[PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (I)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

21-10-1994

Notification No. 177/94-Customs

Exemption to specified goods for use in export of gem and jewellery.

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Annexure I to this notification (hereinafter referred to as the said goods), when imported into India by the gem and jewellery units set up in an Export Processing Zone or in a Free Trade Zone specified in Annexure II of this notification (hereinafter referred to as the Zone), for the manufacture or packaging of gem and jewellery for exports out of India, or for the promotion of exports of gem and jewellery, from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), and from the whole of the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act, subject to the following conditions, namely :-

(1)

the importer has been authorised to establish a manufacturing unit in the Zone for the purposes specified in this notification;

(2)

the importer is covered, wherever required, by a general or specific permit issued by the Reserve Bank of India;

(3)

the importer has been granted necessary licence for the import of the said goods;

(4)

the importer executes a bond in such form and for such sum as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binding himself to –

(i)

bring the said goods into his unit and use them within the Zone for the purposes specified in this notification;

(ii)

dispose of the said goods or the gem and jewelery manufactured or packaged in the unit or the waste arising out of such production or packaging in the manner as may be prescribed in the Export-Import Policy and in this notification;

(5)

the importer shall maintain a proper account of import, consumption and utilization of the said goods and of the exports made by him, and shall submit such account periodically to the Assistant Commissioner of Customs or Deputy Commissioner of Customs;

(6)

the importer satisfies the Development Commissioner of the Zone that the goods so imported have been used for the purposes specified in the notification or for any other purposes specified in Export-Import Policy;

(7)

the Assistant Commissioner of Customs or Deputy Commissioner of Customs, may subject to such conditions and limitations as may be imposed by him and subject to the provisions of Export-Import Policy –

(i)

permit the said goods or goods manufactured or packaged in the unit to be transferred or supplied to another unit in the same Zone;

(ii)

permit re-export of imported goods and export of domestically procured goods including goods generated out of partial processing/manufacture from such goods;

(iii)

permit supply of unsuitable or broken cut and polished diamonds, precious and semi-precious stones or rough diamonds up to 5% of value of import or indigenously procured goods to the Domestic Tariff Area against the valid REP or GEM REP or Diamond Imprest Licences as applicable on payment of appropriate duty;

(iv)

permit with the approval of Development Commissioner personal carriage of precious metals jewellery or precious or semi-precious stones or beads as samples up to US $ 1,00,000 for export promotion tours and temporary display abroad subject to the condition that the exporter would bring back the jewellery or its sale proceeds within 45 days from the date of its clearance;

(iv a)

permit, with the approval of Development Commissioner, export of jewellery for holding, or participating in, an exhibition abroad subject to the condition that jewellery not sold shall be re-imported within 60 days of the closure of the exhibition

(v)

permit export of jewellery including branded jewellery for display and sale in the permanent shops set up abroad, provided that such items not sold abroad within 180 days, shall be re-imported within next 45 days.

(vi)

permit clearance of used packing materials, such as cardboard boxes and polyethylene bags of a kind unsuitable for repeated use, without payment of any customs duty;

(vii)

permit clearance of parts and tools of machinery in Domestic Tariff Area without payment of duty for repairs and return thereof;

(viii)

permit clearance of capital goods out of the zone on payment of an amount equal to the customs duty leviable on such goods on the depreciated value thereof at the rate in force on the date of payment of such duty :

Provided that the importer shall not be eligible to avail of the exemption applicable to goods falling under heading No. 98.01 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), or the exemption available to imported goods under the Export Promotion Scheme other than the Export Promotion Capital Goods Scheme permitting import of capital goods at the rate of duty of 5% ad valorem in terms of notification in force at the time of de-bonding.

Explanation. – The depreciation in respect of capital goods covered by clause (viii) above shall be allowed for the period from the date of commencement of commercial production of the unit or where such goods have been imported after such commencement, from the date such goods have come into use for commercial production, upto the date of payment of duty.

(8)

gem and jewellery, including the rejects, manufactured in the said Zone, shall not be brought to any other place in India (that is to say the Domestic Tariff Area) for whatever purpose :

provided also that exchange of plain gold or plain silver or plain platinum jewellery, from any place in India to the said Zone with the gold or silver or platinum of the equivalent quantity in weight as that of gold or silver or platinum, as the case may be, contained in the said jewellery, permitted subject to such conditions as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs:

Provided also that exchange of machine-made gold or silver or platinum jewellery and chains, from any place in India to the said complex with the gold or silver or platinum of the same purity and quantity in weight as that of gold or silver or platinum jewellery or the chain, as the case may be, permitted subject to such conditions as may be prescribed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs:

Omitted vide Notification No.64/2002-cus dated 24-6-2002.

Provided also that exchange of plain hand-made gold or plain hand-made silver or plain hand-made platinum jewellery, from any place in India to the said zone with the gold or silver or platinum of the same purity and quantity in weight as that of gold or silver or platinum jewellery, as the case may be, permitted subject to such conditions as may be prescribed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs.

(9)

in the event of a unit ceasing its operation, gold, other precious metals, alloys, gem and material for the manufacture of jewellery shall be handed over to the Agency, nominated in this behalf by the Government of India in the Ministry of Commerce;

(10)

the “Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow, subject to fulfilment of such conditions as he may specify, the percentage of wastage of gold or platinum specified in column (2) of the Table given below or percentage of wastage of silver as specified in column (3) of the said Table, during the manufacture of jewellery of description specified in the corresponding entry in column (1) of the said Table.

Table

Description of Jewellery

Percentage of wastage of Gold or Platinum

Percentage of wastage of Silver

(1)

(2)

(3)

a.

Plain jewellery and articles thereof unstudied

3.5%

4.5%

b.

Studded jewellery and articles thereof

9.0%

10%

c.

Mountings and findings used in the plain jewellery

3.5%

4.5%

d.

Mountings, whether imported or indigenously procured/manufactured, used in the studded Jewellary.

2.5%

2.5%

e.

gold / silver / platinum medallions and coins of the nature of the legal tender

1.25%

1.25%

Explanation:

(a)

Omitted.

(b)

The percentage of wastage shall be calculated with reference to the total quantity of gold or silver; imported or issued for manufacture of the jewellery.

(c)

No wastage shall be allowed for the jewellery procured under para 6.15 (d) of the Export and Import Policy.

(d)

The expression “Plain jewellery and articles thereof unstudded” shall include “Mangal Sutra” containing gold and black beads, and jewellery studded with imitation stones, and cubic zirconia and semi-precious stones:

Provided that per gram value of the semiprecious stones utilised in the making of jewellery and articles is less than the per gram value of gold.

(11)

export under this notification shall be allowed –

(i)

by air freight through the airports specified in Annexure-II to this notification; and

(ii)

through post parcels or through the authorised couriers, in accordance with such procedure as may be specified by the Commissioner of Customs:

Provided that when exports are made through authorised couriers through Customs Houses at Mumbai, Calcutta, Chennai, Delhi, Bangalore or Hyderabad, the Free on Board value of any consignment shall not exceed rupees twenty lakhs.

(12)

gem and jewellery manufactured in the said Zone may be supplied to the retail outlets or show rooms set up in the departure lounge at international airports at Calicut, Chennai, Cochin, Delhi, Hyderabad, Kolkata,Mumbai, Thiruvananthapuram and Vishakapattinam in accordance with the Import and Export Policy for sale to a tourist as defined in the Baggage Rules, 1994, leaving India in accordance with the procedure specified by the Commissioner of Customs.

Explanation. Omitted vide Notification No.64/2002-cus dated 24-6-2002.

(13)

gem and jewellery manufactured in the said Zone and sold to a foreign bound passenger may be transferred in accordance with the Import and Export Policy to the retail outlets or showrooms set up in the departure lounge or customs warehouse at international Airports specified in the Annexure-II to this notification for being handed over to the said passenger for the purpose of export, as per procedure specified by the Commissioner of Customs in this regard.

2. Notwithstanding anything contained in the first paragraph, the exemption contained therein shall also apply to silver and gold falling under Heading No. 71.06 and 71.08 respectively of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) imported by the Metals and Minerals Trading Corporation Limited, Handicraft and Handloom Export Corporation, State Trading Corporation, the Projects and Equipments of India Limited and any agency authorised by Reserve Bank of India for being supplied to the gem and jewellery units in the said Zone under the scheme for export of gold and silver jewellery and articles from the Export Processing Zone as specified in Export and Import Policy read with Chapter 6 of the Handbook of Procedures, Volume-I

Provided that where gold is imported on behalf of a jewellery unit, the exemption shall apply only if –

(a) the procedures as may be specified by the Commissioner of Customs are followed by such a jewellery unit; and

(b) the conditions stipulated in the first paragraph are complied with by such a jewellery unit.

Provided further that in the event of the Gem and Jewellery units to whom the gold or silver has been supplied, fails to export the jewellery made out of such gold or silver within the time specified in the Export and Import Policy under the respective Scheme, the nominated agencies shall deposit duty on the quantity of the gold or silver not contained in the jewellery exported at the rate of duty of customs leviable on the gold or silver, as the case may be, as provided in the Notification No. 80/97-Customs, dated the 21st October, 1997 within seven days of the expiry of the period within which the said jewellery manufactured out of the said gold or silver was supposed to be exported.

3. (1) The notifications of the Government of India in the Ministry of Finance, Department of Revenue, specified in Annexure-III to this notification, are hereby rescinded.

(2) Notwithstanding such rescission, anything done or action taken under the notifications so rescinded shall be deemed to have been done or taken under the corresponding provisions of this notification.

4. For the purposes of this notification, the duty of customs leviable on gold and silver imported by the importer shall be limited to the duty specified under notification of the Government of India, Ministry of Finance, Department of Revenue, No. 80/97-Customs, dated the 21st October, 1997.

Explanation.-For the purposes of this notification,

(i)    “Export and Import Policy” means the Export and Import Policy, 1st April, 2002-31st March, 2007 published by the Government of India in the Ministry of Commerce and Industry vide Notification No. 1/2002-07, dated 31st March, 2002 as amended from time to time.

(ii)    “Handbook of Procedures, Volume I” means the Handbook of Procedures, Volume-I, 2002-2007 published by the Government of India in the Ministry of Commerce and Industry vide Public Notice No. 1/2002-07, dated the 31st March, 2002

ANNEXURE-I

Description of goods

1.

Capital goods and spares thereof.

2.

Captive power plants, including captive generating sets and their spare parts, fuel, lubricants and other consumables for such power plants and generating sets as recommended by the Board of Approvals.

3.

Office equipments, spares and consumables thereof.

4.

Raw materials.

5.

Components.

6.

Consumables required for manufacture of goods.

7.

Packaging materials.

8.

Tools, jigs, gauges, fixtures, moulds, dies and instruments and accessories and spare parts thereof.

9.

Prototypes, technical and trade samples for development and diversification.

10.

Drawings, blue prints and charts.

11.

Goods re-imported within one year of the date of exportation for re-export after repairs or remaking.

12.

Goods re-imported within one year from the date of exportation from the Zone due to the failure of the foreign buyer to take delivery.

13.

Old gold jewellery, old platinum jewellery, and old silver jewellery for repair or remaking for re-export.

ANNEXURE-II

Name of the Zone

Exports through Airports at

1.

Santacruz Electronics Export Processing Zone

Sahar

2.

Cochin Export Processing Zone

Trivandrum/ Calicut/Cochin

3.

Noida Export Processing Zone

Delhi

4.

Falta Export Processing Zone

Calcutta

5.

Madras Export Processing Zone

Madras

6.

Surat Export Processing Zone

Sahar

7.

Visakhapatnam Export Processing Zone

Visakhapatnam/Mumbai, Chennai/Hyderabad

8.

Kayfoam Export Processing Zone Kandivili, Mmnbai

Sahar, Mumbai

Note: The Zone shall comprise of places bearing survey numbers and enclosed by boundaries as may be specified by the jurisdicfional Commissioner of Customs in a Public/Trade Notice, issued in this behalf.

ANNEXURE-III

1. Omitted.

2. Omitted.

3. Notification No. 258/87-Customs, dated 2-7-1987.

4. Notification No. 260/87-Customs, dated 2-7-1987.

5. Notification No. 262/87-Customs, dated 2-7-1987.

Notification No. 177/94-Cus., dated 21-10-1994 as amended by Notifications No. 195/94-Cus., dated 6-12-1994; No.101/95-Cus., dated 26-5-1995; No. 115/95-Cus., dated 8-6-1995; No. 117/95-Cus., dated 12-6-1995; No.170/95-Cus., dated 26-12-1995; No. 90/96-Cus., dated 19-11-1996; No. 33/97-Cus., dated 1-4-1997 ; No.57/97-Cus., dated 3-7-1997; No. 76/97-Cus., dated 14-10-1997; No. 83/97-Cus., dated 27-10-1997; No. 11/98-Cus.,dated 27-4-1998; No. 61/98-Cus., dated 5-8-1998; No. 40/99-Cus., dated 28-4-1999 and No. 55/2000-Cus.,dated 5-5-2000  No. 10/2000-Cus.,dated 28-1-2000; Notification No.56/2001 dt.18-05-01, No.116/2001 dt.06-11-01.and No.64/2002-cus dated 24-6-2002.

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