Correlation of inputs with the export product under DFIA Scheme - DGFT Clarifies
In Circular No. 46/2007-Customs, Dated : December 20, 2007, the CBEC clarified as,
I am directed to invite your attention to the provisions of paragraph 4.55.3 of the Handbook of Procedures, Vol.I 2004-09 and condition (i) of notification No.40/2006- Cus dated 1.5.2006 regarding correlation of technical characteristics, quality and specification of the inputs with the export product under the DFIA Scheme. In this connection, representations have been received from trade stating that the importers are facing difficulties in regard to clearance of material under DFIA Scheme because of insistence by the Customs to establish correlation between the imported goods and the exported product in all cases of imports under the said scheme.
It is clarified that except for the items specified in paragraph 4.55.3 of the Handbook of Procedures, Vol.I 2004-09, in all other cases a correlation between the inputs under import with those used in the exported product is not required to be established and that clearance under DFIA scheme may be allowed if other conditions of the scheme and Customs notification referred to above are fulfilled.
Normally, importers face difficulties with Customs on the ground that there is no corresponding Customs provision for the tall promises made in the Foreign Trade Policy. But in a reverse scenario, it seems now the difficulty is that there is no corresponding DGFT Circular for the Customs Circular No. 46/2007.
So now the DGFT clarifies,
DFIA is issued strictly as per SION. There are 22 sensitive items (inputs) listed in paragraph 4.55.3 of HBP v.1, for which an exporter need to specify the technical specification, quality, characteristics etc. to establish nexus with the product exported. For other inputs, such details are not required unless otherwise specifically mentioned in the SION . In this regard, Customs Circular no. 46/07 dated 20.12.07 has been issued.
It is therefore clarified that except for the items(inputs) specified in paragraph 4.55.3 of HBP v.1, such correlation is not required to be established in other cases unless the SION prescribes for the same.
DGFT Policy Circular No. 50 (RE-08)/2004-2009 Dated: January 6, 2009