Circular No. 19/95-Cus. (DBK)
Government of India
Ministry of Finance
Department of Revenue, New Delhi
Subject : Value Based Advance Intermediate Licence for import of Iron & Steel Intermediates – Engineering Products Export (Replenishment of Iron & Steel Intermediates) Scheme
Ministry of Commerce vide their Notification No. 53/ RE/ 92-97 dated the 1st March, 1995 have notified Engineering Products Export (Replenishment of Iron and Steel Intermediates) Scheme. To give effect to this scheme which permits duty free import of inputs required by Iron and Steel Producers to manufacture Iron and Steel Intermediates for supply to Engineering Exporters, Notification No. 10/ 95-Customs dated the 7th March; 1995 has been issued. The following aspects should be kept in view while permitting duty free import against Value Based Advance Intermediate Licences issued under this Scheme.
(i) Items permissible for import.
The licence issued under the scheme shall be based on value based norms prescribed in the Handbook of Procedure, Vol. II for the sub-group “Iron, Steel, Ferro Alloys and Refractories” under the export product group “Engineering Product”. The licence besides specifying the quantity and value of such Iron and Steel Intermediates required to be supplied to Engineering Exporters will also indicate the inputs permissible for import which have to be raw materials, components, intermediates and consumables specified as import item in the Input Output – Norms for the manufacture of such Iron and Steel Intermediates. ONly such inputs should be permitted duty free clearance which are usable in the manufacture of specified Iron and Steel Intermediates keeping in view their grade, quality and specifications. Since the licences issued under the Scheme will be Value Based Advance Intermediate Licences, quantity / value restrictions only in respect of sensitive items as specified in the licence or Handbook of Procedure, Vol. II shall be applicable.
(ii) Execution of Bond with the Licensing Authority.
Under the scheme the importer is required to execute a bond/LUT with the Licensing Authority and produce evidence of the same before clearance of any inputs against the said licence.
(iii) Execution of Bond with Customs Authorities .
The notification requires the importer to execute a bond with such surety or security with the Assistant Collector of Customs binding himself to fulfill the obligation in terms of the said notification and to pay duty in case of default. This bond should provide for production of evidence of having supplied Iron and Steel Intermediates to Engineering Products exporter in the form of a certificate from the Licencing Authority. The bond should also bind the importer with the actual user condition as contained in clause (v) of the notification. The said condition makes it obligatory for the licence holder to use the inputs imported in his own factory and in on case the licence or the inputs imported are transferable. For discharge of this obligation, a certificate of such use of inputs by Central Excise Superintendent incharge of the factory should be insisted upon. The said certificate should also confirm that no MODVAT was availed in respect of iron and steel intermediates supplied to Engineering Product Exporter. The extent of security or surety to be taken can be decided by the Custom House depending upon the status of the importer i.e. whether Trading House, Export House, etc.
(iv) Applicability of other conditions relating to VABAL Scheme.
As specified in the Ministry of Commerce Notification all imports under this scheme are also subject to all other conditions specified for import against Value Based Advance Licences except as stated in preceding para, the inputs imported under this scheme are subject to the actual user condition. The importer is also debarred from availing input stage credit under rule 57A of the central Excise Rules, 1944 on any of the inputs used in the manufacture of Iron & Steel Intermediates. The certificate from the Licencing Authorities towards discharge of obligation on the licence holder should indicate that Iron and Steel Intermediates supplied by the licence holder to Engineering Exporter did not avail input stage credit under Rule 57A or the Central Excise Rules, 1944.
(v) Import through specified Ports etc.
As provided in case of other notifications under Duty Exemption Scheme, the present scheme also permits import through Ports/ Airports and I.C.Ds. as specified in condition (vii) of the notification. However, the Collectors of Customs are empowered to permit import from any other seaport/ Airport/ I.C.D. or Land Customs Station. While considering importer request for permitting import from Ports etc. other than those specified, the guidelines issued by the Ministry under Duty Exemption Scheme in this regard should be kept in view.
(vi) Issue of Release Advice by the Licencing Authority.
The Licence holder has to discharge obligation to supply Iron and Steel Intermediates to Engineering Products Exporters only against Release Advice issued by the Licencing Authority to the Engineering Product Exporter specifying the description, quantity, value and technical characteristics of the Iron and Steel Intermediates to be supplied. Exporters of Engineering Products seeking the Release Advice should not have a availed –
(a) Brand Rate of drawback in respect of Iron and Steel Intermediates, or
(b) Benefit of Duty Exemption in respect of Iron and Steel Intermediates; or
(c) The facility of rule 191A or 191B (as in force immediately before 1st October, 1994) or under rule 12(1)(b) or 13(1)(b) of Central Excise Rules, 1944 in respect of such Iron and Steel Intermediates; or
(d) the input stage credit under rule 56A or 57A of the Central Excise Rules, 1944 in respect or such Iron and Steel Intermediates.
Before issuing Release Advice the Licencing Authorities will be satisfying themselves that the aforesaid benefits have not been availed by the Engineering Product Exporters. Also past exports shall not be entitled for Release Advice if benefit of All Industry Rate of Drawback has been availed. Where the Engineering Exporter / the Licencing Authority approaches for issue of certificate, regarding non-availment of the aforesaid benefits, certificate may be issued by an officer of the rank of the Assistant Collector after due verification of the records.
(vii) Maintenance of records in the Custom Houses.
As in case of import under other Duty Exemption Scheme, the Custom Houses should maintain separate file in respect of every licence issued under the Scheme. The file should contain details of all imports made and T.R.As, if any, issued. Registers as prescribed under the Duty Exemption Scheme should be maintained for this Scheme also. A statement of duty foregone under this Scheme should also be included in the monthly statement at present being sent to Board in respect to other schemes like Quantity Based and Value Based Advance Licencing Scheme etc. The amount of duty foregone may be shown in separate column under the heading “Intermediate Value Based Advance Licence for Iron and Steel Intermediates”.
Under Secretary to the Govt. of India