The Director General of Foreign Trade (DGFT) has notified the procedures for claiming the duty credits under the Status Holder Incentive Scheme (SHIS). He has also issued a Policy Circular clarifying listing of supporting manufacturers in the duty credit scrips. He needs to clarify an important confusion regarding realisation of foreign exchange.
Under the SHIS announced last year, status holders are eligible for duty credit for 1 per cent of the FoB value of exports during 2009-10 and 2010-11. For exports during the year 2009-10, the scrips can be claimed till March 31, 2011, and for exports made during 2010-11, the scrips can be claimed till March 31, 2012. Till Electronic Data Interchange with Customs is put in place for the scheme, exporters have to file manual applications. The SHIS benefit is in addition to other benefits under FTP but exporters availing zero-duty Export Promotion Capital Goods (EPCG) scheme or Technology Upgradation Fund are not eligible for SHIS scrip in the same year. The scheme is also restricted to select sectors like engineering, basic chemicals, leather, textiles, jute, handicrafts and plastics.
The SHIS scrip is not transferable but the supporting manufacturer’s name can be endorsed on the scrip and upon such endorsement, the supporting manufacturer can use the scrip as a co-licensee. For getting the name of the supporting manufacturer endorsed, the merchant exporter (in whose name export proceeds are realised) will have to furnish necessary documents such as shipping bill.
The SHIS scrips can be used for duty payment on import of capital goods relating to the specified sectors. For this purpose, the sector’s name will have to be endorsed on the scrip. Imports of capital goods may be related to any of the select sectors mentioned in the Foreign Trade Policy (FTP), without any sector-wise value limitation. This very significant flexibility is available even if the scrip is used by listed supporting manufacturers. However, for import of any ‘restricted item’, the utilisation of the scrip will be allowed only if the beneficiary/holder has a separate licence/permission for import of the ‘restricted item’ in question.
Many exporters have obtained zero-duty EPCG authorisations in the year 2009-10. The FTP allows them to claim 1 per cent SHIS on exports made during 2009-10 and 2010-11. However, the related Customs exemption notifications says that in the year of imports under zero duty EPCG authorisation, SHIS benefit should not be availed.
DGFT says that monitoring of export proceeds realisation shall be done in terms of para 3.11.12 and 3.11.13 of the Handbook of Procedures, Vol. 1 (HB-1), implying that scrips will be granted on the basis of shipping bill. However, the declaration number 5 to the application form requires the exporter to claim SHIS only on exports for which payment has been received. At S No 3 (b) of the Chartered Accountant Certificate, it is required to be certified that ‘it has been ensured that in respect of export of goods, a shipment can be counted in applicants’ export turnover only if the realisation of export proceeds from overseas is in the applicant’s bank account’. DGFT has to quickly amend the suitable provisions so that the exporters do not face problems in giving suitable declarations or the Chartered Accountant Certificate required for claiming the SHIS scrips.
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