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                                                                                                   What is the procedure for the

                                                                                                       FIEO: Please go through provi-
                                                                                                   sions of Para 5.8.3 of HBP (Vol. I)

                      online                                                                       which provided for extension in ex-
                                                                                                   port obligation period of any particu-
                                                                                                   lar block subject to payment of
 FIEO offers you opportunity to chat online every Wednesday between 3pm and 5pm                    composition fee of 2% on duty saved
 (IST) with Mr Ajay Sahai, DIrEcTOr GEnErAl & cEO FIEO, on issues related to foreign               amount in proportion to the shortfall
 trade. Mr Sahai has served many important offices in various capacities. As Jt. DGFT (Pol-        at the end of each block. You see how
 icy) from 1996-2003 he was closely associated with the formulation of the Exim Policy.            much was the export obligation at the
                                                                                                   end of the second block and how
 Feel free to seek clarifications / advice from Mr Sahai on issues related to foreign trade. All
                                                                                                   much has been fulfilled by you .On
 that you need to do is to click ‘FIEO Online chat Service’ at Some portions
                                                                                                   the differential, you pay composition
 of the chats held last week are reproduced here.
                                                                                                   fee as per the above provision.

 FIEO’s expert answers queries by exporters from various parts of the country.                        Q: We have two sister con-
                                                                                                   cerns which are going to apply for
   Q: Can we use DFIA license for                  installation certificate by an inde-            EPCG benefits. One company has
pre-export and take transferabil-                  pendent chartered engineer instead              only two years exports to its
ity for balance inputs in licence                  of a certificate from Central Excise.           credit while other has one year of
for selling purpose without pay-                   Before 28-01-2004 non-excisable                 exports in its account. How will
ment of any duty?                                  units were allowed to produce instal-           the average EO for both the com-
                                                   lation certificate by a chartered engi-         panies be fixed?
    FIEO: In case you transfer the in-             neer.    Again     with   effect  from
puts already imported under DFIA,                  01-09-2004, the same provision was                  FIEO: If an applicant has been in
you have to refund the additional cus-             restored.                                       existence for less than 3 years, the
toms duty availed at the time of im-                                                               denominator in the above calculation
port of such inputs. If the inputs have                Q: Our deemed exports claim                 will be the number of years. For first
not been imported at the time of                   is pending for over a year despite              company it will be the total of two
transferability, the inputs will not get           submitting response to all defi-                years divided by 2, while for the sec-
exemption from additional customs                  ciencies raised by the Licensing                ond company it will be the export of
duty at the time of import after en-               Authority. Are we eligible to claim             one year. The table on next page will
dorsement of transferability. Exemp-               interest on it and if so at what                make it clear.
tion from other customs duty will                  rate?
continue in both the scenario.                                                                        Q: We are a Super Star Trading
                                                       FIEO: The provision of simple rate          House recognised by the Govern-
   Q: We have obtained an EPCG                     of interest @ 6% per annum in the               ment. We want to open a ware-
authorisation in 2005 in the hand-                 case of delayed refund of Duty Draw-            house    abroad     for    better
icrafts sector .When we applied                    back and TED was introduced in the              marketing. What are procedural
for redemption, the Licensing Au-                  Policy of 2008, which now says that if          requirement of the same?
thority is asking us to furnish a                  the claim has become due on or after
Central Excise installation certifi-               1.4.2007, and is not settled within 30              FIEO: Banks are allowed to con-
cate for the capital goods im-                     days of receipt of complete applica-            sider the applications received from
ported under EPCG. As we are not                   tion, an interest @ 6% per annum is             you and grant permission for open-
under excise, Central Excise has                   payable in case of delayed refund of            ing/hiring warehouses abroad subject
refused. What should we do?                        Duty Drawback and TED. You may                  to the following conditions:
                                                   refer to paragraph 8.5.1 of the For-            i. Your export outstanding does not
    FIEO: It seems you are a manu-                 eign Trade Policy.                                   exceed 5% of exports made dur-
facturer of handicrafts which is a sec-                                                                 ing the previous financial year.
tor not covered under Central Excise.                 Q: We had obtained an EPCG li-               ii. You have a minimum export
You have already fulfilled the export              cence for which EO could not be                      turnover of $100,000 during the
obligation and submitted the docu-                 completed for the second block                       last financial year.
ments for discharge of EODC to the                 period in the specified time .We                iii. Period of realisation should be as
Regional Office. You may furnish an                want to get the period extended.                     applicable.

40                                                                                                                 FIEO NEWS l May 2012
                                                                                       should be completed not later than
                                                                                       six months from the date of ship-
                                                                                       ment, except in cases where amounts
                                                                                       are withheld towards guarantee of
                                                                                       performance. However, banks may
                                                                                       permit settlement of import dues de-
                                                                                       layed due to disputes, financial diffi-
                                                                                       culties, etc. Interest in respect of
                                                                                       delayed payments for a period of less
                                                                                       than three years from the date of
                                                                                       shipment may also be permitted by
                                                                                       banks. You may therefore draw the
                                                                                       attention of your bank to the Master
                                                                                       Circular of RBI on imports dated July
                                                                                       1, 2011.

iv. All transactions should be routed           are to ensure that the terms of           Q: We want to invoice in ru-
    through the designated branch of            payment are such that the liabil-      pees so as to insulate ourselves
    the banks.                                  ity for the import leg of the trans-   against exchange risk fluctua-
v. The above permission may be                  action is extinguished by the          tions. However, our bank in Alla-
    granted to the you initially for a          payment received for the export        habad said the same is not
    period of one year and renewal              leg of the transaction, without        allowed. Is there any notification
    may be considered subject to you            any delay.                             which we can show to our bank?
    satisfying the requirement above.
                                                Merchanting trade transactions are        FIEO: Please see paragraph 2.40
    Q: We want to enter into mer-           not eligible for exports benefits which    of the Foreign Trade Policy 2009-14
chanting trade so as to increase            are only given on goods manufactured       which allows exports contract/in-
our group turnover and profitabil-          in India and shipped from India.           voices to be denominated in Indian
ity. What are the regulations gov-                                                     rupees. The said paragraph is repro-
erning it? Are we eligible for                 Q: Are merchanting trade                duced below:
exports benefit on such exports?            transactions eligible for Rupee
                                            Payment Mechanism worked out                   “All export contracts and invoices
    FIEO: Merchanting trade is per-         by the Government with Iran?               shall be denominated either in freely
mitted in India, and the RBI governs                                                   convertible currency or Indian rupees
such third-country trade. It is subject        FIEO: The Rupee Payment Mecha-          but export proceeds shall be realised
to the following:                           nism for Iran only covers exports of       in freely convertible currency. How-
a) Goods involved in the transac-           goods of Indian origin which are al-       ever, export proceeds against specific
     tions are permitted to be im-          lowed for exports as per the Foreign       exports may also be realized in ru-
     ported into India and all the rules,   Trade Policy of DGFT and which are         pees, provided it is through a freely
     regulations and directions appli-      not under the UN sanction list. More-      convertible Vostro account of a non
     cable to export (except export         over, only such goods which are ex-        resident bank situated in any country
     declaration form) and import (ex-      ported directly from India to Iran are     other than a member country of ACU
     cept Bill of Entry) are complied       covered under the Payment Mecha-           or Nepal or Bhutan. Additionally,
     with for the export leg and import     nism.                                      rupee payment through Vostro ac-
     leg, respectively.                                                                count must be against payment in
b) The entire merchant trade trans-            Q: We had a dispute with a              free foreign currency by buyer in his
     action is completed within a pe-       supplier for an import supply              non-resident bank account. Free for-
     riod of 6 months.                      which has now been resolved.               eign exchange remitted by buyer to
c) The transactions do not involve          However, the bank is not permit-           his non-resident bank (after deduct-
     foreign exchange outlay for a pe-      ting import payment as more than           ing the bank service charges) on ac-
     riod exceeding three months.           12 months have lapsed since the            count of this transaction would be
d) Payment is received in time for          shipment of imports. What should           taken as export realization under ex-
     the export leg.                        we do?                                     port promotion schemes of FTP.”
e) Where the payment for the export
     leg of the transaction precedes           FIEO: In terms of the RBI regula-          With regard to exports to Iran in
     the payment for import leg, banks      tions, remittances against imports                               Contd. on Page 45

FIEO NEWS l May 2012                                                                                                       41
Chat Online                                                                                               Contd. from Page 41

Indian rupees, DGFT has already is-        of Central Excise Rules, 2002, nor the    Excise Rules. Can we avail this fa-
sued    Notification   No.105     dated    Notification   No.   20/2004-CE(NT)       cility?
5.3.2012 which allows export proceeds      dated 6.9.2004 which has been re-
against export to Iran realised in In-     scinded     vide   Notification    No.        FIEO: Facility of factory stuffing
dian rupees to be extended all export      25/2011-CE(NT) dated 5.12.2011            entailing option of examination and
benefits on a par with export proceeds     w.e.f March 1, 2012 make any dis-         sealing of export containers by Cen-
realised in freely convertible currency.   tinction on the basis of mode of pay-     tral Excise officers at the place of dis-
                                           ment of currency for exports.             patch     is    available     to    both
   Q: Whether exports under                Therefore, exports to Nepal will con-     manufacturer-exporters (except when
claim of rebate under amended              tinue to be permissible irrespective of   the export is on free Shipping Bill)
Notifications No. 19/2004-CE(NT)           whether the payments are made in          and merchant-exporter in respect of
dated 6.9.2004 or under bond in            Indian currency or foreign convertible    the goods exported in terms of Rule
terms of amended Notification No.          currency as long as they are in accor-    18 or 19 of the Central Excise Rules,
42/2001-CE(NT) dated 26.6.2001             dance with applicable RBI guidelines.     2002. Such examination, stuffing and
are permitted even when the ex-                                                      sealing of export containers by Cen-
port proceeds are paid in Indian              Q: We are a merchant exporter          tral Excise officers are permitted at
rupees for exports to Nepal.               and would like to avail factory           the factory or warehouse or any other
                                           stuffing permission for goods ex-         approved premises. You as a mer-
   FIEO: Neither Rule 18 or Rule 19        ported under Rule 18 of Central           chant exporter can also avail it.       n

FIEO NEWS l May 2012                                                                                                       45

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