The Central Board of Excise and Customs (CBEC) has issued a useful circular (no.4/2009-Cus. dated January 28, 2009) restricting the quantum of bond to be furnished under the duty exemption scheme and Export Promotion Capital Goods (EPCG) scheme to the amount of duty saved only. The element of interest is not to be added while computing the bond amount.
This clarification will save transaction costs for exporters, especially the small or new exporters, who have to back up the bond with bank guarantee. The bond, however, will have a condition that in case of default, the interest will have to be paid besides the amount of duty saved.
In another circular (no. 3/2009-Cus. dated January 20, 2009), the CBEC has said that the Directorate General of Systems (DGS) has since designed necessary software for online transmission of shipping bills and Advance Licences/Authorisations under the Duty Exemption Scheme (DES) and the EPCG scheme.
These Authorisations and shipping bills shall now be transmitted from DGFT to Customs and vice-versa online. The field formations at EDI-enabled customs stations have been asked to implement the procedures from a specified date in consultation with the DGS. This move again will save transaction costs and documentation hassles for exporters. As regards manual shipping bills at non-EDI station, the existing procedure will continue. The CBEC should quickly make all customs stations EDI-enabled.
The CBEC has, however, tightened the procedures for monitoring the realisation of export proceeds in all cases where duty drawback has been paid. The CBEC wants the exporters to declare at each port the details of all Authorised Dealers (AD), their codes and addresses, through whom they intend to realise the export proceeds, while filing drawback shipping bills.
Within seven days of the end of every calendar half year, the exporter has to furnish at each port AD-wise certificates from his AD or statutory Chartered Accountant showing details of the shipments which remain outstanding beyond the prescribed or extended time limit. Based on the certificates, the Customs will take action for recovery of drawback in all cases where the export proceeds have not been realised. The exporters have to now have to worry about one more compliance requirement.
The Director General of Foreign Trade (DGFT) has now clarified (Policy Circular no.56/2008 dated January 21, 2009) that Export-Oriented Units (EoU) will have the option not to claim Income Tax exemption and instead claim the benefits under various export promotion schemes under Chapter 3 of the Foreign Trade Policy. This is a very useful clarification because in many cases, the benefits under Chapter 3 schemes will be more than the benefit of income-tax exemption.
More From This Section
The DGFT has also clarified (Policy Circular no.55/2008 dated January 19, 2009) that deemed exports claims submitted in the form ANF-8 before June, 9, 2008 will remain valid even though the form was changed on that date. This principle should be applicable for all applications. Many times, the exporters are asked to resubmit applications in revised formats. That should be avoided as a matter of standard practice.
The government should study and come out with more instructions to cut down unnecessary paperwork, help reduce transaction costs and ensure quicker disbursement of refunds/rebates. The government must also declare a ‘blank year’ for fulfilment of export obligation, as many exporters are finding it difficult to find buyers in recession-hit countries.