Chatroom: DTA units can pay EOU in foreign currency, says expert

TNC Rajagopalan answers SME queries related to GST, export and import matters

We have an EOU. One of our DTA customers wants to pay in foreign currency for the goods supplied by us. Is that allowed?

S.No.8 in the Annexure 1 to RBI AP (DIR) Circular no.54 dated 25th November 2002 says that if the concerned authorities permit EOUs, un­its in EPZs, EHTPs and STPs to sell goods to buyers in DTA against payment in free foreign exchange, authorised dealers may sell foreign exch­ange to the buyers of such goods in DTA, without prior approval of the Reserve Bank.

We refer to the proviso to Rule 34 of the SEZ Rules, 2006, where (ii) and (iii) are separated by ‘or’ but both refer to sale of unutilized inputs from SEZ to EOU/EHTP/STP/BTP and state different conditions. Moreover, even under (ii), there are two conditions (a) and (b) that carry different conditions but are separated by ‘and’, which means both conditions must be fulfilled.  We find it very confusing. Can you please clarify which Rule we should follow?

 

The said proviso to Rule 34 was amended through notification GSR 909(e) dated 19th September 2018 and while drafting the amendment, it appears not enough care was taken. I think the option at (ii) should be only for sale from one SEZ unit to another SEZ unit, whereas the option at (iii) should be for sale from a SEZ unit to any EOU/ EHTP/STP/BTP unit. Further, the provisions at (iii)(a) and (iii)(b) should be read as options. The option at (iii)(b) should be used where the clearance is effected under notification 52/2003-Cus dated 31st March 2003. The option at (iii)(a) can come into play when the goods are cleared without claiming the benefit of any notification exe­m­pting the  IGST but since it does not talk about other dut­ies (e.g. basic customs duty), the matter is quite unclear and in fact, confusing. I suggest that you take up the matter with the Commerce Ministry for suitable amendments to the above referred provisions.

We refer to SION C-819 for export of stainless steel cutlery with or without handle irrespective of what material the handle may have been made of. We want to know whether the CIF value limit of 5 per cent FOB value allowed for import of miscellaneous items against this entry refers to the FOB value of imports or FOB value exports.

In my opinion, it refers to FOB value of exports but I cannot quote any specific provision to support my opinion.

We had got credit of RoDTEP benefit in our electronic duty credit ledger, immediately after exports. Now, due to some quality and service issues, our buyer may not make the full payment and therefore, there may be short realisation of export proceeds. We are required to surrender the RoDTEP credit in proportion to the shortfall in realisation of export proceeds.  Is there any way to tell the Customs to reduce credit made available to me?

No. You have to pay the amount of shortfall through TR-6 challan.  

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