In re Wabtec Locomotive Private Limited (CAAR Delhi)
Customs Authority for Advance Rulings (CAAR) in Delhi has issued a ruling clarifying the eligibility of Wabtec Locomotive Private Limited (WLPL) to avail duty exemption under Notification No. 32/97-Customs dated April 1, 1997, for importing parts for “jobbing” purposes. The ruling, in the case of In re Wabtec Locomotive Private Limited, outlined the conditions for availing the exemption and addressed the treatment of “Free of Cost” (FOC) imports.
WLPL had sought an advance ruling on several points, including duty drawback and the applicability of the said exemption notification for importing cab signaling equipment on an FOC basis for assembly and integration into locomotives for export.
Scope of Ruling Limited
At the outset, the CAAR clarified that its jurisdiction does not extend to issues related to duty drawback under Section 75 of the Customs Act, 1962. Therefore, the ruling was confined to questions concerning the availability of the exemption notification.
Conditions for Exemption Notification No. 32/97-Customs
The CAAR reiterated the five key conditions for availing the benefit of Notification No. 32/97-Customs:
- Import for Jobbing Purpose: Raw materials must be imported for jobbing.
- Specific Export Order: Raw materials should be imported specifically for an export order placed by the supplier of the goods.
- Re-export to Supplier or Nominee: The imported goods, including the final manufactured product, must be re-exported to the raw materials supplier or any other person specified by the supplier.
- Minimum 10% Value Addition: The Free on Board (FOB) value of the resultant exported products must be at least 10% more than the Cost, Insurance, and Freight (CIF) value of all imported goods related to those products.
- Not Prohibited Items: The imported goods must not be prohibited items as per the ITC (HS) Classification.
Addressing Objections and Clarifications
WLPL clarified how it met these conditions. A key objection from the port authority concerned the re-export condition, as goods were imported from M/s China Railway 18th Bureau Group Co. Ltd. but exported to M/s Rio Tinto SimFer at Guinea, while invoicing was done by M/s Rio Tinto, U.K. WLPL clarified that M/s China Railway 18th Bureau Group Co. Ltd. acted on behalf of M/s Rio Tinto, U.K., which maintained ownership of the goods. Since the re-export was to a party specified by the actual supplier (Rio Tinto, U.K.), the CAAR found this condition satisfied.
