Circular No. 27/2007-Cus,
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Applicable date for calculating the interest on excess imports under Para 4.28 of the Handbook of Procedures, Vol. 1 – Reg.
I am directed to invite your attention to Para 4.28 of the Handbook of Procedures, Vol. 1 and Notification No. 93/2004-Cus., dated 10-9-2004 according to which the authorisation holder is required to pay customs duty along with interest on the unutilized portion of the imported material in case he is unable to discharge the full export obligation.
2. A reference has been received by the Board seeking clarification regarding the manner in which the interest is to be calculated, especially in cases where the imports have taken place at two or more different dates and there is a partial failure in fulfilment of the export obligation. A doubt has been raised whether the applicable date for calculating interest in such cases would be the date of first imports or the date of last imports.
3. The matter has been examined by the Board. Prima facie, no interest becomes due till the taxable event i.e. excess import has occurred. As the goods imported first are normally used first in the manufacturing process, it would be logical to treat the last imports, which could not be utilised in the manufacture of export goods, as excess imports unless specific correlation between imports and exports is available.
4. It is, therefore, clarified that the applicable date for calculation of interest in terms of Para 4.28 of the Handbook of Procedures Vol. 1 and Notification No. 93/2004-Cus., dated 10-9-2004 would be the date of clearance of last imports, which could not be utilised in the manufacture of export goods, unless specific correlation between imports and exports is available.
5. These instructions may be brought to the notice of the trade and the staff by issuing suitable Trade Notice/Standing Order. Difficulties faced, if any in implementation of this Circular may please be brought to the notice of the Board at an early date.
Receipt of this Circular may please be acknowledged