Exporters can retain forex

CHATROOM

Commissions against orders can be remitted after realisation of proceeds.

I am a newcomer to exports and I have a opportunity to export telecommunication products to Africa but the concerned party in Africa expects some commission from me for each order. In order to pay commission to the African party, I must maintain a USD account. My questions are: 1) Are we allowed to open and keep USD accounts? 2) Shall I accept payment against export in USD account instead of INR current account? 3) Is there any percentage or limitation of receipt of USD amount to keep it in the dollar account? 4) Are we allowed to give "Commission against order/shipment" to the party at destination? If so, what is the maximum percentage or limit?

As an exporter, you can retain your foreign exchange earnings in EEFC (Exchange Earners Foreign Currency) account. You may approach your bank through whom you receive your export proceeds with a request to open EEFC account at the time of receiving the export proceeds in foreign currency. You can remit the agent's commission that you have declared in the GR/SDF form from your EEFC account. If you do not have enough balances in the EEFC account, your bank can sell foreign currency against your Indian rupees for remittance of commission. There is no limit on how much commission to pay but it must be reasonable as per the current industry practice. Commission can be remitted after realisation of export proceeds. Please note that service tax is payable on such commission.

Procedures for export through a merchant exporter or status holder by a SEZ unit have been given in Rule 46(11) of Special Economic Zones Rules 2006. Our query is whether the invoice raised by the SEZ unit on the merchant exporter / status holder in DTA against such activity will qualify for VAT exemption. The goods will be exported directly from the SEZ against shipping bill standing in the name of merchant exporter / status holder and the export proceeds will also be directly received by the merchant exporter / status holder.

Goods sold by SEZ to merchant exporter or status holder located in DTA can be a pre-export sale, in the sense that the same goods are exported. The merchant exporter or status holder in DTA may issue Form 'H', in which case VAT need not be charged.

We manufacture agrochemicals, namely Chlorpyriphos, Imidacloprid, Triclopyr and Fluroxypyr. Out of the four products, only Chlorpyriphos is listed under DEPB. Imidacloprid was sold in the domestic market only. Triclopyr and Fluroxypyr are 100 per cent export.

My queries are: 1) The materials that are being imported used to manufacture Triclopyr and Fluroxypyr by paying the Basic Customs Duty (BCD) and Education Cess (EC) through the DEPB (Duty Entitlement Passbook) available with the company are eligible for drawback or not? 2) In terms of Customs circular no.41/2005, Additional Duties of Customs (i.e. CVD & 4 per cent CVD) are eligible to claim for drawback even if the payment is made through DEPB. If this be the issue what about the BCD &EC debited to DEPB ?

3) When the company is prepared to pay the BCD& EC by cash and CVD and 4 per cent CVD by DEPB against the imports, the Customs is not allowing us to pay the same and instructing us to pay the total duties by cash or by DEPB. If the payment of BCD & EC by DEPB can't treated as payment made by cash, payment of CVD and 4 per cent CVD by DEPB are being treated as payment made by cash, what is the status of our drawback claim when we pay the BCD & EC by debit to DEPB?

The customs exemption notification 89/2005 Cus. dated 04.10.2005 exempts BCD, CVD (including. 4 per cent CVD) subject to fulfilment of specified conditions, one of them being that the duty amounts are debited to the DEPB. Since exemption means that no duty is paid on the imported goods so cleared under DEPB, there is no question of drawback of any duty, even if such goods are used as inputs in the manufacture of exported goods.However, two special provisions have been made in the said notification by way of exceptions- one that the CVD (including.4 per cent CVD) may be paid in cash and the other that the CVD (including.4 per cent CVD) debited to DEPB may be adjusted as Cenvat Credit or duty drawback. Similar provisions have not been made in the notification in respect of BCD or EC. In view of the above clear provisions in the exemption notification, no drawback of BCD and EC debited to DEPB will be available. Secondly, the Customs are quite right in refusing payment of only BCD and EC by cash and debit of only CVD to DEPB.

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