Import of Ships & Moveable Capital Goods under SFIS Scheme - DGFT clarifies to clear confusion of Customs Authorities
IT appears that the Customs authorities, particularly those at Mumbai and Kakinada Sea Ports have some confusion in their minds regarding import of ships as capital goods (a moveable capital asset) under SFIS scheme. They were insisting that the importers have to furnish ‘installation certificate' for the imported ships, failing which the benefits of the SFIS scheme were being disallowed for such imports.
How on earth can a ship be installed? And where on earth are they expecting a ship to be installed – in the Custom House?
Trade and industry represented to the DGFT to resolve this confusion in the minds of the Customs. After examining the matter DGFT has clarified as follows:
a) The provision relating to disallowing import of ‘vehicle' was introduced in FTP RE 2006 (Updated as on 7.4.2006) and applies to SFIS duty credits scrips issued on foreign exchange earned during 2005-0 6 and thereafter, implying that there is no such stipulation for SFIS duty credits scrips issued for foreign exchange earned prior to 2005-06 period under the FTP. The intention of this provision is to protect the domestic sector industry of ‘ motor cars, s ports utility vehicles and the likes' and thereby disallows such imports only under SFIS Scheme.
b) Ships cannot be treated as a ‘vehicle'. Hence, it is clarified that the import of ships, a capital good for Shipping Sector, is permitted under the scheme.
c) Upon imports, ships are registered with the Director General of Shipping (or Mercantile Marine Board, as the case may be) and only then these vessels are treated as ‘ Indian Flag vessels'. Ships are moveable capital assets; hence these cannot be installe d at one particular location. Thus, the requirement of ‘installation certificate' cannot be insisted upon, for such moveable capital assets/goods. Customs Authorities are accordingly requested not to insist on furnishing ‘installation certificate' for moveable capital ass ets / goods, if imported under the SFIS scheme.
DGFT further clarifies that this clarification regarding non-requirement of installation certificate shall also apply to EPCG for Service Providers wherein import of moveable capital goods is permitted.
DGFT Policy Circular No. 26 /2009-2014, Dated: March 17, 2010