Woes of electronics/semi-conductors industry
FEBRUARY 07, 2016
By K S Naveen Kumar, Advocate
This representation is to bring to the kind notice of the Hon'ble Finance Minister the difficulties faced by persons, who import or export used goods for various purposes.
Problems/difficulties faced:
The following situations of imports occur in the course of business:
a. The goods would be imported for repairs, refurbishing or reconditioning purpose. These goods would have been supplied by the same importer to their foreign customers. The goods would come back for the said purpose.
b. The goods would be imported for repairs, refurbishing or reconditioning purposes. These goods would have been sourced from India (from any other supplier other than the importer) or elsewhere by the foreign customer.
c. Sometimes the goods imported by the Indian customer (manufacturer or a trader), if found defective, would be returned to the foreign supplier for repair, reconditioning etc. These defective goods after repair etc are again imported back to India.
d. The goods imported by the Indian customer may also be sent out of India to a person other than the supplier for repair, reconditioning abroad. After repair etc the goods are again re-imported into India.
e. Some goods would be imported for R&D purposes. The R&D results are to be delivered to the supplier in a time-bound manner.
f. That apart, some equipments would be sent for calibration abroad, which would be imported back at a later date.
g. Sometimes goods are sent as samples, for demonstration/exhibition purpose or on sale or return basis. These goods would be imported back subsequently after fulfilling its purpose.
When such goods are imported, the Customs Department is insisting on obtaining clearance/approval from the Ministry of Environment, Forests and Climate Change, under a preconceived notion that the imported goods are in the nature of hazardous waste or e-waste. This process of obtaining approval takes about three to four months and in worst-case scenario even a year, which severely affects the importer as they are not able to meet their obligations towards their foreign customer/supplier. This also results in incurrence of huge demurrage charges, as the goods would be stored in the customs premises for an unduly long period of time. That apart the foreign customers/suppliers initiate proceedings against the Indian importers for inordinate delay and may even result in loss of business and cancellation of orders/contracts. It also affects our country's business image as “not-so-user friendly”. Further the concerned Committee working under the aegis of the Environment Ministry meets at New Delhi only once in a month and there are many such imports across the country awaiting the clearance or approval of the committee.
Relevant provisions and impact:
Presently, import of hazardous waste and e-waste is subjected to clearance under the Environment Protection Act, 1986 and the Rules framed thereunder. However, this has been applied even in case of import of used goods received on repair and return basis or refurbished goods meant for R&D purposes in India by importers including EOUs, as pointed out above. Further on the strength of Circular No. 27/2011-Cus ., dt.4.7.2011, issued by the Central Board of Excise and Customs (CBEC), the Bangalore Customs has issued a Public Notice No.14/2015, dt.14.8.2015. As per the said Circular and Public Notice, the Customs Department is insisting on getting a no objection certificate/clearance from the Ministry of Environment in terms of Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 and E-Waste (Management and Handling) Rules, 2011 even to cases where goods are imported for reconditioning or repair or R&D purposes etc as stated supra. This is posing serious difficulties to Indian importers especially EOUs and others, who are supposed to fulfill their export/contractual obligations in a time bound manner. Delay in obtaining clearance from Ministry of Environment results in cancellation of orders and initiation of legal proceedings by the foreign party. It also involves demurrages and other expenses.
Remedy/Relief sought:
It is the industry's fervent request that the Hon'ble Ministers and Board should intervene and issue suitable instructions and clarifications in order to mitigate the hardship faced by the industry and to bring in clarity in law by inter-alia taking the following measures/steps:
a. The Circular No. 27/2011-Cus , dt.4.7.2011, issued by the Board should be reviewed and suitable clarifications should be issued to avoid hardship to categories of importers mentioned supra.
b. As an interim measure, issue suitable instructions for Fast Track Clearance for genuine importers and decentralize the process of giving environmental clearance by setting up clearance committee in major port cities.
c. Initiate a consultative process with the concerned Ministries and take steps jointly to resolve the issues pointed out supra.
Reasons/justification:
a. This would avoid hardship to genuine importers.
b. It would avoid huge losses and demurrage costs.
c. It would be a step, which would facilitate ease of doing business.
d. It would avoid losses due to cancellation of orders and initiation of legal proceedings for delay in adhering to the contractual obligations.
e. It would avoid loss of production or stoppage of production due to delayed clearance by Customs.
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