There is serious problem in Notification No. 33/2015-20 dated 13.10.2017 related to the advance authorization issued by the DGFT. The prior import condition is not just & proper as it is simply interference in how the beneficiary of the entitlement conducts his business. Please note that hitherto this condition was only applicable in those cases where the imported input is to be used for the Manufacture of exports. For e.g., in the case of imports of unregistered bulk drugs for the manufacture of pharmaceutical formulations. This is essential because the unregistered bulk drugs cannot be imported & consumed for the manufacture & release in the domestic market. Any sane person can understand & appreciate the legal provision. However, there is absolutely no guarantee that whether the provision is being complied with because of the way it is implemented. Once again, a person with little common sense will understand that prior import cannot guarantee that the imported goods are used in the manufacture of exports. Therefore, this in itself is idiotic & simply acts as a tool for harassing the Exporters. The reason being that there is no valid test for compliance in the real sense of the word. As a matter of fact such idiocies compel the exporters to fudge the records to show compliance. The DGFT should comprehend that if any condition is added then it loads the Exporter with the cost of compliance & this is antithetical to the export promotion policy, the prime objective of which is to make the exports competitive by reducing the transaction costs. However, all these ideals are dealt with lip service but the whims & fancy of the official in position manifests as the policy & the helpless Exporter has to bear the brunt of such idiocies. Why can’t the DGFT understand that he has no right to meddle in the way the Exporter conducts exports & imports. How, does prior import condition makes sense when the same was not there prior to the introduction of the GST? Why the DGFT is trying to pull wool over the eyes of the Exporters & get them trapped? If the Exporter is hard-pressed for supply & the raw material supply from the import source is delayed should the Exporter delay the supply to his overseas buyer & incur the wrath & pay the penalty though the Exporter is in position to fulfill the exports by using the indigenous material. Do I need to tell you that nothing can be more ridiculous than this! Why the DGFT does not apply mind to find out that whether there was an error in the policy for years together & why such restriction did not apply? These basics should be clear to one & all & at the very least to the policy makers. The DGFT cannot prove to be a stooge, whose hand can be forced to impose a condition, which makes no sense at all. Under the aegis of the WTO, the period of imports & exports is even discussed & approved & both the advance as well as replenishment imports are permitted in the guidelines to be followed by the member countries. Therefore, why the DGFT should impose such arbitrary & whimsical conditions on the exporters & render them uncompetitive. Why DGFT is proving to be the biggest stumbling block? Why should the DGFT force imports on the exporter even if it doesn’t suit his condition or market is not favorable. As specified earlier, this advance import condition has not been there earlier because this restriction is ridiculous. If the Exporter has made Exports under an AA between July & September i.e. the Exporter anticipated the reversion to complete exemption then the benefit should be allowed to the Exporter. There is no legal basis for such restriction. If the Exporter prefers to import under replenishment clause as a matter of business strategy to minimize the risk then why the DGFT should have any objection?

Further, please note that restoration of the complete exemption should be restored for deemed exports AA also because the deemed Exporter may be fully dependent on imports. The DGFT cannot ignore the fact that foreign exchange saved is equivalent to foreign exchange earned & does not warrant any discrimination. Therefore, an AA issued for deemed exports should be at par with physical exports. The discrimination is not valid & therefore there is no room for such idiocies. There is no legal basis for such discrimination. Why should you kill manufacturing in India by imposing such restriction. Therefore, this needs change.

Thirdly, restoration of exemption on indigenous procurements should have been carried out because this was the hope given to the Exporters & it should not be belied. This is essential because it will otherwise render indigenous procurements uncompetitive & this cannot be the objective of the export promotion policy of the DGFT.

It is pertinent to point out that, the government is responsible & accountable for formulating & implementing a sensible export promotion policy. However, there is no semblance of it visible. The Foreign Trade Policy is the prerogative of the DGFT & the GST council cannot hijack this authority & treat DGFT just because the MoF has the most prominent role to play in the GST regime. The law is to serve the orderly conduct of International trade. How & why there cannot be exemption made available to Exports out rightly because the exports are zero rated & therefore there is no tax leviable. It is difficult to comprehend that how these elite IRS cadre officials propel fallacies & pull over the eyes of the whole nation including the businessmen with peddling of the half truths. The MoF says that there cannot be exemption under the GST completely oblivious of the fact that Basic Customs Duty exemption is administered through the AA scheme or there are zero GST items as per the tariff. Therefore, is it not simple, the tariff for all exports is fixed at zero i.e. the GoI does not collect tax, which does not belong to them in the first place. Why the Delhi mandarins in North Block & South block are simply interested in creating extra work & burden the Exporters for nothing. Are these officials not able to understand that by doing this, you are wasting the precious resources. The bureaucracy is not able to do any quality assessments but simply waste their time in processing refunds, which should not have been there in the first place. Not only this, the Exporter is wasting precious time in uploading this data & waste for the refunds. This is besides the cost of capital impinged on the Exporters, which has the effect of rendering the exports uncompetitive. It is difficult to understand that why the whole country should now down to such foolishness & participate in it. It is high time,that the DGFT & businessmen should show some spine & act rather than be bulldozed. You may not feel the pinch now, it is just possible but one crises in the International markets & the cookie will just crumble. We should therefore take precautions.

(Author Rajiv Gupta can be reached at

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December 2020