Problems faced by new units under Advance License and EPCG licenses.
Here is a genuine problem faced by an assessee because of lack of co-ordination between Revenue and Commerce Departments.
We have set up a new manufacturing facility for processing of Poly Tetra Fluoro Ethylene (commonly known as PTFE or Teflon) Powder into products such as PTFE Rods, Tubes, Sheets and Films. We import entire requirement of raw material from Russia and Europe for our export production as the quality raw material is not available in India.
The DGFT had deleted the condition of furnishing of 100% Bank Guarantee equivalent to import duty from the advance license on achieving exports of Rs. 3.00 Crores but the Customs Authorities are not accepting the deleted condition and are insisting on BG to be furnished equivalent to 15% of Customs duty + Interest.Being a new company and facing considerable difficulty in getting orders from overseas market due to recessionary conditions in Europe & US, we are finding it difficult to furnish for 1 year of commercial operations 15% BG on all imports for export production.The Board circular no. 58 of 2004 - Cus wherein it has been specified that ‘the manufacturer exporter registered with Central Excise who have been exporting during the previous two financial years and have minimum export of Rs.1 Crore or more during the preceding year are exempted from furnishing BG. A new unit which has achieved exports of Rs. 5 Crores in the current year are exempted from furnishing BG on imports against EPCG/Advance License.In the current financial situation, medium size units like ours who have achieved exports of Rs.3.00 Crores in the current year are in a difficult situation to provide/furnish BG of 15% of import duty + interest on imports for export production.It is unfortunate, that the raw materials we import from Russia are subject to anti dumping duty and we are required to furnish BG for basic customs duty + countervailing duty + anti dumping duty + interest on duty.
We find that there has been no amendment to the Board's Circular No. 58/2004. It is earnestly requested to kindly amend the above circular and reduce the eligibility of ‘Nil' Bank Guarantee security for exporters who have achieved Rs.3 Crores or more instead Rs.5 Crores or more in the current year or first year of operations.
Will the CBEC look into this?