Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Subject: G&J EP Schemes — clarifications
It is directed to refer to Chapter 8 of the revised Exim Policy, 1997-2002 and Handbook of Procedures, Vol.I. The changes made in Chapter 8 of Exim Policy and HOP have necessitated amendments in notifications No. 3/88-Cus, dt. 14.1.88, 277/90-Cus, dated 12.12.90 and 177/94-Cus, dated 21.10.94, governing duty free import of Gem and Jewellery units in Jhandewalan special Jewellery Complex, EOU & EPZ respectively. These notifications have been amended vide notification No. 55/2000-Cus, dated 5.5.2000. Amendments have also been carried out in notification No. 41/99-Cus, dated 25.4.2000, providing for duty free I mport of consumables by the Gem and Jewellery units, Notification No. 144/93-Cus, dated 25.6.93, which deals with import of gold/silver in terms of Paragraphs 8.19, 8.20 & 8.22 of the Exim Policy, has been superseded by notification Nos. 56/2000-Cus, dated 5.5.2000 and 57/2000-Cus, dated 8.5.2000. A copy of each of the notifications is enclosed for reference. The salient features of the changes made are as give below:
Personal Carriage of Gem and Jewellery Import Parcels
Export against Supply for Foreign Buyers:
2. Prior to revision of the Policy, Paragraph 8.19 of the Policy allowed the nominated agencies to get in advance and free of charge gold, silver etc. from the foreign buyer for manufacture and export of jewellery. There is no duty on such imports under notification No. 144/93-Cus, dated 28.6.93. In the revised Policy, the para has been amended so as to extend this facility to the status holders (i.e. Export Houses, Trading Houses etc.). The revised para also allows nominated agencies and status holders to import in advance and free of charge plain semi-finished jewellery for repairs/re-make and export thereof, subject to achievement of minimum value addition of 10% for plain jewellery and 15% for studded jewellery. In both cases, the wastage permitted is 2%.
3. The corresponding paras of the HOP have also been revised. According to the revised provisions, the exporters, viz. Status holders, shall furnish a bank guarantee (valid for at least 1 year) to the Customs equivalent to 1-1/2 times the customs duty leviable on imported gold/silver etc./semi-finished jewellery/chains. In these cases, the exports shall be completed within 120 days from the date of import, falling which the Customs could enforce the bank guarantee executed by the exporters for recovery of duty/fine. Penal action could also be initiated under the Customs Act, 1962. Notification No. 56/2000-Cus, dated 5.5.2000 may be referred to for details. The Commissioner of Customs may make necessary arrangements to monitor imports and exports under the above mentioned scheme and to take timely action in case of default.
4. The Notification No. 144/93-Customs, dated 28.6.93 allows duty free import of gold and silver, when imported under -(I) scheme of export of gold/silver jewellery and articles against gold/silver supplied by foreign buyer, (ii) scheme of export of gold/silver jewellery for sale at approved exhibitions and (iii) Export Promotion and Replenishment Scheme as referred to in paragraphs 8.19, 8.20 & 8.22 of the Exim Policy respectively. The said notifcation required execution of bond and undertaking by the importer to further export even in cases where the import is against the sale at approved exhibitions or export promotion tour as replenishment as referred to in para 8.20 of the Policy. However, the corresponding provision in the HOP provides that gold, silver & platinum content on items sold in such exhibitions may be imported as replenishment. This replenishment is against the export already effected and items sold at exhibitions, therefore, the same does not call for any further export obligation on the importer. To implement the changes in Policy and HOP, notification Nos. 56/2000-Cus, dated 5.5.2000 and 57/2000-Cus, dated 8.5.2000 have been issued in supersession of notification No. 144/93-Cus, dated 28.6.93. The notifications may be referred to for further details.
Reduction in Value Addition Norms for Certain Studded Jewellery:
5. Under the revised Handbook of Procedures (paragraph 8.28), in the Table laying down wastage norms, jewellery studded with imitation stones, cubic stones, cubic zirconia and semi precious stones having per gram value less than per gram value of gold, has been included in the category of plain jewellery. The wastage norm for such studded jewellery is 3.5%. To align the revised provision of HOP with the Customs notifications, amendments have been carried out in notification Nos. 3/88, dated 14.1.88, 277/90 dt. 12.12.90 and 177/94-Cus, dt. 21.10.94.
Gold/Silver Coin, Medallion
6. Hitherto, only plain/studded jewellery – chain and bangles-manufactured by mechanized process were allowed to be exported. In the revised Policy, a new item namely gold/silver/platinum medallions and coins (excluding the coins of the nature of legal tender), has been included as item for manufacture and export. This item is required to achieve value addition of 3% and shall be allowed wastage norms of 0.25%. To align the provision of HOP with the Customs notifications, amendments have been carried out in notification Nos. 3/88, dated 14.1.88, 277/90 dated 12.12.90 and 177/94-Cus, dated 21.10.94.
Import of Studded Jewellery for Repairs/Remaking:
7. Before revision of Policy, under the provisions of paragraph 8.28 A, EOU/EPZ Units were allowed to import plain gold/platinum/silver jewellery for repairs/remake and export subject to a minimum NFEP of 7.5%. In such cases, wastage of 2% was allowed. Paragraph 8.28 A of the Policy has been revised to permit the import of studded gold/platinum/silver jewellery for repairs/remake and export thereof subject to a minimum NFEP of 12.5%. In both cases, the wastage allowed is 2%. To implement the above change, amendments has been carried in the existing notifications Nos. 3/88, dated 14.1.88, 277/90 dated 12.12.90 and 177/94-Cus, dated 21.10.94.
Wastage Norms for the Jewellery manufacture and export:-
8. The Table under Paragraph 8.28 of the Handbook of procedure lays down wastage norms for different categories of jewellery. Prior to 1.4.2000, paragraph 8.28 of the HOP provided wastage on mountings and findings at 3.5% if made out of gold/platinum and 4.5% if made out of silver. However, under the Customs notifications governing EOU/EPZ, the wastage for mountings and findings is admissible only if such mountings and findings are manufactured from imported gold and exported as such. The Table has been revised so as to allow wastage of 2.5% on the mountings, whether imported or indigenously procured/manufactured, used in the studded jewellery. To align with this new provision of HOP, the existing notifications Nos 3/88, dated 14.1.88, 277/90 dated 12.12.90 and 177/94-Cus, dated 21.10.94 have been amended.
Supply of Unsuitable/Broken cut and Polished Diamonds etc. in DTA
9. As per Paragraph 8.32 of the Exim Policy, unsuitable/ broken/cut and polished diamonds/rough diamonds/precious, semi precious stones upto 5% of the value of imported or indigenously procured goods are allowed to be sold in DTA against valid REP/Gem/REP/Diamond Imprest Licenses on payment of appropriate duty. The enabling notification (No. 20/97-CE dated 11.4.97), allows DTA clearance of broken stones/dead stocks on payment of excise duty or at 50% of custom duty, whichever is higher. Though the opening paragraph of said notification talks about goods manufactured by EOU/EPZ and allowed to be sold in DTA in accordance with paragraph 8.32 and 8.36 of the policy, the entries specified in the table does not include unsuitable cut and polished diamonds, rough diamonds, precious and semi-precious stones. iT may be noted that paragraph 8.32 of the Policy covers not only broken stones but also unsuitable cut and polished diamonds, rough diamonds, precious and semi-precious stone. In order to align the provisions of the notification with that of the EXIM policy, Notification No. 20/97-CE, dated 11.4.97 is being amended to allow DTA sale of unsuitable/broken/cut and polished diamonds/rough diamonds/precious, semi-precious stones and dead stocks upto 5% of the value of I mported or indigenously procured goods, on payment of 50% of aggregate duties of Customs or Excise duty, whichever is higher. A copy of the amended notification will be sent to you separately.
Import of Additional Items of Consumables:
10. Prior to amendment of EXIM Policy and HOP, para 8.88 of the HOP allowed duty free import of specified consumables upto 1% of FOB value of export, when imported by REP Licence holders issued under Chapter 8 of the Policy. The same was implemented vide Notification no. 41/99Cus, dated 28/4/99. This notification has been amended vide Notification No, 55/2000-Cus, dated 5/5/2000 so as to expand the list of consumables. Now the consumables may be imported by the importers against separate Replenishment Licences to be issued by the DGFT for the purpose. Such licences would be for the actual users and shall not be transferable.
Consignment-wise accounts between exports and imports:
11. A new para (8.78B) has been added in the HOP regarding maintenance of accounts. It has been provided that when the accounts are scrutinized at any point of time, the unit should account for, by way of fulfillment of export obligation and realization of prescribed NFEP, the entire quantity of imports. The unit shall also account for the total quantity of imports by way of total quantity of exports and the balance stocks including broken diamonds and other gemstones. However, the unit shall not be required to co-relate every export consignment with the corresponding import consignment. The diamond, precious and semi-precious stones shall be accounted for in cartage. The above provision may be brought to the notice of field formations for compliance.
12. Wide publicity may be given by issue of a Public Notice in this regard. Difficulties, if any faced in
the implementation of the above changes, may be brought to the notice of the Board at an early date.