We refer to RBI instructions regarding opening/hiring warehouses abroad. One of the conditions is that our export outstanding should not exceed five per cent of exports made during the previous financial year. We are unable to meet this condition but we want to open a warehouse abroad. What to do?
The RBI instructions allow AD-category 1 banks to grant approval for opening or hiring warehouses abroad subject to fulfilment of certain conditions. Since you don’t fulfil one of those conditions, your banks cannot grant approval, but RBI can certainly consider your application. So, you may approach RBI with a request to grant necessary approval.
We refer to the DGFT Trade Notice no. 16/2015 dated February 10, 2016 regarding supply of goods to SEZ units. We have an advance authorisation issued before April 1, 2015 but we have made supplies to SEZ units after April 1, 2015 against payment in Indian rupees. Will they be counted towards discharge of export obligation?
The Trade Notice makes it clear that in the new FTP 2015-20 it has been stipulated in para 4.21 (iii) that “Export to SEZ Units shall be taken into account for discharge of export obligation provided payment is realised from Foreign Currency Account of the SEZ unit”. So, conditions of para 4.21(iii) of FTP will have to be complied with in respect of the Advance Authorisations issued during FTP 2015-20 only. Your advance authorisation was issued during the earlier 2009-14 FTP. So, the conditions of Para 4.16 (a) of that policy will apply regardless of when you have made the supply. In short, your supplies will be counted towards discharge of export obligation despite payment realisation in Indian rupees.
Yes. That requirement went away on October 1, 2014, when the definition of ‘intermediary services’ was amended in the Place of Provision of Services Rules, 2012. Prior to that date EXP-3 and EXP-4 were required under the notification 42/2012-ST dated June 29, 2012. That notification was rescinded on March 1, 2015.
As merchant exporters, we issue CT-1 to manufacturers based on the price at which we buy from them, and not based on the price at which we export. Are we correct?
Yes. You may refer to CBEC Circular No. 203/37/96-CX, dated April 26, 1996, and Para 6.2.1 of Part-II, chapter 7 of CBEC Manual of Supplementary Instructions.
Can we claim drawback at notified rates when we are exporting under advance authorisation?
No. As per condition 10(b) of notification no.110/2015-Cus (NT) dated November 16, 2015, the rates of drawback specified in the Drawback All Industry Rate Schedule will not be applicable to the export of a commodity or product if such commodity or product is manufactured or exported in discharge of the export obligation against an Advance Licence or Advance Authorisation or Duty Free Import Authorisation issued under the Duty Exemption Scheme.
The RBI instructions allow AD-category 1 banks to grant approval for opening or hiring warehouses abroad subject to fulfilment of certain conditions. Since you don’t fulfil one of those conditions, your banks cannot grant approval, but RBI can certainly consider your application. So, you may approach RBI with a request to grant necessary approval.
We refer to the DGFT Trade Notice no. 16/2015 dated February 10, 2016 regarding supply of goods to SEZ units. We have an advance authorisation issued before April 1, 2015 but we have made supplies to SEZ units after April 1, 2015 against payment in Indian rupees. Will they be counted towards discharge of export obligation?
The Trade Notice makes it clear that in the new FTP 2015-20 it has been stipulated in para 4.21 (iii) that “Export to SEZ Units shall be taken into account for discharge of export obligation provided payment is realised from Foreign Currency Account of the SEZ unit”. So, conditions of para 4.21(iii) of FTP will have to be complied with in respect of the Advance Authorisations issued during FTP 2015-20 only. Your advance authorisation was issued during the earlier 2009-14 FTP. So, the conditions of Para 4.16 (a) of that policy will apply regardless of when you have made the supply. In short, your supplies will be counted towards discharge of export obligation despite payment realisation in Indian rupees.
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Our excise authorities allege that for claiming exemption from service tax on commission earned by agents abroad for booking export orders, we have not filed form EXP-3 and EXP-4. Has this requirement not been removed?
Yes. That requirement went away on October 1, 2014, when the definition of ‘intermediary services’ was amended in the Place of Provision of Services Rules, 2012. Prior to that date EXP-3 and EXP-4 were required under the notification 42/2012-ST dated June 29, 2012. That notification was rescinded on March 1, 2015.
As merchant exporters, we issue CT-1 to manufacturers based on the price at which we buy from them, and not based on the price at which we export. Are we correct?
Yes. You may refer to CBEC Circular No. 203/37/96-CX, dated April 26, 1996, and Para 6.2.1 of Part-II, chapter 7 of CBEC Manual of Supplementary Instructions.
Can we claim drawback at notified rates when we are exporting under advance authorisation?
No. As per condition 10(b) of notification no.110/2015-Cus (NT) dated November 16, 2015, the rates of drawback specified in the Drawback All Industry Rate Schedule will not be applicable to the export of a commodity or product if such commodity or product is manufactured or exported in discharge of the export obligation against an Advance Licence or Advance Authorisation or Duty Free Import Authorisation issued under the Duty Exemption Scheme.