Import of Alternative Inputs - DGFT Policy Circular No.30 dated 10.10.2005 withdrawn
PURSUANT to Representations received from the trade and industry on the issue of allowing alternative inputs as per SION under DFRC scheme even if exactly the same input, in the product value added chain, has not been utilized in the manufacture of the exported product, the DGFT had issued a Circular 30 dated 10/10/2005 titled "Importability of Alternative inputs allowed as per SION under DFRC Scheme" and clarified thus -
2. The matter was examined in detail and it has been decided to inform all concerned that since the objective of SION is to allow duty free import of the inputs which are actually used or are capable of being used in the export product, the exporter has the flexibility to import the alternative input/product mentioned in the SION as long as the same can be used in the manufacture of the exported product under the DFRC scheme.
In DDT-2162 we had reported about issuance of DGFT Notification No.31 dated August, 1, 2013 which stipulates that "inputs actually used in manufacture of the export product should only be imported under the authorisation. Similarly inputs actually imported must be used in the export product."
Now, this goes contrary to the Policy Circular 30 referred above.
Quickly realizing this contradiction, the DGFT has come out with a Circular and clarifies -
"…Accordingly, the earlier Policy Circular No.30 dated 10.10.2005 becomes infructuous and hence stands withdrawn.
2. This is to reiterate that duty free import of inputs under Duty Exemption/Remission Schemes under Chapter-4 of FTP shall be guided by the Notification No. 31 issued on 1.8.2013. Hence any clarification or notification or communication issued by this Directorate on this matter which may be repugnant to this Notification shall be deemed to have been superseded to the extent of such repugnancy."
This is what is expected of a government body – issuing clarification before any damage is done - when will others learn?
DGFT Circular No. 3/(RE-2013)/2009-2014, Dated: August 02, 2013