QCOs of only three ministries exempted from imports under AA/EOU/SEZ

The commerce ministry has issued notification no. 71 dated March 11,  2024 superseding its own notification 67 dated 

March 7,  2024. What are the important changes?

First, the provisions relating to importability of items under advance authorisation/EOU/SEZ without quality compliance to the Quality Control Orders (QCO) have been shifted to the newly inserted Para 2.03A of the FTP (under Chapter 2 of the FTP which deals with the general provisions regarding imports and exports) from Para 4.18A, which incidentally dealt with only the imports under advance authorisations. Second, now the unutilised inputs imported under advance authorisation, irrespective of origin of goods, will be subject to payment of effective duty on MFN basis along with interest on the exempt materials besides payment of composition fee at 10 per cent of the CIF value of the goods. Third, SEZ units will be required to follow the same disciplines as EOUs such as giving a declaration at the time of imports to the Customs and jurisdictional DC that the imported inputs exempted from the applicability of the QCOs issued under the BIS Act 2016 are required for export production and DTA clearance of such inputs or goods manufactured out of such inputs will not be made. 
 

 

The list of ministries/departments whose QCO notifications are exempted by the DGFT for goods to be utilised/consumed in the manufacture of export products are given in Appendix 2-Y of HBP. It allows the exemptions only for QCO notifications issued by the ministry of steel, department for promotion of industry and internal trade and ministry of textiles. Does it mean that items covered by QCO notifications issued by other ministries, such as ministry of consumer affairs, ministry of chemicals and fertilizers, ministry of mines, ministry of electronics and information technology etc. will not be exempted even if imported under advance authorisation or by EOU  or SEZ units?
 

Yes. That is my understanding of the situation, although the DGFT policy circular no. 40 dated February 20, 2001 stating that such compliance to the quality standards shall not be applicable on imports made under AAs, by EOUs and SEZ units and imports for re-export purposes has not yet been withdrawn. I hope the DGFT will clarify the matter and also get the QCOs issued by other ministries exempted from imports under advance authorisation and by EOUs and SEZ units.
 

We have applied for EPCG authorisation but there is some delay in its issue. In the meantime, the goods have arrived at the airport.  In this case, can we ask for provisional assessment and get the goods released?

When we get the EPCG authorization, we can get the bill of entry finalized by claiming the exemption under the relevant Customs notification. 
 

Section 18 of the Customs Act, 1962 spells out specific situations when provisional assessment can be sought.  Your matter is not covered there.  However, Para 2.12 of FTP says that goods already imported/shipped/arrived, in advance, but not cleared from Customs may be cleared against an authorisation issued subsequently.