TIOL-DDT 2693
28 09 2015
Monday

AS per para 6.09(g) of the Foreign Trade Policy, 2015-20, the following supplies effected from EOU / EHTP / STP / BTP units will be counted for fulfilment of positive NFE.

(g) Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export.

CBEC has notified the conditions, safeguards and procedures for supply of items like tags, labels, printed bags, stickers, belts, buttons and hangers produced or manufactured in an Export Oriented Undertaking ("EOU") and cleared without payment of duty to a Domestic Tariff Area ("DTA") unit in terms of Para 6.09 (g) of Foreign Trade Policy, 2015-20, for the purpose of their exportation out of India.

1. The EOU is required to execute a bond and furnish a guarantee or security of 5% duty.

2. EOU can clear the goods to DTA without payment of duty.

3. DTA unit should export the goods within six months or within such extended period as the Deputy or Assistant Commissioner may allow.

4. Where the specified goods are not received by the DTA Unit or are not exported by the DTA exporter within the specified period or the extended period as permitted by the Assistant or Deputy Commissioner in charge of EOU, the EOU shall be liable to pay the duty leviable on such specified goods alongwith interest and penalty.

5. The specified goods shall be deemed not to have been used for the specified purpose even if any of the quantity of the subject goods is lost or destroyed by natural causes or by unavoidable accidents or for any other reasons during transport from the place of procurement to the DTA exporter and no wastage of the specified goods shall be allowed and duty on such goods lost or destroyed shall be payable by the EOU, alongwith interest and penalty.

The FTP 2015-20 came into force from 1.4.2015 and the Board is issuing this notification on 24.09.2015. Was there no procedure or condition for the last six months?

There is an existing notification No. 31/2007-CENT dated 02 08 2007 for the 2004-09 Policy. What happens to that notification? Perhaps that has lost its fizz long back!

Now, even if a single button is lost, the DTA unit is finished. If the buttons received from the EOU are defective, there seems to be no option for the DTA except suffer duty. Why can't it be sent back?

Incidentally, the notification 31/2007-CE(NT) provides a remedy thus -

Provided that if the specified goods on receipt are found to be defective or damaged or unsuitable or surplus to the needs of the DTA exporter, he may return these goods to the EOU unit from whom he had obtained these goods and all such goods returned shall be added to the non-duty paid stock of the EOU unit and dealt with accordingly. At the time of return of such goods, the procedure prescribed herein for removal of said goods from the EOU unit to the DTA exporter shall mutatis mutandis apply.

Perhaps, the Board wants the EOU to manufacture these goods bereft of any defect!

What is DTA?

What is a DTA? The notification defines it:

"Domestic Tariff Area" means India except Special Economic Zone and hundred per cent. export oriented undertakings.

Please note the ‘Special Economic Zone' is in singular and the export oriented undertakings' is in plural. They should have written it as 'Special Economic Zones' , but these days, nobody is fussy about such language. And what was the need to define Domestic Tariff Area?

Anyway this is not a new invention. It was like this even in the old notification. But Notification No. 23/2003-CE dated 31.03.2003 has it like this:

"Domestic Tariff Area" means India except special economic zones and export oriented undertaking, Software Technology Park units and Electronic Hardware Technology Park units.

Here the zone is plural while the EOU is singular. They must have thought that the singular and plural are interchangeable as per their fancy.

Notification No. 20/2015-Central Excise (N.T.), Dated: September 24, 2015

Reduce Litigation, pay refunds, be fair - Revenue fairy tale?

IN the recently held conference of CBEC Chief Commissioners, the lofty goals discussed include:

1. Finalise pending investigations and adjudications

2. All RUDs to the notices, should be supplied timely along with giving three opportunities for personal hearing for expeditious disposal of pendency.

3. Adjudicating authorities should pass fair orders, and officers passing orders that do not meet the legal scrutiny should be suitably advised.

4. Board's guidelines on prosecution were not being followed. (any instance of any guidelines being followed?)

5. Timelines have been fixed for all circulars and instructions to be reviewed and topic-wise indexation by 31.12.2015.

6. Drawback is required to be sanctioned within three working days while CEx and ST registration is to be granted in two working days.

7. The emphasis of Government is on “Ease of Doing Business” and in that context the Board and field formations have to focus on reduction in time, cost and documents associated with procedures / requirements stipulated under various Rules and Regulations.

Focus Areas:

Customs:

1. Reduction in dwell time of cargo release - suggested measures in this regard are simplifying and automating amendment procedures of import /Export General Manifest, Bill of entry / Shipping bill, exploring the feasibility of combining payment along with filing of Bill of entry (including introduction of PLA type arrangement, encouraging filing of advance / prior Bills of entry, encouraging Direct Port delivery and expanding the scope of pre-arrival processing by tweaking “entry inward” procedure in ICES.

2. Elimination of paper documents wherever there is robust and reliable electronic handshake through message exchange and/or wherever digital signatures are introduced. Exploring the feasibility of digitization of all supporting documents and printing of Bills of entry and Shipping bills in summarized form.

3. Review of Rules and Regulations from the perspective simplification and reduction in time, cost and documentation requirements.

4. Review ACP and AEO schemes for enhancing trade facilitation.

5. Use website to explain procedures in lucid manner and develop and publish standard operating procedures associated with Customs clearance and other departmental functions. Address frequent downtime, interruptions and slowness in systems.

6. Implementation of Single Window which would include an integrated Customs declaration, automated routing of consignments to the other government agencies for clearance, an integrated risk assessment that takes into account selectivity criteria of other government agencies. The project envisages a paperless clearance process.

Central Excise and Service Tax:

1. e-payment and automated sanction of Rebate for Manufacturers (if they file ARE1 online and file shipping bills with digital signature).

2. e-payment of Refunds.

3. Review of Rules and Regulations from the perspective of simplification and reduction in time, cost and documentation requirements. Develop standard operating procedures and simplification of existing procedures related to end-use notifications.

4. Simplification of Refund procedure in Service Tax - Automated computation of refund amount in Service Tax and explore the possibility of immediate sanction on the basis of accreditation and subjecting them to annual audit.

Vision CBEC

CBEC is envisaged as an organization of global standards, which is fair and transparent and technology driven, encourages voluntary compliance, ensures efficient collection of taxes and administers border control. The group also focused on certain areas of immediate concern such as Dispute resolution, technology, Human Resources issues and Attitudes and Motivation.

Take-away of the conference

(i) Withdrawal of cases pending in SC/HC/CESTAT where SC decision on an identical matter has been received and accepted;

(ii) Data regarding cases pending in CESTAT where duty involvement is Rs 10 lakh or less, or where appeal has been filed only for enhancement of penalty to be furnished to the Ministry in 30 days for examination of withdrawal of all such cases in keeping with the National Litigation Policy;

(iii) Reasonable time bound disposal of adjudication - views of all formations sought in 30 days time;

(iv) 12 crore legal fees said to be pending across the country: review to be done by all formations and steps taken for expeditious settlement.

Until next conference, have a nice time.

Not a Single Commissionerate Inspected.

The conference was told that in this financial year, no Commissionerate has been inspected till date by the Chief Commissioners.

Inspection, over the years, has been converted into an annual farce and now they have stopped doing that also. The officers are so busy that they have no time to inspect or be inspected.

CBEC Officers don't obey transfer orders

CBEC issued transfer orders on 9th June, 17th June, 17th August and 20th August of officers from Assistant Commissioner to Chief Commissioner. On 24th September, Board has realised that many of the transferred officers are not relieved to join their new places of posting.

Now, Board has decided that all the transferred officers unless retained or stayed by Courts, stand relieved by 30.09.2015.

Board wants a compliance report by 5th October 2015. If they stand relieved, what is there to comply?

The officers in the field alone are not to blame. The Board recently transferred some officers who were already transferred and joined in their new places in obedience to Board's transfer orders.

CBEC F.No. A.22011/09/2015-Ad(pt)., Dated: September 24, 2015

No Minimum Alternate Tax (MAT) on foreign companies having no PE in India-CBDT

GOVERNMENT has already clarified the inapplicability of MAT provisions to FIIs/FPIs. Government has decided that MAT under section 115JB of the Income-tax Act will not be applicable to foreign companies having no place of business/permanent establishment in India.

The Income Tax Act will be amended.

Until Tomorrow with more DDT

Have a nice day.

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