TIOL-DDT 2784
11 02 2016
Thursday

REPRESENTATIONS have been received by the DGFT from Trade, Industry and Export Promotion Council for EOU and SEZ on the pending requests for allowing closure/ redemption/EODC in cases where the Advance Authorisation holder had made supplies to SEZ units and realised the proceeds in Indian Rupees as per the extant provisions laid down in Para 4.1.6(a) of FTP 2009-14.

DGFT clarifies:

1. Para 4.1.6 (a) of  FTP 2009-14  had not stipulated that DTA supplying goods under Advance Authorisation to an SEZ unit has to realise payment from Foreign Currency Account of SEZ unit.

2. Moreover, Rule 30(8) of SEZ Rules 2006 also do not mention that it is mandatory for SEZ unit to make payment to Advance Authorisation holder from Foreign Currency Account (FCA).

3. The above condition was made applicable for Advance Authorisation in the FTP (2015-2020), as per para 4.21 (iii) w.e.f. 1st April, 2015 only.

As a matter of trade facilitation, DGFT has decided to allow closure/redemption/EODC where the Advance Authorization holder or DFIA holder has made supplies to SEZ units and realised the proceeds in Indian Rupees as per the extant provisions laid in para 4.1.6(a) of  FTP 2009-14.

DGFT further clarifies that in the new FTP 2015-20 it has been stipulated in the para 4.21 (iii) that "Export to SEZ Units shall be taken into account for discharge of export obligation provided payment is realised from Foreign Currency Account of the SEZ unit." Hence conditions of para 4.21 (iii) of FTP will have to be complied in respect of the Advance Authorisations issued during FTP 2015-20.

DGFT has actually taken a U-turn. By letter dated 15.7.2015 on the same subject, DGFT had clarified;

In pursuance of the decision taken in SOM, SEZ Division of Department of Commerce is requested to instruct all concerned SEZ units that as per Rule 30(8) of SEZ, that the unit were required to make payments from their FCA, in cases of supplies received by them towards fulfilment of export obligation against the Advance Authorisation of the DTA supplier. Therefore, all Development Commissioners may be directed to advise concerned SEZ Units to make payment from their FCA to the suppliers in respect of such cases failing which they would - be liable for action under FT(DR) Act, 1992 .

DDT had covered this in DDT 2736 02 12 2015.

Though the present decision is a reversal of the earlier view, it will be accepted happily as it is beneficial. Further, there is no change in Rule 30(8) which is relied upon in both the instructions! DDT had raised another important related issue in the same capsule.

DGFT Trade Notice No. 16/2016; Dated: February 10, 2016

FTP - Minimum Import Price (MIP) on Iron & Steel under Chapter 72 - DGFT Clarifies

THE Government had imposed Minimum Import Price (MIP) on Iron & Steel by Notification No. 38 dated 5.2.2016. Now, the DGFT clarifies:

1. Imports effected on or after 5.2.2016 below the USD unit value specified in the Notification will be restricted from entry into India.

2. Landed unit cost must not be below the specified MIP.

3. It is not possible to import items covered under Notification No. 38  (2015-2020) whose unit CIF import price is below the stipulated MIP by paying custom duty on the MIP specified in the Notification. The imported items must have a unit CIF value equal to or above the MIP.

4. the date of reckoning of "import" is decided with reference to date of shipment/dispatch of goods from supplying country as given in Para 9.11 of Handbook of Procedure; and not the date of arrival of goods at an Indian port. Accordingly, imports effected on 5.2.2016 and thereafter will be governed by the Notification No. 38 dated 5th February, 2016.

5. import shipments under letter of credit entered into before the date of the Notification shall be exempted from the Minimum Import Price condition subject to Para 1.05(b) of the Foreign Trade Policy 2015-20.

6. As per Para 1.05(b) of the Foreign Trade Policy 2015-20, for operationalising irrevocable letter of credit, the applicant/importer will have to register the Letter of Credit with jurisdictional Regional Authority (RA) against computerized receipt, within 15 days of the imposition of any such restriction or regulation.

DGFT Trade Notice No. 17/2016; Dated: February 10, 2016

Defective Revenue Appeals lying in defect for more than three years dismissed by Delhi High Court

THE Commissioner of Income Tax (Judicial) filed an affidavit before the Delhi High Court on 5.2.2016 submitting that:

1. There were about 272 defective appeals pending upto the year 2012.

2. There were 149 defective appeals up to 2012 where the tax effect is less than Rs. 20 lakhs.

As per the new litigation policy, the less than 20 lakh appeals are to be withdrawn. The Delhi High Court dismissed these appeals as not pressed.

The Revenue Counsel wanted the other defective appeals to be considered for condonation of delay. The High Court was of the view that a delay of more than three years in re-filing of the appeal cannot, by any stretch of imagination, be accepted particularly in view of the standard reasons offered for the delay in such re-filing. So all those appeals were dismissed.

Why should the Revenue take the trouble of filing an appeal at huge costs if it cannot rectify the defects pointed out and refile them? In one stroke they lost 272 appeals.

It appears that there are 46 defective appeals pertaining to the year 2013. The Delhi High Court has allowed the Revenue Department to cure them within a month from 8.2.2016.

As far as the defective appeals of 2014 are concerned, the exercise of curing the defects and getting the appeals registered/numbered will be completed by the Revenue within two months from 8.2.2016.

Rest of the defective appeals will have to be cured within three months from 8.2.2016.

We don't know how many of these defective appeals will be cured and how many will be salvaged.

STP Units - extension of re-warehousing period of Bonded capital goods - DGEP Reiterates 2005 Circular

STP units have brought to the notice of Board that the process of renewal/extension of the Private Bonded Warehouse License and the extension of warehousing period for the bonded capital goods are not coterminous and are handled by different authorities, thereby creating difficulties for them.

The same issue was raised 11 years ago when Board in a clarificatory Circular No. 7/2005-Cus, dated 14.2.2005 observed,

I am directed to draw your attention to sub-section 1(a) of section 61 of the Customs Act, 1962, wherein it has been provided that capital goods intended for use in the EOU can be kept in the warehouse for a period of 5 years. Extension of such warehousing period may be given by the Commissioner of Customs under proviso (i) to sub-section 1(b) of above section. It has been brought to the notice of the Board that EOU/EHTP/STP units have to approach every now and then for getting extension of warehousing period. This keeps the units always under pressure of keeping track of warehousing periods. This practice also distract the attention of the units from export production apart from being a major irritant.

2. The matter has been considered by the Board. The EOUs import capital goods frequently especially in the software development sector to keep pace with the development of technology. The units are required to be always in its toes to apply for extension of warehousing period within the time frame provided in the law. There is no denying that this practice does distract the units attention from export production and the units are always busy in preparation of obtaining timely extension of warehousing to avoid action under law for delay.

3. As you are aware that the EOU/EHTP/STP units are required to obtain private bonded warehousing licence u/s 58 of the Customs Act. The said licence is valid for a period of 5 years and the units are required to apply for renewal after every 5 years. The Board in order to obviate the difficulties of the EOU/EHTP/STP units has decided to allow extension of warehousing of all the capital goods installed or put into use, simultaneously at the time of renewal of warehousing licences irrespective of the fact that the capital goods are due for extension or not. The period of extension would be allowed for such a period so that the capital goods need further extension only on the date of renewal of warehousing license. The period of extension, therefore may be adjusted accordingly for every piece of capital goods. However the maximum period of extension at a time would not be allowed for a period for more than five years.

Now the Board wants Chief Commissioners to give wide publicity to the Circular so that STP/EOU/EHTP units can avail benefit thereof.

DIRECTORATE GENERAL OF EXPORT PROMOTION Letter in F.No. DGEP/FTP/07/2015/2000 to 2039., Dated November 19, 2015

EOUs - Procurement Certificate (P.C) - countersignature of Jurisdictional AC/DC

IN the year 2001, the CBEC issued a Circular No. 84/2001-Cus dated 21-12-2001 wherein it was stated,

Issue of Procurement Certificate:

The EOUs and STP/EHTP/EPZ/SEZ units obtain a procurement certificate from the jurisdictional Assistant/Deputy Commissioner in the format annexed to Board's Circular No.14/98-Cus, dated 10-3-98, for clearing goods duty-free under the relevant exemption notifications at the port of import/airport etc. It has been brought to the notice of the Board that the units have approach the jurisdictional Assistant/Deputy Commissioner every time for issuance of such certificates and in situations where the office of the Assistant/Deputy Commissioner is situated far away from the EOUs, the representatives of the EOUs have to travel a long distance to obtain the certificates. In order to mitigate the difficulties of the units it has been decided that henceforth the procurement certificates to the EOUs and units in EPZ/STP/EHTP/SEZ except for those in textile and chemical sectors would be issued by the jurisdictional Superintendent of Customs or Central Excise. However, in respect of units in chemical and textile sector the procurement certificate would continue to be issued by the jurisdictional Assistant/Deputy Commissioner of Customs or Central Excise. The jurisdictional Superintendent befor issue of procurement certificate would ensure that the consignment under clearance is covered by the Bond amount.

STP units have recently brought to the notice of Board that certain field formations are insisting upon countersignature of Procurement Certificates by AC/DC even in case of sectors other than textile and chemical causing difficulty to them.

DGEP reiterates that Circular no. 84/2001-Cus dated 21-12-2001 does not necessitate countersignatures by AC/DC, of procurement certificates in respect of sectors other than textile and chemical.

DGEP wants that the above circular is interpreted and implemented correctly and thus there is no divergence of practice.

DIRECTORATE GENERAL OF EXPORT PROMOTION Letter in F.No. DGEP/FTP/07/2015/2239 to 2277., Dated December 30, 2015

Immovable Property Returns by babus - 94% IRS officers are defaulters

ALL the babus are required to submit their property returns by 31 st January every year and the returns of the Group A officers are to be placed in the public domain by 31 st March.

The CBEC has observed that out of the current working strength of IRS (C&CE) Group 'A' officers of 3784, as per the information available with the Ad.II Section in the Board and DGHRD, so far IPRs in respect of only 206 Group 'A' officers have been received for the year ending December, 2015 which is less than 6% of the working strength as on date.

This has been viewed seriously.

Further, it has been reported by the DGHRD that a total of 640 IPRs were received by them in respect of the year 2014, out of which 555 IPRs has been uploaded on the DGHRD website and remaining 85 IPRs are in the process of uploading on Departmental website. It indicates that less than 20% IRS (C&CE) Group 'A' officers have furnished IPRs for the year 2014 and less than 6% for the year 2015.

As per the instructions of the Government,vigilance clearance shall be denied to an officer if he fails to submit his annual immovable property return of the previous year by 31st January of the following year.

Has the Board denied vigilance clearance to a single officer on the ground that he has not submitted his annual property statement?

Now the Board wants the returns to be furnished latest by 15.2.2016.

These are all senior responsible revenue officers who will at the slightest opportunity, impose penalties on the assessees for late filing of returns.

Why are they reluctant to file their property returns? Are they afraid of revealing their wealth or is it simple habitual contemptuous disregard for rules fortified by the firm conviction that they don't get punished for any misdemeanor?Aren't these senior officers setting a very bad example for their subordinates? And will this not enhance the corrupt image of the department? How long can the Board tolerate such rank indiscipline?

CBEC F. No. C-50/120/2015-Ad.II(pt)., Dated February 09, 2016

Government - the Incorrigible Litigant

A study by Vidhi Centre for Legal Policy revealed that in the year 2014, the Government had filed 890 appeals in the Supreme Court against orders of the Armed Forces Tribunal while only 34 appeals were filed by individuals. Of the 890 government appeals, 861 were dismissed in limine.

The Armed Forces Tribunal deals with service matters of defence employees and many of the appellants are low placed soldiers or their widows.

Until Tomorrow with more DDT

Have a nice day.

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