It's taken a year to remove ambiguity in SHIS scheme

The commerce ministry introduced the Status Holder Incentive Scrip (SHIS) scheme on August 27, 2009. Under it, status holders were entitled to incentive scrip at one per cent of the FOB value of exports made during 2009-10 and during 2010-11, of specified sectors, in the form of duty credit over and above any other duty credit scrip claimed/availed. On August 23 this year, the benefit was extended for exports made during 2011-12.

Para 5.1A in the Handbook of Procedures (HBP) as notified on August 27, 2009, provided that the of the Zero Duty Export Promotion Capital Goods (EPCG) Scheme & SHIS shall not be simultaneously available in the same year. However, Para 2 (4) in the related Customs exemption notification no 102/2009 dated 11.09.2009 stated that the importer should not avail, in the year of import of the goods, the benefit of SHIS under Para 3.16 of the Foreign Trade Policy (FTP). Also, Para 9.3 and Para 9.4 of HBP that allowed filing delayed applications and supplementary claims did not bar applications under the SHIS scheme.

These provisions created some confusion. The FTP denied the claim of both these benefits in the same year but the Customs notification denied simultaneous benefits in the year of imports under the zero duty EPCG scheme. Second, the exporters could delay filing the SHIS claim to next year and get around the restriction. These confusions were highlighted in this column dated September 21, 2009.

In this year’s annual supplement, the confusion has been sorted by making suitable provisions in Para 3.10.3 of HBP that the SHIS scrips will not be issued in the year in which Zero Duty EPCG authorisation has been issued. And, that the SHIS scrips not issued in a particular year, for the reason that Zero Duty EPCG authorisation has been issued in that year, shall also not be issued in subsequent years. The finance ministry has also amended the related Customs notification by issuing an amending one, 92/2010 dated September 9 this year. The Central Board of Excise and Customs (CBEC) has also clarified the post-amendment position through its Circular no. 38/2010 dated September 27.

Para 3.10.3 of HBP makes it clear that the last date of filing the application under the SHIS scheme shall be March 31, 2011/2012/2013, for exports made during 2009-10/2010-11/2011-12, respectively. Second, the provision for filing delayed application under Para 9.3 of the HBP shall not be applicable for the SHIS Scheme in cases where the SHIS application (say, for exports made in 2009-10/2010-11/2011-12) has been filed after the prescribed date (i.e after March 31 2011/2012/2013) and Zero Duty EPCG Authorisation has been issued to the applicant by any Regional Authority (RA) during the year 2010-11/2011-12/2012-13 (from April 1 to March 31), says the HBP.

Moreover, in case SHIS Application is filed within the prescribed date (for exports made during 2009-10/2010-11/2011-12, as the case may be, including any supplementary claim under Para 9.4 of HBP) and where Zero Duty EPCG Authorisation has been issued to the applicant by any RA during the relevant year (i.e. during 2010-11/2011-12/2012-13, respectively, as the case may be), SHIS application shall be summarily rejected in view of the fourth sub-para of Para 5.1A of HBP.

These overdue amendments are very welcome because they remove doubts and avoid grant of simultaneous benefits under SHIS and the zero-duty EPCG scheme.

email: tncr@sify.com