Circular No. 101/95-Cus.
Government of India
Ministry of Finance
Department of Revenue, New Delhi
Subject: Exemption of additional duty of Customs on materials imported against Quantity Based Advance Licences for export of leather garments and readymade garments- Issue of Notification No. 149/95-Customs – regarding
Your attention is dawn to Notification No. 80/95-Customs and Circular No. 32/95 dated 31st March, 1995 wherein the changes in the Duty Exemption Scheme in terms of the changes announced in the Exim Policy on 31.3.95 were communicated. Representations were received regarding grant of exemption to the additional duty of Customs in respect of non-dutiable items.
2. After careful consideration of the representations received, Department has issued a separate Notification No. 149/95-Customs dated 19.9.95 (copy enclosed)1 permitting exemption from both basic duty of Customs and additional duty of Customs on materials imported for the manufacture of export product specified in the Table to the said notification viz. leather garments and ready-made garment including knitwear. The said notification is applicable only with respect to imports against Value Based Advance Licences (including Advance Intermediate Licences), issued on applications made on or after 19th September, 1995 in terms of paras 50 and 55 of the Exim Policy, for the aforesaid products. Keeping in view the need to ensure proper administration of the revised scheme, the duty concession has been extended only to exports which are made after filing the Advance Licence applications with the Licensing authorities on or after 19th September, 1995. In view of this any exports made prior to the specified data should not be considered for fulfilment of export obligation where application for Advance Licence was made prior to the specified date viz. 19th Sept., 1995 and hence the imports made against such export obligation against and Advance Licence even if issued on or after 19.9.95 would not be eligible for the duty concession under this notification. Under this Scheme, even where a part export obligation has been fulfilled in pursuance of an application made before 19.9.95 for Advance Licence, further exports if any made even after the specified date viz. 19.9.95 would not confer on the corresponding import materials any duty concession from additional Customs duty. Therefore, Commissioners of Customs are advised to issue suitable instructions to be Groups concerned so that extension of the concession in properly watched and granted only to eligible imports against DEEC issued specifically in terms of Notification No. 148/95-Customs.
3. The said Notification No. 149/95-Customs has been issued on the lines of Notification No. 204/92-Customs dated 19.5.92 and therefore, all instructions issued with regard to imports and exports under Notification No. 204/92-Cus in relation to maintenance of records, valuation of import and export goods, nexus between inputs and the export products, export and import through specified ports and non-availment of benefit of specified Central Excise Rules, etc. shall apply mutatis mutandis in respect of exports under the new Notification are not eligible for drawback under Section 75 of the Customs Act, 1962 in respect of all input (s) not to be imported against Advance Licence, Drawback shipping should not be allowed to be filed for export in terms of this Notification.
4. The salient feature of the revised Scheme is that the imported materials are subject to Actual User Condition. They can therefore be imported for export production (in the case of prior imports) or can be utilised as replenishment material. Even where it is imported as replenishment material, it cannot be traded or transferred and shall be subject to Actual User Condition. However, there could be some cases where the imported raw materials used in the manufacture of export products but the export products may become export rejects on grounds of quality control. In such cases, such export rejects may be sold in the domestic market. Such a sale would not, in any way effect or disqualify the grant of duty concession to the imported materials provided such sale of finished goods (rejects) is made after discharge of export obligation in full. The revised scheme is to ensure that the imported materials are utilised by the exporter in his factory or the supporting manufacturer who has been issued a joint licence alongwith the Merchant Exporter. Since the exporters factory or the factory of the supporting manufacturer may be spread out and may not be under the administrative area of the Customs Commissioner, a suitable declaration may be obtained from such importers before grant of the duty concession that they would utilise the imported inputs in the production process and not dispose them of and sell them or transfer them in any manner. In view of this Actual User condition, the licences are not transferable either. This aspect has to be kept in mind and in case a person other than the licence holder claims the benefit it should not denied in such cases of transferred licences
5. The notification incorporates specific conditions requiring Export obligation to be discharged by exporting products specified in the Part E of the DEEC, which should also be covered in the Table to the said notification and in respect of which facility of Rule 12(1)(b) or Rule 13(1)(b) of Central Rule, should not have been availed for inputsallowedto be imported against the licence. Hence, the provisions of Circular No 8/94-Customs dated 3.5.94, shall be applicable for monitoring the non-abailment of benefits in terms of the aforesaid Rules. However, since the export products included in the Table to the said notification are at present non-dutiable and therefore, not eligible for Modvat, it may not be necessary to insist on production of AR. 4 for the shipments. Accordingly a general certificate from the Central Excise authorities certifying that the units is not availing the benefit of Rule 12(1)(b) or 13(1)(b) in relation to the export products, may be accepted for the said export goods exported during the particular financial year in which the certificate was issued.
6. Declaration required to be given at the time of export in terms of Circular No. 4/92-Cus. dated 16.6.92 in relation to exports under Notification No. 204/92-Customs shall also be applicable in respect of export under this notification with the modification that instead of Rule 191A and 191B, the declaration shall be with regard to new Rules i.e., Rule 12(1)(b) and Rule 13(1)(b) of the Central Excise Rules. Since notification does not bar availment of Modvat benefits under rule 57 A, no declaration in respect of this rule would be required.
7. A separate record of import and export under this notification should be maintained by the Customs Houses and CIF value of imports, FOB value of export and revenue foregone, should be separately indicated in the monthly statement sent to the Board.
8. Necessary standing orders for the guidance of staff and Public Notices for information to Trade, should be issued and copies forwarded to Commissioner (Drawback)/ Director General of Inspection and Audit (Customs and Central Excise), New Delhi.