TIOL-DDT 482 · the untouched capture
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<html> <head> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <title>Taxindiaonline's DDT 402</title> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 482</font><br> 02 11 2006<br> Thursday</b></font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">DFIA</font></b><font color="#006600"><b> – How to get goods from E.O.U./DTA units?</b></font></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i>Revenue</i> does not respect <i>commerce</i></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <b><i>Foreign Trade Policy 2004-09 Annual Supplement 2006</i></b> introduced a new scheme called <b>Duty Free Import Authorisation (DFIA scheme). </b>As provided for in all the export promotions schemes, the exporter is allowed to import goods without payment of duty. It goes without saying that when goods can be imported without payment of duty, they can as well be procured indigenously without payment of duty. Actually if an Indian supplier is able to supply goods substituting imports, he should be given all concessions and honours.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <i>EXIM policy</i> and its later version the <i>Foreign Trade Policy</i> understood and promoted this concept, But often it takes a little while for the Babus of the revenue ministry to give effect to the dreams of the Babus of the commerce ministry. For all the hype they generate, the policy drafted by the commerce ministry is only a dream. The dream can be a reality only when the revenue Babus choose to make it so.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Take the case of DFIA. </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the Scheme, duty free imports are allowed. However as per para 4.1.11 of the Policy, a DFIA holder intending to source the <b>inputs from indigenous</b> sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP/BTP units <b>in lieu of direct import</b> has the option to source them against Advance Release Orders denominated in free foreign exchange/ Indian rupees. However, supplies may be obtained against the Authorisation from EOU/EHTP/BTP/STP/ SEZ units, without conversion into ARO.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What does this mean? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ DFIA holders can get their goods from manufacturers in India</st1:place></st1:country-region> based on Advance Release Orders issued by DGFT or on the Authorisation Certificates themselves if they are getting the goods from EOUs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But will excise authorities allow this? The excise officers are not always impressed with the Foreign Trade Policy; they would insist on notifications from the Revenue ministry.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are a couple of notifications dealing with exemption to goods supplied to such Export Promotion Scheme holders.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>Notification No.44/2001 C.E</u></b> dated 26.6.2001 allows goods to be cleared without payment of duty for the purpose of use in the manufacture or processing of all articles by a manufacturer who is an holder of a Duty Exemption Entitlement Certificate and an Advance Licence under the Duty Exemption Scheme and their exportation out of India. Under this Notification excisable goods can be cleared without payment of duty to DEEC holders. But this does not cover DFIA. And there is no other notification even remotely dealing with this. The result: <b>DFIA holders cannot get their goods from any manufacturer in India</st1:place></st1:country-region>.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>What about EOUs?</b> For the EOUs, clearances to DFIA holders are deemed to be exports. Then can the clearances be done without duty? No, No, Where is the notification? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2003/etariff023.htm">Notification No. 23/2003-C.E., dated 31-03-2003</a><b><i> </i>allows duty free clearance</b> from the EOU to a person holding an Advance License in terms of paragraph 4.1.3 of the Foreign Trade Policy and a person holding Duty Free Replenishment Certificate in terms of paragraph 4.2 of the Foreign Trade Policy.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This also does not cover DFIA. The Result: <b>DFIA holders cannot get their goods from EOUs.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Net Result:</b> <b>A DFIA holder can get his goods duty free from any country in the world except India</st1:place></st1:country-region>.</b> Is this what export policy is all about? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commerce ministry should have an officer posted in the CBEC and before the Policy is announced, they should get the excise and customs notifications approved and these notifications should be released along with the Policy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the Revenue Ministry has such scant respect for the Policy, why should the rest of the world have any faith in the Policy? Is it the Policy of the Government of India or is the Revenue Ministry above the government of India?</font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">IIM</font></strong><font color="#006600"><strong> – Man power Recruitment Agency?</strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"IIM-A can by no stretch of imagination be compared with a manpower placement agency. We oppose it as we are an educational institute and not a placement agency We are opposing this on principle," saidIIM-A Director, Prof. BakulDholakia. Please see <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3574">TIOL-DDT 341 - 13 04 2006.</a></u></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Board does not think so, at least from 1.5.2006. Board has clarified that “these institutes were not liable to pay service tax prior to 1.5.2006 under the category of “manpower recruitment or supply service”. <b>As regards the period after 1.5.2006, decision should be taken after taking into account all material facts on case to case basis.” </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what does this mean? Issue summons and Show Cause Notices for the period after 1.5.2006?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2006/sercir86.htm">Circular No. 86/4 /2006-Service Tax dated, the 1st November, 2006</a></u></font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Customs Chief jailed</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The customs chief in military-ruled Myanmar has been sentenced to 66 years in prison as part of an anti-corruption drive that has gutted the department. KhinMaung Lin, director general of the Customs Department, has been given a 66-year jail sentence while his personal assistant AungKyawOo got seven years in connection with this particular case with charges of bribery and corruption. </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></span></font></p> </body> </html>