Export clarification

SME CHATROOM

We had set up a Service EOU in 1994 for detailed engineering activities. We were one of the first to have gone for a service EOU after the Exim Policy made provisions for setting up of such EOUs. We did not make use of any duty-free inputs.

Our output was also not subject to any duties. When we approached the Customs Authorities in compliance with the standard conditions of approval, we were verbally informed that there was no need for a Customs Licence as there was no duty involvement.

The EOU authorities also never raised this question in the last ten years. When we applied for de-bonding, the EOU authorities informed us that the Customs Bond Officer should sign the form certifiying that we have complied with all stipulations of bonding.

Since Customs Bonding was never done in the first place, we are unable to comply with requirement. Could you kindly advise as to how we should proceed to complete the de-bonding of the EOU?

Bonding is an integral part of the EOU scheme, whether you take any duty exemptions or not. So, I am rather surprised that you were advised not to take a private bonded warehouse licence in the first place.

As per para 6.18 (e) of the Foreign Trade Policy, "The unit proposing to exit out of the EOU scheme shall intimate the Development Commissioner and Customs and Central Excise authorities in writing. The unit shall assess the duty liability arising out of debonding and submit the details of such assessment to customs and Central Excise authorities. The Customs and Central Excise authorities shall confirm the duty liabilities on priority basis. After payment of duty and clearance of all dues the unit shall obtain "No Dues Certificate" from the Customs and Central Excise authorities. On the basis of No dues certificate so issued by the Customs and Central Excise authorities, the unit shall apply to the Development Commissioner for final debonding. In case there is no proceeding pending under FT(DR) Act 1992, the Development commissioner shall issue final debonding order within a period of 7 working days. "

Thus, 'No dues' certificate from the Customs and Central Excise authorities is essential for the debonding of a EOU. You may approach the jurisdictional Commissioner of Customs and Central Excise, explain your case and get a 'no dues' certificate. If you still face difficulties, please take up the matter with the Central Board of Excise and Customs and the Development Commissioner.

I have read the article clarification regarding submission of "Proof Of Export".

I have a reverse query.

We have sold goods""toothpaste, to exporter who have submitted export proof, ARE, Mate receipt, copy of BL & other set of export documents. The exporter however now is no more traceable & have not submitted us the H Forms for the last of the consignments, which were factory stuffed. Necessary ARE are also available with us.

In lieu of the above & absence of Form H, can the documents as above be sufficient for the sales-tax officer to accept our submissions.

The exporter have also submitted us the Form H for previous consignments exported by him. All consignments are factory stuffed-ex works basis.

Let me clarify at the outset that the clarification regarding 'proof of export' that I gave last week was in response to a query from a small scale industry working under exemption limit of Rs. 1 crore. It is for such units that the Central Board of Excise and Customs (CBEC) had put in place a simplified procedure.

The purpose of the simplified procedure was to enable the small units working under exemption limit of Rs. 1 crore to exclude the export sales and exports through merchant exporter while reckoning the domestic turnover limit of Rs. 1 crore. It was to make life easier for such small units using the simplified procedure that the CBEC issued necessary instructions regarding acceptance of Form 'H' or any similar sales tax form as 'proof of exports'. The relaxation given by CBEC is not available to duty paying units that clear the export goods under bond/UT1 and under cover of excise invoice and ARE1 form.

Regarding your query, I have not come across any specific instructions from sales tax authorities that waive the requirement of producing the form 'H'. As a matter of principle, however, there are case laws (e.g. in excise) that say that non-fulfilment of procedural requirements should not result in denial of substantial benefits.

Our overseas client had asked for the Export Documents to be directly sent to them and not through bank. We had to concede to their request. We are not a status holder company and neither have we obtained RBI approval for directly sending the documents to the bank.

In this connection we want to know what are the repercussions of directly sending the documents to the overseas client and not routing the same through bank. Can the Bank refuse to remit commission to overseas agent or issue Bank Realisation Certificate or Foreign Inward Remittance Certificate?

Since you have already dispatched the documents directly to the buyer, you may explain the reasons to your bankers and submit to them the GR/SDF form duplicate along with a set of non-negotiable documents. You may request them to take the documents on record and mark off the GR/SDF form as and when the payment is received. In case you have not delivered the GR/SDF form within 21 days of shipment to the bank, you may request for condonation of delay explaining the reasons.

The RBI instructions do give bankers the powers to condone the delay. But the powers to condone your not routing the documents through your bank are not specifically provided. However, I expect that so long as you realise the payment within the time allowed, your bankers as well as the RBI will take a lenient view. Your bankers might decide to forward your request to RBI and obtain the necessary approval, will take a lenient view.

In any case, your bankers must take the GR/SDF form and your non-negotiable documents on record and they must issue bank certificates and foreign inward remittance certificate. They should also permit the remittance of commission, as declared in the GR/SDF form, subject to compliance with other RBI instructions relating to remittance of commission. In case, your bankers do not co-operate, you can approach the RBI who, I am sure, will take a sympathetic and lenient view of a bonafide mistake.

We procure excisable goods without duty payment under notification no. 43/2001-CE (NT) dated 26.06.2001 issued under C.Ex. Rule 19 (2) for export production. Kindly let us know, whether we can export the manufactured goods under DEPB scheme?

There is no bar against claiming benefits under the DEPB scheme against export of goods manufactured from excisable inputs procured under the notification no.43/2001-CE (NT) dated 26.6.2001. The DEPB scheme neutralises only the incidence of basic customs duties on the deemed import content of inputs in the export product. The CVD or excise duties do not enter the DEPB calculation while notifying the rates.

From now on SME-related queries will appear every Wednesday on the Accent Pages. TNC Rajagopalan will answer questions from readers on SME-related issues pertaining on taxes, exim policies or registrations/reservations, etc. Due to a technical glitch, the ID smequeries@business-standard.com was not receiving mails. The error has been rectified and readers can now send mails.