We are receiving commission against marketing and sourcing service provided in India to foreigners. Are we entitled for Served from India Scheme (SFIS)? Further, can we use this duty credit scrip to adjust against the excise duty on our procurement of raw material for our group battery manufacturing company?
For getting SFIS, you must have a minimum free foreign exchange earning of Rs 10 lakh in the preceding or current financial year. For individual service providers, the minimum would be Rs 5 lakh. Moreover, as per Para 9.53 of the Foreign Trade Policy, ‘Service Provider’ means a person providing supply of a ‘service’ from India to any other country, or supply of a ‘service’ from India to service consumer of any other country in India, or supply of a ‘service’ from India through commercial or physical presence in territory of any other country, or supply of a ‘service’ in India relating to exports paid in free foreign exchange or in Indian rupees, which are otherwise considered as having being paid for in free foreign exchange by the RBI. Also, your service must be covered under the list of services given in Appendix 10 of Handbook of Procedures – Vol 1. The SFIS scrip is not transferable. You can use the SFIS scrip for getting exemption of excise duty under notification no. 34/2006-C E dated 14/06/2006. Please note, however, that the supplier must examine the implications under Rule 6 (1), (2), (3) of Cenvat Credit Rules, 2004. He may be required to pay 10 per cent of the value (which is more than the 8 per cent duty saved) or reverse proportionate credit.
Safeguard duty of 20 per cent is levied on import of soda ash from China. What is the value on which it will be levied? Will 20 per cent be on the total of CIF value and duties?
The notification no. 37/2009-Cus. dated 20th April 2009 imposes safeguard duty at 20 per cent ad valorem on import of soda ash from China. It means that the duty will be levied on the assessable value determined in accordance with Section 14 of the Customs Act, 1962.
Kindly refer to DGFT Policy Circular no. 72/2008 dated 24/03/2009, which says that since the objective of SION is to allow duty-free import of the inputs which are actually used or are capable of being used in the export product, the exporter has the flexibility to import the alternative input/product mentioned in the Standard Input Output Norms (SION). Does the clarification apply for advance licenses also?
The clarification is issued in the context of doubts regarding allowing alternative inputs as per SION under Duty Free Import Authorisation (DFIA) scheme, even if the input mentioned in the SION has not been specifically utilised in the manufacture of the exported product. But the clarification itself is general enough regarding SION and so must apply to advance authorisations. Please note, however, that the DFIA notification no. 40/2006-Cus. dated 1/5/2006 still says that ‘materials’ means raw material, components, intermediates, consumables, catalysts, and parts which are required for manufacture of the resultant product.
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