articles thereof, plywood and allied products, marine
products, sports goods and toys and additional engineering
products.
‰ Since there is addition and deletion in Chapters and ITC (HS) codes,
it is necessary to check the exclusion list carefully before availing of
Zero Duty EPCG Scheme. (The list is given below)
Chapters deleted from exclusion 3, 40, 44 (except plywood and
list
allied products), 48, 49, 69, 70
ITC (HS) added under exclusion 4011 to 4013,
list
ITC (HS) deleted from exclusion 7201 to 7212, 7218 to 7220, 7224
list
to 7226
Chapter deleted from Zero EPCG 44
Scheme for Handicraft Exports
74
37
PARA 5.2A – EPCG Authorisation for
Annual Requirement
New para added, which reads as under:
“The Authorization for Annual Requirement will be issued subject
to the following conditions in addition to other terms and
conditions governing the EPCG scheme:Authorizations shall be issued with a specific duty saved amount
and corresponding export obligation. The applicant would be
required to indicate export products proposed to be exported
under the authorization.
The authorization holder shall also be required to submit a Nexus
Certificate from an independent Chartered Engineer (CEC) in
Appendix 32A, to the Customs authorities at the time of clearance
of imported capital goods. A copy of the CEC shall be submitted to
the concerned Regional Authority along with copy of the bill of
entry, within 30 days from the date of import of the Capital
Goods.”
Contd…….
75
Remarks: Procedural simplification.
‰ Now EPCG authorisation for annual requirement can be
granted upto 50% (duty saved value) on FOB value of preceding
year’s exports.
‰ Details of products proposed to be exported should be given
while filing initial application.
‰ Nexus certificate as per prescribed format is to be submitted
at the time of physical import, at Customs authority instead at
initial stage of application with concerned RA. Thereafter,
copy of the same should be submitted to RA along with Bill of
Entry, within 30 days of import. In other words, nexus will be
monitored by Customs instead of Regional Authority.
‰ This provision would be very useful to large companies where
all details of imports are not finalised in advance. It will
reduce the application fees substantially.
Very welcome provision.
76
38
Chapter 8-HBP
Deemed Exports
PARA 8.3.1 – Procedure for claiming Deemed Exports
Drawback & Terminal Excise Duty Refund / Exemption
First point of the para is substituted as under
Words in bold are added
“An application in ANF 8 along with prescribed documents, shall be
made by Registered office or Head office or a branch office or
manufacturing unit of supplier to RA concerned. Where applicant
is branch office or manufacturing unit of a supplier, it shall
furnish self certified copy of valid RCMC. Recipient may also claim
benefits on production of a suitable disclaimer from supplier in the
format given in Annexure III of ANF 8 along with a self declaration
in the format given in Annexure II of ANF 8 regarding non-availment
of CENVAT credit in addition to prescribed documents.”
Remarks:
Good procedural simplification.
78
39
NOTE:
X There are no practical changes made in the following chapters:
‰ Chapter 1C-FTP - Board of Trade
‰ Chapter 2-FTP - General Provisions Regarding Imports and
Exports
‰ Chapter 6-FTP and HBPv1 - Export Oriented Units (EOUs),
Electronics Hardware Technology Parks (EHTPs), Software
Technology Parks (STPs) and Bio-Technology Parks (BTPs)
‰ Chapter 8-FTP - Deemed Exports
‰ Chapter 9-FTP - Definitions
‰ Chapter 9-HBP - Miscellaneous Matters
79
Updates on SEZ
40
Fact Sheet on Indian SEZ
X No. of Notified SEZs as on 20.07.2010 – 358 (out of 575) +
(7 Central Govt. + 12 State/Pvt. SEZs)
X No. of valid formal approvals – 576
X No. of valid in-principle approvals – 155
X Operational SEZ as on 31.12.2009 – 114 (Out of these 14 are
multi-product SEZs, remaining are IT/ITES, Engineering,
electronic hardware, textiles, Biotechnology, Gem& Jewellery
SEZs and other sector specific SEZs)
X Units approved in SEZs as on 30.06.2010 – 3,048
Source: www.sezindia.nic.in
81
SEZs-Area Requirement
SEZ
Formally approved and notified
SEZs
Area Estimates
[approx]
(in hectares )
69,324
In-principal approvals
1,29,668
Total Area for proposed SEZs
1,98,992
82
41
Fact Sheet on Indian SEZ
Total Investment made in
notified SEZs (as on 30th
June 2010)
Employment created in
notified SEZs (as on 30th
June 2010)
Employment in Govt. SEZs
Rs. 1,49,744.55 cr
2,89,738 persons
2,00,327 persons
83
Fact Sheet on Indian SEZ
Exports from the functioning SEZs during the last three years are as
under:
Year
Exports (Rs. crores)
Growth Rate of exports
2003-2004
13,854
39%
2004-2005
18,314
32%
2005-2006
22,840
24.71%
2006-2007
34615
52%
2007-2008
66638
93%
2008-2009
99688.87
50%
2009-2010
2,20,711.39
121.40%
Exports in 2010-11 as on 30.06.2010 - Rs. 58,685.46 crore
84
42
Changes effected
till August 2010
SEZ Draft Guidelines Dtd.13.11.09 Guidelines for Development of SEZs
X Draft Guidelines were issued by the Ministry of
Commerce and Industry (MoC&I) on 5th August, 2009 and
were circulated to SEZ Developers. On getting
suggestions from the SEZ developers, revised draft
guidelines are issued by this notification.
86
43
S.O. 75 Dtd. 13.01.2010
On 13th January, 2010 following sections of SEZ Act, 2005 have been
operationalised
‰ Sections 20-Agency to inspect
‰ Section 21-Single enforcement officer or agency for notified
offences
‰ Section 22-Investigation, inspection and search or seizure.
S.O. 76 Dtd. 13.01.2010
MoC&I specified acts or omissions punishable under the Foreign Trade
(Development and Regulation) Act, 1992 (28 of 2005) as notified
offences for the purposes of the Special Economic Zones Act, 2005.
S.O. 77 Dtd. 13.01.2010
MoC&I authorizes Development Commissioner [DC] to be the
enforcement officer in respect of the notified offences [as given in S.O.
76 Dtd. 13.01.2010] committed in a SEZ.
87
S.O. 78 Dtd. 13.01.2010
Director STPI would no more be In-charge of SEZ particularly IT/ ITES/
Software SEZs.
S.O. No. 228 Dtd. 03.03.2010
‰ Very important amendment. SEZs are authorized as deemed
licensee for the purposes of distribution of electricity.
‰ Hence notified SEZs (notified under sub-section (1) of section 4 of
the SEZ Act, 2005) need not make application for obtaining licence
for distribution of electricity under clause (b) of Section 14 of the
Electricity Act, 2003.
S.O. No. 527 Dtd. 03.03.2010
‰ Clause (u) of section 2 of the Special Economic Zones Act, 2005
(definition of “offshore banking unit”) would not apply to offsite
Automated Teller Machines [ATM] in the Special Economic Zones,
and
‰ branches in Special Economic Zones by Banks, not licensed as
Offshore Banking Units; with the prior permission of the Reserve
Bank of India under section 23 of the Banking Regulation Act,
1949.
88
44
G.S.R. 501(E) Dtd. 14.06.2010 –
Amends SEZ Rules, 2006
Rule 3, 5, 6, 8, 9, 11 and 12 are amended and Rule 3A, 6A and 78
are inserted. By this notification, following Forms are also added.
Form-A1
APPLICATION FORM FOR APPROVAL OF CO-DEVELOPER
Form-C1
APPLICATION FOR EXTENSION OF VALIDITY OF APPROVAL GRANTED
UNDER RULE 6(2)(a)
Form-C2
APPLICATION FOR EXTENSION OF VALIDITY OF APPROVAL GRANTED
UNDER RULE 6(2)(b)
Form-C3
APPLICATION FOR SEEKING CHANGE IN SECTOR
Form-C4
APPLICATION FOR INCREASE IN AREA
Form-C5
APPLICATION FOR DECREASE IN AREA
Form-C6
APPLICATION FORM FOR DENOTIFICATION
Form-C7
APPLICATION FOR APPROVAL OF AUTHORISED OPERATIONS
Explanation on each amendment/insertion of rule is provided in
EPCES Cir. No. 113 Dtd. 14.07.2010.
89
G.S.R. 597(E) Dtd. 12.07.2010 – Amends
Rule 5 (2) (b) of SEZ Rules, 2006
This notification amends Rule 5 (2) (b) related to sector specific
SEZ. The inserted proviso prescribes minimum built up area for
SEZs located in the cities as categorized under Annexure-IV.
Annexure IV is also inserted by this notification. The minimum built
up area prescribed is as under:
B1 category cities
50% of the area specified in Rule 5(2)(b)
B2 category cities
25% of the area specified in Rule 5(2)(b)
Third Proviso of Rule 5(2) (c) related to FTWZ is also amended. The
proviso says that in SEZ for a specific sector, FTWZ may be
permitted with no minimum area requirement, provided maximum
area of FTWZ should not be more than 20% of processing area. This
criterion under third proviso was applicable to Sector Specific SEZ,
now after amendment, this provision is made applicable to SEZs
“having area less than 1000 hectares”.
90
45
EPCES Cir. No. 100 Dtd. 08.01.2010
This circular is issued referring A.P. (DIR Srs.) Cir. No. 22
Dtd. 29.12.2009. In this circular it was clarified that SEZ
developers are allowed to open, hold and maintain EEFC
account and to credit up to 100% of their foreign exchange
earnings.
EPCES CIRCULAR NO. 104 DATED 2-3-2010
‰ IT/ITES SEZs can also house electronic hardware units in
these SEZs.
‰ For setting up a unit in the SEZ, where Industrial Licence is
required, permission can be given by Board of Approvals.
91
EPCES CIR. NO. 112 DTD. 16.06.2010 - Revised discussion paper on Direct
Tax Code, released by Ministry of Finance on 15-6-2010.
‰ Very important circular relating to revised discussion paper on Direct Tax
Code (DTC) released by Ministry of Finance on 15th June, 2010.
‰ Finance Minister has proposed in Revised DTC paper for discussion, in
Chapter VII that, provision to protect profit linked deductions of units
already operating in SEZs, for the unexpired period, will be incorporated.
‰ However, he has further clarified that since Profit linked deductions are
distortionary in nature as they create an incentive to inflate profit as well
as to transfer profits from a taxable entity to a non-taxable one, it has
been decided not to extend the scope or the period of profit linked
deductions.
‰ This amendment only meets the requirement of SEZ partially, as it protects
only the existing SEZ units. This would practically close the door for new
investment in the SEZ and hence, Dr. L.B. Singhal DG, EPCES, has invited
representations from the Industry upto 30.06.2010.
92
46
Instruction No. 37 Dtd. 07.09.2009 – Clarification on whether
import, re-melt, re-make and export of imported finished jewellery
is an authorized activity in SEZ
In view of the provisions contained in Section 2(r) of SEZ Act, 2005 read
with Rule 27(1) of SEZ Rules, it is clarified that import of jewellery and
its remaking is an authorised manufacturing activity by an SEZ unit
holding letter of approval for manufacturing of jewellery. Further
import would include re -import of exported jewellery.
Instruction No. 38 Dtd. 11.09.2009 - SEZ Online Project.
MoC is executing agreement with NDML for SEZ online project. This is
to establish a nationwide integrated e-governance solution for the
administration of SEZ and to facilitate speedy processing of
transactions of SEZ Developers SEZ units.
Instruction No. 39 Dtd. 11.09.2009 - Procedure for consideration of
operational issues regarding SEZs.
Very important instruction. For approvals or operational issues related
to SEZ, the matter should be referred to Unit Approval Committee
[UAC] or Board of Approval [BoA] and not to the individual Departments
of Government of India.
93
Instruction No. 40 Dtd. 01.10.2009-Effective implementation of the
Hazardous Waste Rules, 2008
For ensuring compliance with Hazardous Waste Rules, 2008, following
recommendations are made by the Ministry of Environment and Forests
[MOEF].
‰ Officers of the State Pollution Control Boards [SPCBs] are advised to
attend the meetings of the Approval Committee and assist the
Development Commissioner [DC] in ensuring compliance of the
environmental regulations, especially Hazardous Waste (Management,
Handling & Transboundary Movement) Rules, 2008.
‰ SPCBs are also advised to monitor the units which are recycling/
reprocessing imported waste on a regular basis.
Instruction No. 41 Dtd. 13.11.2009 - Clarification on calculation of NFE
as per Rule 53 of the SEZ Rules, 2006
NFE is to be calculated in rupee terms only. In cases where SEZ unit
achieves negative NFE due to foreign exchange fluctuations, they can
approach Approval Committee. However, in such cases, SEZ unit will have
to get the computations certified by the Authorised Bank, on a case to
case, basis.
94
47
Instruction No. 42 Dtd. 18.11.2009 - Guidelines for consideration of
proposals for authorized operations by the BoA.
All requests for carrying out authorized operations, whether covered in
the default list or not, are to be made initially to the concerned
Development Commissioner [DC]. The DCs will send only such
requests/items for consideration by BoA, which are outside their
powers with their recommendations.
Instruction No. 43 Dtd. 23.11.2009 - Procedure for seeking
clarification on policy issues relating to SEZ Act and Rules from
Department of Commerce.
This is to facilitate speedy disposal at the hands of Zonal DC related to
procedure for seeking clarification on policy issues relating to SEZ Act
and Rules from Department of Commerce
95
Instruction No. 44 Dtd. 24.11.2009 - Reports to be furnished by DCs
for review/monitoring of performance of SEZs
DCs are required to submit monthly reports for reviewing/monitoring
of performance of SEZs in the prescribed forms A to F, formats of
which are given in the Instruction. Further, Zonal DCs are also required
to submit such reports in the Format G and H. Following is the list of
these formats.
Format of monthly reports to be furnished
By DCs
A. Approval of activities under SEZ Rules 17 & SEZ Rules 18,19
B. Other Permissions
C. Permissions under Rule 74
D. Statement on monthly Data on Export Duty, Import Duty and Duty
Foregone
E. Import and Export Data
F. Statement in respect of SEZ Developers coming under the
Jurisdiction of DC
I. Information regarding staffing positing in SEZs.
By Zonal DCs
G. INFORMATION on CST claims and drawback
H. [No title is given, however, information relates to built up and land
space]
96
48
Instruction No. 46 Dtd. 12.01.2010 - Setting up of small
scale units in Central Government SEZ
‰ Development Commissioners of Central Govt. SEZ should give
preference to “small scale units” as defined under the Micro,
Small and Medium Enterprises Development Act, 2006.
‰ DCs of the IT/ITES SEZs are required to ensure that the
IT/ITES SEZs are advised to set up incubators of size of
minimum 200 seats and the minimum 10% of the space in the
SEZ may be reserved for SSI IT/ITES units.
‰ All other SEZs should allocate 10% space to SSI units.
97
Instruction No. 47 Dtd. 04.03.2010 - Procurement, Import and
Export of Prohibited and Restricted Goods
Following clarifications are provided in respect of procurement, Import
and Export of Prohibited and Restricted Goods
‰ Export of prohibited items is permitted provided required raw
materials are imported.
‰ Items which are prohibited for import can also be imported by SEZ
Units if such imports are made for manufacturing export goods.
‰ In respect of supply of Restricted Items by a DTA unit to SEZ
Developer/Unit, the DTA unit can supply such items to a SEZ
Developer or unit for setting up of infrastructure facility or for
setting up of a unit.
‰ DTA units can also supply restricted raw materials to SEZ unit for
undertaking a manufacturing operation except refrigeration,
cutting, polishing and blending.
‰ However for all the above activities Prior Approval from Board of
Approval is required.
98
49
Instruction No. 49 Dtd. 12.03.2010 - Clarifications on FTWZ issues
Ministry of Commerce & Industry has issued clarification on following
issues related to FTWZs.
‰ No approval for procurement of service “Rental” of immovable
property for office outside the Special Economic Zone/FTWZ can
be given.
‰ Import of prohibited items will be as per Rule 27, Rule 26 and
Instruction No.47 Dtd. 04.03.2010.
‰ Diesel is permitted to be procured for authorized operations in the
processing area including material handling equipment.
‰ There are no limitations on Units set up in FTWZs located in Sector
Specific SEZs to carry out Trading and Warehousing Activities in
respect of any product.
‰ Trading and Warehousing units located within FTWZ can carry out
DTA to FTWZ and FTWZ to DTA transactions.
‰ Requests for allowing cutting, polishing, blending etc. as part of
authorised operation of a FTWZ unit can be considered by the
Approval Committee on a case to case basis based on the merits of
the case.
99
Instruction No. 51 Dtd. 25.03.2010 - Declaration of Raw material
components etc. imported by G&J units in respect of goods to be
manufactured by them
Important circular for G&J units in SEZ.
‰ In terms of Rule 17 of the SEZ Rules SEZ units are required to file a
declaration in Form-F while submitting an application for setting
up of a unit. The Approval Committee considers the same before
granting Approval for issue of LOA.
‰ In this connection, procedure prescribed in this instruction should
be followed by all G&J units for bringing in jewellery, broken
jewellery etc. for remaking, remelting, repairing, etc.
Instruction No. 52 Dtd. 20.04.2010 - Clarification on broad- banding
in IT/ITES Sector SEZ
It is informed by this instruction that no approval of BoA is required in
case of developers in IT/ITES sector to broad-band their product
profile by including electronic hardware. This is because IT/ITES
includes both Hardware and Software.
100
50
Instruction No. 58 Dtd. 21.05.2010 – Allowing of authorized
employees of IT/ITES units in SEZ to work from home.
Off-site employees of the IT/ITES units in SEZ are also permitted to
work from home or from place outside the SEZ. It is also stated in the
instruction that IT units in DTA can carry out their job-work in a SEZ
Unit by following procedures mentioned in Rule 43 of SEZ Rules, 2006.
Instruction No. 59 Dtd. 18.06.2010 - Requests for transfer of units
from one SEZ to another SEZ
Board of Approval [BoA] permits shifting of units from one SEZ to
another SEZ, provided all such proposals are placed before the BoA.
Instruction No.60 Dtd. 06.07.2010 – Clarification on holding of
goods by units in FTWZ.
‰ Doubt raised by the FTWZ Developers: Whether units in the FTWZ
can hold goods on behalf of Foreign Buyer, DTA Supplier and Buyer.
‰ Clarification provided by Department of Commerce: Subject to
provisions of Rule 18 (5) of SEZ Rules, 2006, FTWZ units can hold
goods on behalf of foreign supplier and buyer and DTA supplier and
buyer.
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Instruction No. 61 Dtd. 14.07.2010 – Withdrawal of Instruction Nos.
36, 25, 24 and 16.
Following instructions are withdrawn
‰ Instruction No. 36 Dtd. 03.09.2009 – Instructions regarding
proposals to be considered by BoA
‰ Instruction No. 25 Dtd.16.07.2009 – Guidelines regarding “Putting
up of a boundary wall”
‰ Instruction No.24 Dtd.16.07.2009 – Guidelines for dealing with
“Requests for change in area of SEZs”
‰ Instruction No. 16 Dtd. 11.06.2009 - Validity of Formal Approval
This is because issues addressed in these instructions are now
considered and carried out in the SEZ Law, by amending the SEZ Rules,
2006 by G.S.R. No. 501 Dtd. 14.06.2010.
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Instruction No. 62 Dtd. 23.07.2010 – Procedure for clearance of
State SEZ Bills.
This is regarding faster procedure for clearance of State SEZ Bill. It is
decided that Department of Commerce will create consensus of all
concerned Departments and will send the recommendations and No
Objection of concerned Departments of Government of India to the
Ministry of Home Affairs [MHA] for final approval and MHA would get
the assent of the President on the Bill.
Instruction No. 63 Dtd. 10.08.2010- Procedure regarding removal of
goods to bonded warehouse under Rule 46(13) of SEZ Rules, 2006
Procedure for removal of goods from SEZ unit to the Bonded
Warehouse under Rule 46 (13) of SEZ Rules, 2006 has been prescribed
in this Instruction.
Instruction No. 64 Dtd. 11.08.2010 – Role of Zonal DCs
This Instruction is about responsibilities allocated to the Zonal
Development Commissioner [DC].
103
Thought for the Day…
“The beauty of life is, while we cannot undo
what is done, we can see it, understand it,
learn from it and change.
So that every new moment is spent not in
regret, guilt, fear or anger, but in
wisdom, understanding and love.”
- Buddha
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105
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Email:
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