DEPB Scheme discontinued and replaced by new Duty Drawback Scheme:
Ref: ELCINA
The government has discontinued the popular Duty Entitlement Pass Book Scheme (DEPB) scheme wef 30th September 2011. The DEPB scheme had been in existence since 1997. This has been replaced by a new Duty Drawback Scheme which incorporates an additional 1100 line items. The uncertainty over the continuation of the DEPB Scheme which was being extended from time to time, ended with the announcement by the Finance Secretary, Shri R S Gujral in mid-September 2011.

The Ministry of Finance has issued the above notification and circular announcing the all industry rates of Duty Drawback for 2011-12. This is effective from 1st October 2011.

The new drawback schedule incorporates items which were hitherto under the DEPB scheme. Thus, the total number of items in the drawback schedule now number approximately 4000.

The tariff items and descriptions of goods in the drawback Schedule are aligned with the tariff items and descriptions of goods in the Customs Tariff at the four-digit level only. The descriptions of goods given at the six digit or eight digit or modified six or eight or ten digits are in several cases not aligned with the descriptions of goods given in the Customs Tariff.

Through Circular No.955/16/2011-CX dated 15th September 2011 from Central Board of Excise and Customs to all Chief Commissioners of Central Excise and Customs on the above subject, it has been decided to make it mandatory for the assessees to submit the prescribed Central Excise Returns electronically w.e.f. 1st October, 2011. In this regard, the Central Excise (Fourth Amendment) Rules, 2011 has been issued vide Notification No. 21/2011-CE (NT) dated 14.09.2011, amending Rule 12 and Rule 17 of the Central Excise Rules, 2002. Similarly, the CENVAT Credit (Fourth Amendment) Rules, 2011 has been issued vide Notification No.22/2011-CE (NT) dated 14-9-2011, amending Rule 9A of the CENVAT Credit Rules, 2004. The above mentioned changes will come into effect on 01.10.2011.

2. The following amendments have been made in Central Excise Rules, 2002 and CENVAT Credit Rules, 2004:

1. ER-1 Return, filed under Rule 12(1) of the Central Excise Rules, 2002, will have to be electronically filed irrespective of the duty paid in the preceding financial year.
2. ER-2 Return, filed by 100 per cent EOUs under Rule 17 of the Central Excise Rules, 2002, will be required to be filed electronically irrespective of the duty paid in the preceding financial year.
3. ER-3 Return, filed under the provisos to Rule 12(1) of the Central Excise Rules, 2002, will be required to be filed by the concerned assessees including SSI units electronically irrespective of the duty paid in the preceding financial year.
4. ER-4 Return (Annual Financial Information Statement), filed under Rule 12(2)(a) of the Central Excise Rules, 2002 will continue to be filed electronically by the assessees who are not exempted from filing such statement by a notification.
5. ER-5 and ER-6 Returns, pertaining to principal inputs filed under Rule 9A of the CENVAT Credit Rules, 2004, will continue to be electronically filed by the assessees who are not exempted from filing such declaration/return by a notification.
6. ER-7 (Annual Installed Capacity Statement) filed under Rule 12(2A)(a) of the Central Excise Rules, 2002, has to be filed by all assessees electronically.
7. ER-8 Return, to be filed under the proviso to Rule 12(1) of the Central Excise Rules, 2002, by assessees availing the exemption under Notification No.1/2011-CE dated 1-3-2011 has to be filed electronically.

(3) As a large number of assessees may be required to file Central Excise Returns electronically as a result of the above changes, Excise Officials have been requested to provide all assistance so as to help them in adopting the new procedure.

India-Japan CEPA from August 1
ET June 29, 2011
India and Japan are scheduled to implement the Comprehensive Economic Partnership Agreement from August 1 to boost bilateral trade between the countries to $25 billion by 2015. Under it, the two countries will eliminate import duties on 94% of their trade items in ten years.

The Ministry of Corporate Affairs, Government of India has simplified procedures to enable incorporation of companies within 24 hours with effect from 11th August, 2011 as under :

1. Online allotment of Directors Identification Number (DIN) by the system immediately.
2. Online application and approval of Name by the system immediately.
3. Online filing and registration of incorporation forms and e-form of Memorandum of Articles of Association with digital signatures of promoters and professionals by the system immediately.
4. Online issue of Incorporation Certificate by ROC under his digital signature within 24 hours on incorporation.

Implementation of a nationwide goods and services tax (GST) in 2012-13 suddenly seems possible, with the assertion of the chairman of the empowered committee of state finance ministers, Sushil Modi, to work towards meeting the April 2012 deadline.

The official said if there was a consensus, the whole process of bringing in a legislative framework for the GST implementation could be completed before April next year. Explaining the possible road map, he said, “The GST Constitutional Amendment Bill is with the standing committee. If we get the recommendations of the committee in the winter session of Parliament, we can pass the Bill in the same session.” After this, both the Centre and states can concretise their GST Bills in due course.

“We will then move the Central GST Bill in the Budget Session of Parliament and get it passed. Simultaneously, all the 28 states can also introduce their State GST Bills in assemblies and get these passed,” he said. The official agreed completing all the legislative processes before April next year would be difficult technically, but as things stood now, if there was a consensus among political parties and states, implementing GST from April 1, 2012, was certainly possible. S D Majumder, chairman of the Central Board of Excise and Customs, said, “We are getting ready with the back-end work. The back-end work on both business processes and information technology infrastructure is going on full swing.

The advantage with the introduction of GST is that unlike the direct taxes code, GST can be implemented any time during the financial year. “Even if we miss the April deadline, we need not wait for April 2013. As GST is a transaction-based tax, it can be implemented any time,” said the official. After the empowered committee’s meeting on last Friday, Modi had said he was optimistic about meeting the GST implementation deadline the way things were going, if all the parties concerned co-operated.

Draft IT policy stresses on social media, tablets
ET, Sep 09, 2011

National electronics policy emphasizes on local manufacturing to reduce imports. Anytime anywhere access of internet may soon become a possibility, as envisaged in the draft of the first National Policy on IT, 2011. According to the plan, internet access will be extended to kiosks in government offices, post offices and bus stops. It also plans wireless access in public transport.

India has about 100 million internet users, the third largest in the world after China and the US. The policy aims to expand the user base using optic fibre, wireless and Wi-fi. "India's IT sector engages about 2.5 million people and is worth about $88 billion now, 80% of which come from exports. We want to make IT tools and accessories accessible to all segments of society including all categories of differently-abled people," an official at the Ministry of Communication & IT said, on condition of anonymity since the policy is still in drafting stage.

To upgrade to the new internet protocol, IPv6, the government is making a national plan under the policy. The IPv6 road map will aim to connect all electronic devices with each other via the new protocol. Low-power consuming devices such as tablets and smart phones will be given preference for computing in villages. As a policy, the government will now make use of social media such as Facebook and Twitter to reach out to the masses. The Department of IT has already released guidelines on use of social media by government officials, which guide babus on how to use Twitter and Face book to communicate with citizens. The government has also realised that there is duplicity between data collection methods of National Population Register and the Unique ID Authority which is leading to wasteful expenditure. The policy aims at integrating the NPR and UID databases.

This will simplify flow of funds to citizens under the public distribution system and national rural employment guarantee scheme. Alongside the IT policy, the government is also preparing the first National Policy on Electronics, which aims at setting up semiconductor wafer fab facilities in the country. Three invitations by the government to set up a fab in the country have been ignored by chip makers, who are reeling under excess capacity in fabs around the world. The demand for electronics in India is expected to shoot up from $50 billion currently to $400 billion by 2020. But domestic production of electronics is only $20 billion, which the government plans to increase to $75 billion by 2015 and $300 billion by 2020. "India's electronic import bill is expected to overtake its oil import bill by 2020. This means, we have to encourage companies to manufacture locally than import," Sam Pitroda, advisor to Prime Minister on innovation and infrastructure told ET.

The preamble to NPE (National Policy on Electronics, 2011) notes that while India's electronics production accounts for only 1.3% of world's produce, China's accounts for one in three electronic items made in the world. The new policy aims to change that.

Help on way for DEPB-deprived Exporters (One year transitional duty drawback scheme to replace DEPB, but exporters fear scheme may add to uncertainty)
ET, Sep 01, 2011)

The government is likely to offer a lucrative one-year stop-gap duty reimbursement scheme, replacing a popular tax break for exporters that ends in September. The move would bring relief to big industrial houses and other exporters. An experts panel, set up by the finance ministry to rework the duty drawback scheme for all export products, including those covered under the popular duty entitlement passbook scheme (DEPB) is likely to recommend a middle path and provide a one-year transition regime.

“A transitional duty drawback scheme will replace DEPB,” a person privy to the development said. DEPB, an export promotion scheme similar to the duty drawback scheme, cost the exchequer Rs.8,520 crore last fiscal.

Large engineering and chemical exporters cornered over 60% of this amount. The finance ministry is determined to end this scheme on September 30, the new deadline set after intense lobbying by exporters forced the government to defer its June 30 expiry. The ministry, however, is also wary of upsetting exports in an uncertain global environment.

Notifications

The Central Board of Excise & Customs, Ministry of Finance, has issued Customs Circular No.33/2011 dated 29th July 2011 making e-payment of Customs duty mandatory. The effective date of implementation will be notified shortly.

A copy of the Customs Circular No.33/20111 which covers the procedure for e-payment is being attached. Circular No. 33/2011-Customs F.No.450/180/2009-Cus.IV(Pt.) Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs

*****

229-A, North Block, New Delhi, 29th July, 2011. To, All Chief Commissioners of Customs All Chief Commissioners of Central Excise and Service Ta Subject: Making E-payment of Customs duty mandatory-regarding. Sir / Madam,

1. E-payment facility at Customs locations was introduced in 2007 and is available through more than one authorised bank at all major Customs locations having ICES facility. Though voluntary, the facility has been made use of by numerous importers. Besides expediting the process of payment of duty and clearance of imported goods, the facility of e-payment has resulted in reduction of transaction costs.

2. In the aforestated background, in order to reduce the transaction cost of the importers and expedite the time taken for customs clearance the Board has decided to make e-payment of duty mandatory for the importers paying an amount of Rupees one lakh or more per transaction. Additionally, for Accredited Clients under the Customs Accredited Client Programme irrespective of any amount of duty, the Customs duty will have to be paid through E- payment mode only. The date from which the E- payment will be made mandatory will be notified separately.

3. DG (Systems) has prepared instructions outlining the procedure for electronic payments. It is requested to sensitise concerned officers, importers, trade and industry regarding the E- payment.

4. As a large number of taxpayers would be required to pay the taxes electronically, it is requested that importers, trade and industry may be provided all assistance so as to help them in adopting the new procedure. 5. Suitable Public Notices or Standing Orders may be issued to guide the trade / Industry and officers.

Procedure for e-payment Payment of Customs duty

In continuation of its efforts for trade facilitation, CBEC has now implemented centralized application called Indian Customs EDI System (ICES1.5) and E-payment facility has been extended to all ICES locations from more than one authorized bank.

(a) Person desirous of availing the E-payment facility must approach the designated bank at the location for opening an INTERNET ACCOUNT (Annexure);

(b) The Central Board of Excise and Customs has set up a CUSTOM E-Payment Gateway (CEG) at ICEGATE (www.icegate.gov.in). The users who are already registered with ICEGATE will automatically be able to avail the facility of e- Payment as REGISTERED USER without any further registration process. However, even the users who are not registered with the ICEGATE can avail e-payment facility as an UNREGISTERED USER;

(c) In the ICEGATE home page, a person can select the e-payment icon from the main menu or if the person is using any other module of ICEGATE (like document filing), he can select the e-Payment option from the side screen menu;

(d) On selection of E-Payment option, the e-Payment page will open. The users already registered with ICEGATE can login with their username and password as REGISTERED USER. Thereafter their (personal) web page would open which will display all the unpaid challans details for the Bills of Entry filed by him;

(e) If the person is an UNREGISTERED USER, or he intends to make payments of duties on the documents not field by him through ICEGATE, then he can make E-Payment by entering the IE Code of the importer. The CEG will display all the unpaid challans against the IE Code;

(f) On selection of the Challan the user will be shown the options of the “designated” banks for the purpose of E-payment. The user can select any bank authorized for e-payment at the Customs locations;

(g) Thereafter, the user will see the web page of the selected bank. He would be required to login as an “Internet Customer” of the bank;

(h) After successful login in the bank site, the user will be shown the details of the challan including the amount to be paid. The user shall be prompted to confirm the payment option;

(i) On successful payment, a cyber receipt will be generated by the bank for successful transaction. Then user may take the printout of the cyber receipt for his reference. The bank will prompt the user to come back to the CEG (Customs E-Payment Gateway) after completion of the bank transaction;

(j) The user must come back to the ICEGATE site to complete the transaction;

(k) In case of an incomplete transaction or link failure, a VERIFY option is automatically activated against the concerned challan for verification of the duty payment details. In case of incomplete transaction, the Importer/CHA must go back to ICEGATE and select the VERIFY option against the challan. On selecting the VERIFY option, the importer/CHA is taken back to the site of the Bank for completion of the transaction. The VERIFY option must be exercised on the date of payment itself, and the option would be de-activated the next day;

(l) After e-payment is made at CEG, ICEGATE will send the payment particulars to the ICES. Thereafter, the Bill of entry shall automatically move to the examination queue;

(m) The importer/CHA need not produce any proof of payment for the clearance of goods in case of e-payment. However, he is advised to keep the copy of the cyber receipt with him for future reference for his own convenience; (n) In case of problems in e-Payment, the Importer/CHA can contact the ICEGATE 24 hour helpdesk by phone at toll free no. 1800-3010-1000 or by email at icegatehelpdesk@icegate.gov.in. They can also contact the Systems Manger/AC (EDI) at Customs Location, in case of any difficulty.

ANNEXURE
E-PAYMENT A/C OPENING PROCEDURE

Industry Scan

Cycle of rise key policy rates may be extended
ELCINA (BS April 20, 2011
According to economists, the cycle of upward revision in key policy rates by the Reserve Bank of India (RBI) is likely to be extended, owing to the high prices of commodities. Many economists also said the pricing power of producers posed upside risks to inflation. Market observers have now revised their outlook on policy rate increases, following higher-than-expected inflation in March. To tame rising inflation, RBI may raise rates by 75-100 basis points in the current financial year.

End of Road for DEPB Scheme
ELCINA(FE May 05, 2011)
Finance Ministry turns down proposal for extension. The Duty Entitlement Pass Book (DEPB) scheme for exporters is most likely to end on June 30 as the finance ministry is not in favour of extending the flagship incentive plan. The DEPB, under which exporters get sops to the extent of 8-9% of the value of shipments, has been extended year after year on the recommendation of the commerce ministry. However, sources said this time around, the finance ministry is not yielding to exporters’ demand, which was supported by the commerce ministry. Exporters are not giving up hope and will lobby hard in the coming weeks for continuation of the benefit, which makes their exports competitive in the global market. According to the Federation of Indian Export Organisations (FIEO), the DEPB scheme should continue for at least five more years in light of tough conditions in the international market.

Reserve bank of India raised its policy rates, banks were quick to take the cue and responded by increasing their lending rates. Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and Yes Bank have raised their base rate and the BPLR (bench mark prime lending rates) by 50 basis points or 0.50%, thereby making loans costlier both for their new as well as the existing borrowers.  

After Prime Minister Mr. Manmohan Singh called India’s widening trade deficit vis-â-vis China ‘untenable’, the government has decided to factor the lop-sided trade basket into its manufacturing sector strategy.

In 2010, India’s trade deficit with China was over $20 billion, equating its exports to China. The two nations are targeting bilateral trade of $100 billion by 2015 – up from $60 billion in 2010. But the current situation where India imports high-value goods and capital equipment and exports raw materials like iron ore and cotton to China is unsustainable, as the PM stressed. Even the National Security Agency (NSA) recently raised the dependence on imports of capital goods, like power plants, from China as a security threat.

“There was time when we couldn’t afford imports,” said a senior government official. “If the trend with China persists, we may again be unable to import,” he warned. To avoid such an eventuality, India’s manufacturing policy will focus on producing what the world and the country need – more value-added goods and protecting jobs – creating small scale industries that can’t compete with cheap Chinese goods, respectively.

The Prime Minister’s high-level committee on manufacturing is expected to meet soon to reconcile three manufacturing policy blueprints on its table – a draft by the industry, a strategy fleshed out by the National Manufacturing Competitiveness Council and a plan being worked out by the Planning Commission. The issue of curbing cheap Chinese power plant imports, which has been hanging fire for over a year after an expert group led by Commission member Mr. Arun Maira suggested urgent action, will now get dovetailed into the manufacturing policy review by the Prime Minister.

Govt tightens Deemed Export benefit scheme, to save Rs. 1800 crore:
ELCINA(taxguru.in, May 06, 2011

After detecting several cases of misuse of incentives, the Commerce Ministry has tightened the norms governing the Deemed Export benefit scheme, a move expected to save about Rs 1,800 crore to the exchequer annually. The Deemed exports refer to those transactions in which goods supplied to the users do not leave the country and payment for such supplies is received either in Indian currency or in foreign exchange.

Generally supply of goods to projects financed by multi-lateral or bilateral agencies qualify for these benefits.

However, concerned over the cases of misuse, especially in the power sector, the Directorate General of Foreign Trade (DGFT) has decided to send recovery notices to those under its scanner, sources said.

The decision to make the rules tough follows a meeting of Policy Interpretation Committee of DGFT held in March.

Some Tightening on project imports
(BS May 09, 2011)

The Central Board of Excise and Customs (CBEC) has tightened the procedures for monitoring and finalization of assessments under Project Import Regulations (PIR).

Heading 98.01 under Customs Tariff covers goods required for initial setting up of a project or substantial expansion of an existing unit. The project/unit may be an industrial plant, irrigation project, power project, and mining project, project for exploration for oil or other minerals, or any other project notified by the Government in this behalf. The basic idea is to classify all goods required for a project under 98.01 and extend concessional duty rates. Once a contract is registered under PIR, all imports covered by the contract become classifiable under 98.01 and liable to duty at the project rate. The tariff entry covers not only capital goods but components and raw materials required for their manufacture, besides spares required for maintenance of such machinery.

The imports under 98.01 are assessed provisionally against a bank guarantee or security deposit equivalent to two per cent of the value of the goods (up to Rs. 1 crore). The assessments are finalized after the importer gives a reconciliation statement, within three months from the date of clearance of the last consignment under the contract registered. It indicates the details of goods imported, together with necessary documents of proof required by the Customs for finalization of assessment. There were delays in the presentation of such statements, plate site verification (PSV) of proper use of goods released at concessional duty rates by the Customs and finalization of assessments. Therefore, CBEC has issued tougher instruction now.

The latest CBEC Circular (22/2011 dt. May 4) says where the importer does not give a complete reconciliation statement within the time limit stipulated; necessary action must be initiated for enforcing bond/undertaking/cash security/bank guarantee and issue of notice for demand of duty and penalty for non-compliance with the provisions of the Regulations. In case of goods cleared under Release Advice from other ports, the importer should ensure the provisionally assessed Bills of Entry at the ports of import are finally assessed, audited and presented along with other documents at the port where contracts are registered. Customs must finalise the assessments within 60 days from the presentation of the required documents.

Government to review deemed exports scheme
(TOI May 10, 2011)

The deemed export scheme available to suppliers of products to specified projects is under review with the commerce ministry setting up a committee. The committee headed by Director General for Foreign Trade Mr. Anup K Pujari will review the very existence of the scheme whose scope has considerably widened over the years, among other things.

Deemed exports refer to transactions in which goods supplied do not leave the country, and payment for such supplies is received either in Indian rupees or foreign exchange. Supply of goods to export-oriented units, software technology parks or to projects financed by multilateral agencies and to power projects and refineries are treated as deemed exports at present. The benefits include those available under export promotion schemes.

The six-member panel has been tasked to revisit deemed exports issue and see if it “properly reflects government priorities”, an order announcing the panel’s constitution said. The committee includes representatives from the finance ministry, Reserve Bank of India, Planning Commission and revenue department.

Exports will fall drastically if DEPB stopped: FIEO
(ET May 11, 2011)

India’s exports will drop to $200 billion in the current fiscal if sops under the DEPB duty neutralisation scheme are withdrawn, says apex exporters’ body Federation of Indian Export Organisations (FIEO) President Mr. Ramu S Deora. The Government has set an export target of $312 billion for 2011-12, pegging growth at 26.7% vis-à-vis the 2010-11 achievement, as highlighted in the Commerce Ministry’s strategy paper. The country had registered an impressive growth of 37.5% in overseas merchandise shipments in 2010-11, which reached $246 billion, against a modest target of $200 billion. Under DEPB, the incidence of customs duty on import content of export products is neutralized and reimbursed to the exporters. Several key industries like engineering, including automobiles, have been the major beneficiaries of the scheme.

Economic growth may not touch 9% in FY 12
ELCINA(FE May 12, 2011

The economy may not grow around 9% in the current fiscal due to volatility in global commodity prices and other supply constraints says Finance Minister Mr. Pranab Mukherjee. Inflation is likely to be 7-7.5% by March end 2012. The Budget had forecast GDP growth at 8.75-9.25% this fiscal, up from an estimated 8.6% in 2010-11.

Government seeks public opinion on Service Tax
ELCINA(TOI May 07, 2011)

In order to broaden the tax net, the Government recently sought public opinion on possibility of a negative list for Service Tax meaning that all services which are not mentioned in it would be taxed under the proposed GST regime. “The main issues that are sought to be deliberated in the debate are advantages and disadvantages of a negative via a vis a positive list….definition of the term ‘service’ and possible list of services that merit to be included in the negative list,” Finance Ministry statement says. Services mentioned in the positive list will be taxed. Currently, only few services come under the tax net.

Commerce Minister to Discuss Rate Hike with Finance Minister
(ET May 12, 2011

Commerce and Industry Minister Mr. Anand Sharma will meet Finance Minister Mr. Pranab Mukherjee to discuss concerns raised by industry on the rate hikes announced by the RBI and ways to ensure availability of cheap and adequate credit. The minister will also take up exporters’ demand for continuation of the duty entitlement passbook scheme scheme that is to expire next month-end. Exporters body FIEO had asked for capping of interest rate for small and medium exporters at 7% against the present rate of about 10.25% applicable to all exporters.

Notifications

Project Import Regulations, 1986 (PIR) – Instructions / regarding

Customs Circular No.22/2011 dt. 4th May, 2011 : Project Import Regulations, 1986 (PIR) – Instructions / regarding.

The Central Board of Excise & Customs, Ministry of Finance has issued Customs Circular No.22/2011 dt. 4th May, 2011 elaborating instructions regarding Project Input Regulations 1986 (PIR). This follows review by the Comptroller & Auditor General of India (C&AG) after a review of the working of ‘Project Imports’ scheme with a view to ascertaining the level of compliance, effectiveness of internal control and whether finalization.
Interested members may see full details of Customs Circular No.22/2011 dt. 4th May, 2011 on CBEC website by http://www.cbec.gov.in/customs/cs-circulars/cs-circulars11/circ22-2k11-cus.htm.

CENVAT Credit Rules 2004– Regarding

Circular No.943/04/2011-CX dated 29th April, 2011: Clarification on issues relating to CENVAT Credit Rules 2004– Regarding.

GST Bill tabled in Lok Sabha
(FE March 23, 2011)
On 22nd March, 2011, the government introduced the much-talked-about Constitution Amendment Bill to facilitate implementation of the goods and services tax (GST) in the Lok Sabha. The GST will subsume all indirect taxes such as excise duty and service taxat the centre level and VAT at the state level as well as local taxes, paving the way for creating a common market for goods and services across the country. The constitutional amendment is crucial as it seeks to confer simultaneous powers on Centre and States to levy taxes on goods and services, as at present the Centre cannot impose excise duty beyond the manufacturing stage and the States cannot levy tax on services. The Bill will now go through Parliamentary scrutiny and will be sent to the Standing Committee before being put up for debate and final passage. Being a Constitutional Amendment Bill, it will require two-third support in both the Houses of Parliament and approval of not less than half the States.

Implementation of ‘Self-Assessment’ in Customs
(Customs Circulation No.17/2011 dt. 8th April, 2011)
The Ministry of Finance, Department of Revenue, has issued Customs Circular No.17/2011 dt. 8th April, 2011 on the “Implementation of Self-Assessment in Customs” as stipulated in the Budget 2011-12.  Considering the importance of the subject, full contents of the Circular are being placed below for the benefit of ELCINA members:-

Circular No.17/2011- Customs
F.No.450/26/2011-Cus.IV
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
227-B, North Block,
               New Delhi-110001.
8th April, 2011.
To

All Chief Commissioners of Customs / Customs (Prev.).
All Chief Commissioners of Customs & Central Excise.
All Commissioners of Customs / Customs (Prev.).
All Commissioners of Customs & Central Excise.
All Directors General under CBEC.
 Subject:  Implementation of ‘Self-Assessment’ in Customs – regarding.
 ***
Sir / Madam, 

            The Finance Bill, 2011 stipulates ‘Self-Assessment’ of Customs duty in respect of imported and export goods by the importer or exporter, as the case may be. This  means that while the responsibility for assessment would be shifted to the importer / exporter, the Customs officers would have the power to verify such assessments and make re-assessment, where warranted. The proposed changes shall become effective immediately from the date of enactment of the Finance Bill, 2011.  It is, therefore, necessary that the new legislative provisions are carefully studied and applied correctly to ensure that there is no disruption in the assessment work, and clearance of imported and export goods continues smoothly.   

2.         New Section 17 of the Customs Act, 1962 provides for self-assessment of duty on imported and export goods by the importer or exporter himself by filing a Bill of Entry or Shipping Bill, as the case may be, in the electronic form (new Section 46 or 50). The importer or exporter at the time of self-assessment will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, in respect of the imported / export goods while presenting Bill of Entry or Shipping Bill. This should not pose any new difficulties since the importers / exporters and CHAs have been filing these documents containing the required details  regularly in the ICES.  

3.       Important changes are also made in Section 46 of the Customs Act, 1962 whereby it has been made mandatory for the importer to make entry for the imported goods by presenting a Bill of Entry electronically to the proper officer except for the cases where it is not feasible to make such entry electronically. While this is not a new requirement, it provides a legal basis for electronic filing. Where it is not feasible to file these documents in the System, the concerned Commissioner can allow filing of Bill of Entry in manual mode by the importer. These Bills of Entry would continue to be regulated by Bill of Entry (Forms) Regulations, 1976.  However, this facility should not be allowed in a routine manner and Commissioner of Customs should ensure that manual filing of Bill of Entry is allowed only in genuine and deserving cases. Similarly, on export side also, Section 50 of the Customs Act, 1962 makes it obligatory for exporters to make entry of export goods by presenting a Shipping Bill electronically to the proper officer except for the cases where it is not found feasible to make such entry electronically.  The Commissioner concerned in these cases may allow manual filing of Shipping Bill.  Again, this authority should be exercised cautiously and only in genuine cases.  

4.         Under the new scheme of self-assessment, the Bill of Entry or Shipping Bill that is self-assessed by importer or exporter, as the case may be, may be subject to verification with regard to correctness of classification, value, rate of duty, exemption notification or any other relevant particular having bearing on correct assessment of duty on imported or export goods.  Such verification will be done selectively on the basis of the output of  the Risk Management System (RMS), which not only provides assured facilitation to those importers having a good track record of compliance but ensures that on the basis of certain rules, intervention, etc. high risk consignments are interdicted for detailed verification before clearance. For the purpose of verification, the proper officer may order for examination or testing of the imported or export goods. The proper officer may also require the production of any relevant document or ask the importer or exporter to furnish any relevant information.  Thereafter, if it is found that self-assessment of duty has not been done correctly by the importer or exporter, the proper officer may re-assess the duty.  This is without prejudice to any other action that may be warranted under the Customs Act, 1962.  On re-assessment of duty, the proper officer shall pass a speaking order, if so desired by the importer, within 15 days of re-assessment.  This requirement is expected to arise when the importer or exporter does not agree with re-assessment, which is different from the original self-assessment. There may be situations when the proper officer of Customs finds that verification of self-assessment in terms of section 17 requires testing / further documents / information, and the goods can not be re-assessed quickly but are required to be cleared by the importer or exporter on urgent basis.  In such cases, provisional assessment may be done in terms of  Section 18 of the Customs Act, 1962, once the importer or exporter furnishes security as deemed fit by the proper officer of Customs for differential duty equal to duty provisionally assessed by him and the duty payable after re-assessment. 

5.       One of the salient features of self-assessment scheme is that verification of declarations and assessment done by the importer or exporter, except for cases wherein a speaking order has been passed by the proper officer while re-assessing the duty, can also be done at the premises of the importer or exporter.  This provision will be applicable as a part of an ‘On Site Post Clearance Audit’ (PCA) programme, which is likely to be implemented soon. Suitable legal cover has been provided vide Section 17 and Section 157 of the Customs Act, 1962. The  programme is being developed  and detailed instructions will follow in due course.  Till  that time, the  current  Post Clearance Audit will continue. 

6         In cases, where the importer or exporter is not able to determine the duty liability / make assessment for any reason, except in cases where examination is requested by the importer under proviso to sub-section (1) of Section 46, a request shall be made  to the proper officer for assessment of the same under Section 18(a) of the Customs Act, 1962.  In this situation an option is available to the proper officer of Customs to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit by the proper officer for differential duty equal to duty provisionally assessed and duty finally payable after assessment.  In this regard, it is clarified that importer should not resort to this provision in a routine manner and it is expected that this would be done in deserving cases only  where importer or exporter is not able to assess the goods for duty for want of certain information / documents etc. As far as possible, steps should be taken to provide guidance to importers/ exporters so that they are able to self-assess and  file the Bill of Entry. It should however be made clear that such guidance is not legally binding.

7.         Hence, in both the cases where no self-assessment is done and when self-assessment is done and reassessment is required under Section 17, the importer or exporter can opt for provisional assessment of duty by the proper officer of Customs.  The difference is that when no self-assessment is done, the provisional assessment shall get converted into final assessment and when self-assessment is done, the provisional assessment shall get converted into re-assessment.  Consequential changes are being made in the Customs (Provisional Duty Assessment) Regulations, 1963. 

8.         Bill of Entry (Electronic Declaration) Regulations, 2011 are being framed in supersession of the Bill of Entry (Electronic Declaration) Regulations, 1995. Bill of Entry (Electronic Declaration) Regulations, 2011 shall incorporate changes made vide Finance Bill, 2011 and mandate self-assessment by the importer or exporter, as the case may be.  While amending the same, requirements of ICES 1.5 shall be taken into account since the migration to ICES 1.5 in respect of locations having ICES 1.0 application is almost complete at all major Customs locations. Similarly, Shipping Bill (Electronic Declaration) Regulations, 2011 are also being framed in tune with statutory provisions of Sections 17, 18 and 50 of the Customs Act, 1962.  All these proposed changes viz. formulation of Regulations and amending formats of Bills of Entry / Shipping Bills requires detailed consultation with DG (Systems).  Thus, these changes will take some time and till then, the existing Regulations and forms shall continue to apply to the extent these do not conflict with the amended statutory provisions that come into force from the date of enactment of the Finance Bill, 2011. 

9.       The aforementioned changes will come into effect when the Finance Bill is enacted.  Thus, it is clarified that all Bills of Entry or Shipping Bills which have been presented either electronically or manually before the date of enactment of the Finance Bill shall be governed by provisions of erstwhile Section 17 or Section 18 of the Customs Act, 1962. 

10.       Suitable trade notice / standing order may be issued to guide the trade and industry. 

11.       Difficulty, if any, faced in implementation of these instructions may be brought to the notice of the Board immediately.

 Yours faithfully,

 ( R. P. Singh )
Director (Customs)
Internal circulation:  As usual
Internal circulation:  As usual.

The Directorate General of Foreign Trade (DGFT) has issued the subject Notification dt. 31st March, 2011 and Public Notice No.42/2009-14 dt. 30th March, 2011 on the above subject. Through the notification, the government has notified the list of specified goods, services and technologies i.e. SCOMET. As per Annexure attached to the notification, export of SCOMET items included shall be regulated as per conditions enumerated in the Annexure. The new form (Aayat Niryat Form 2E’ – ANF 2E), which is simplified, rationalized and easy to fill for export licence for SCOMET items, has been designed to include a revised ‘Declaration/Undertaking’. ‘Guidelines for Applicants’ too have been made exhaustive with a view to facilitate filing of the form. New ANF 2E is applicable w.e.f. 1.4.2011. All applicants for export of SCOMET items field from 1.4.2011 onwards must be filed in the new ANF 2E.

Items in SCOMET list are organized in 7 categories. Category No.7 covers ‘Electronics, Computers, and Information Technology, including information security’, as follows:-

7A : Electronics
7B : Electronic test equipment
7C : Computers
7D : Information Technology including information security
7E : (Reserved)

Members interested may access full notification throughhttp://dgft.delhi.nic.in.

On 8th April, 2010, the government said it will soon unveil a national manufacturing policy, which aims at attracting overseas investments and increase the share of the sector in the economy. According to Anand Sharma, Commerce & Industry Minister, the government had completed all inter-ministerial and stakeholders consultations. It aims at increasing the share of manufacturing sector from 16-17% to 25-26% of the GDP by 2020. Under the upcoming policy, the government has proposed to set up integrated green-field mega-investment zones to attract global investment and latest technologies.

Service Tax Liability too fixed at Invoice Stage
(ET April 02, 2011)

Through a circular dated 31st March, 2011, the Central Board of Excise and Customs has tweaked service tax rules, making service providers liable to pay tax as soon as they issue an invoice to their clients. Under the earlier rules, service tax became due only when a provider received payment for the service. This was at variance with the taxation of goods. States levy sales tax (value-added tax) on goods when the invoice is issued. Excise duty is also paid at the factory gate when the goods leave the factory on issuance of an invoice. The new rules provide a consistent regime for taxation of goods and services and aim to set the stage for the GST, which the government intends to roll out from April 2012. For invoices issued periodically within 14 days of completion of service, a service provider will have to pay tax on completion of the service. The new rules, however, offer relief to individuals, proprietary or partnership firms that provide services such as architecture, interior decoration, chartered accountancy, cost accountancy, scientific or technical consultancy and legal services. These service providers will be required to pay tax only after they receive payment.

Notifications

• Notification no. 26/2011-Central excise dt. 24th March 2011: Amends notification no. 6/2006-CE dt. 1st March 2006 - at S. No. 12D, for CTH 8443 99, “Parts of inkjet and laser-jet printers” replaced by “Parts for the manufacture of printers under sub-heading 8443 32” subject to Condition 2&3.
• Notification no. 26/2011-Central excise dt. 24th March 2011: Amends notification no. 8/2003-CE dt. 1st March 2003 on SSI exemption scheme for units not availing cenvat credit, to clarify that “packing material” includes “labels of all kinds”.
• Notifications: Customs Circular No.17/2011 dt. 8th April, 2011Implementation of ‘Self-Assessment” in Customs.
• Public Notice No.42/2009-2014(RE-2010) dt. 30th March, 2011 and Notification No.38(RE-2010)/2009-2014 dt. 31st March, 2011 Regarding export of SCOMET items being regulated.
• Central Excise Notification No.13/2011-CX.-N.T. dt, 31st March, 2011 Further amending CENVAT Credit Rules, 2004
• MCA Circular no. 09/2011 dt. 31st March 2011 Filing of financial statements with RoC for the year 2010-11 and onwards in XBRL Mode.

Major highlights of Union Budget Proposals for 2011-12
ELCINA (All Newspaper March 01, 2011
Indirect Taxes

• To stay on course for transition to GST.
• Central Excise Duty to be maintained at standard rate of 10 per cent.
• Reduction in number of exemptions in Central Excise rate structure.
• Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in the tax net.
• Lower rate of Central Excise Duty enhanced from 4 per cent to 5 per cent.
• Peak rate of Custom Duty held at its current level.

Excise
The base excise rate stays at 10%, but exemptions on some 130 items are being withdrawn on which a basic rate of 1% is being levied. Another 240 items that are still exempt will be attracting tax when the goods and services tax is introduced next year. This can have a negative impact and push up inflation.

• Full exemption from excise duty is being withdrawn on microprocessors for computer, other than motherboards, floppy disc drive, hard disc drive, CD-ROM drive, DVD drives/DVD writers, flash memory and combo drives meant for fitment inside the CPU or laptop.   These goods will attract a concessional rate of excise duty of 5%.
• Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted.
• The concessional rate of excise duty of 4% is being increased to 5%.  Accordingly, items such as prepared foodstuff like sugar confectionary, pastry and cakes; starches; paper and articles of paper; textile intermediates & textile goods; drugs, medical equipments etc. would now subject to the enhanced rate of duty of 5%.
• An excise duty of 1% without Cenvat credit facility is being imposed on about 130 specified items, which were hitherto either fully exempt from excise duty or chargeable to nil rate of excise duty.  General SSI exemption would be available to all products covered under this new levy.
• A concessional rate of  excise duty of 10% is being prescribed for hydrogen vehicles based on fuel cell technology.
• Excise duty is being reduced from 10% to 5% on hybrid kits for conversion of fossil fuel vehicles to hybrid vehicles.  Parts of such kits would also attract 5% duty.

Amendments in Central Excise Act, 1944

• Section 4A is being amended to substitute the reference to Standards of Weight & Measures Act, 1976 with Legal Metrology Act, 2009 with effect from 01.03.2011

Customs

• The basic customs duty rates of 2%, 2.5% and 3% are being unified at the median rate of 2.5%.
• Basic Custom Duty reduced for various items to encourage domestic value addition vis-à-vis imports, to remove duty inversion and anomalies and to provide a level playing field to the domestic industry.
• Rate of Export Duty for all types of iron ore enhanced and unified at 20 per cent ad valorem. Full exemption from Export Duty to iron ore pellets.
• Basic Custom Duty on two critical raw materials of cement industry viz. petcoke and gypsum is proposed to be reduced to 2.5 per cent.
• Cash dispensers fully exempt from basic Customs Duty.
• Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty extended to batteries imported by manufacturers of electrical vehicles.
• Exemption granted from basic custom duty and special CVD to critical parts/assemblies needed for Hybrid vehicles.

ELECTRONICS HARDWARE

• A concessional import duty structure of 5% CVD and Nil SAD is being prescribed on parts of inkjet and laser-jet printers imported for manufacture of such printers.
• Full exemption from basic customs duty is being extended to parts/components required for the manufacture of PC connectivity cable and sub-parts of parts & components of battery charger, hands-free head phones and PC connectivity cable of mobile handsets including cellular phones.
• Full exemption from SAD presently available upto 31.03.2011 on parts, components and accessories for manufacture of mobile handsets including cellular phones is being extended upto 31.03.2012.
• Full exemption from customs duty is being extended to additional specified capital goods and raw materials for the manufacture of electronic hardware.
• A concessional import duty structure of 5% CVD and Nil SAD is being prescribed on parts for manufacture of DVD writers, Combo drives and CD Drives subject to actual user condition.

DRDO, CSIR may share research data with electronics industry
ELCINA (Financial Chronicle Feb. 18, 2011)
In a bid to boost electronics hardware manufacturing in India, the government is considering a proposal to share research done at its institutions such as Defence Research & Development Organisation (DRDO) and Council of Scientific and Industrial Research (CSIR), with companies engaged in the manufacturing of electronics hardware. This was stated by Dr. Ashwani Kumar, MoS for Science & Technology, during his media interaction at EFY EXPO 2011 on 17th Feb/11 in New Delhi. The Minister added that if efforts to increase indigenous production of electronics hardware were not made now, India’s electronics hardware import bill would exceed that of oil. Electronics hardware includes products used in IT, telecom and consumer durables such as television, video players, voice recorders, set-top-boxes and other gadgets. Recommendations by a Task Force set up by the Department of IT on growth of IT, ITeS and electronics hardware manufacturing industry in August 2009 had said that demand for electronics hardware industry in India would increase from $45 billion in 2009 to $125 billion by 2014 and $400 billion by 2020. This would include exports of $15 billion by 2014, going up to $80 billion by 2020.

Coupled with the existing rate of growth, the production of electronics hardware in the
country is likely to grow to $104 billion by 2020, creating a demand and supply gap of $296 billion, which would have to be met through imports. The Task Force, chaired by Mr. Ajay Chowdhry, Chairman of HCL Infosystems, has suggested the creation of a Rs.500 crore R&D fund by the government to create these products in India. According to Mr. Ajay Chowdhry, the electronics hardware sector has the potential to contribute 20% to the GDP by 2020. The Task Force has recommended that at least 35% of the total purchase of electronics hardware by government should be sourced from indigenous manufacturers. DIT has submitted the Task Force Report to the Planning Commission and Science & Technology ministry to act on the recommendations. The government has also identified five major initiatives for implementation of its recommendations on a fast track mode such as – setting up of a national electronic mission (NEM), dedicated electronic development fund, create policies for preferential access to manufactured in India / Indian products, electronic goods for all government procurements and procurement by government licensees, setting up of a semiconductor wafer fabs, and encouraging manufacture of specific high priority electronic product lines in India by providing capital grant and creation of electronic manufacturing clusters.

Worried over the dip in foreign direct investment (FDI) in the country, the government is considering revamping the guidelines and could reintroduce elements that it had disallowed earlier.  The government now plans to allow foreign investment in domestic companies against considerations other than cash, like import of machinery, intangible assets like goodwill and franchise rights, trade payables and various other services.  Once the new norms come into place, companies could issue equity shares against import of products from a foreign company instead of paying in cash.  The proposal is part of biannual review of FDI policy set to be announced in April, 2011.

• Circular No.11/2011-Customs dt. 24th Feb, 2011 : Refund of 4% CVD (SAD) – Extension of time upto 30th June, 2011 for using re-credited 4% CVD (SAD) amount in DEPB.

• Public Notice No.30/2009-2014(RE-2010) dt. 14th Feb, 2011 : Amendment in paragraph 4.24A related to Advance Authorisation for Annual Requirement in HBP vI.
  

Customs Notifications

• Notification No. 14/2011-Customs dt. 1st March, 2011 amends Notification No. 25/1999-Customs, dated the 28th February, 1999 to expand the list of specified raw materials eligible for customs duty exemption
• Notfn no. 18/2011-Customs dt. 1st March 2011 substitutes the words “produced or manufactured in”, with the words “cleared from” (exemption for goods brought from a special economic zone to any other place in India)
• Notification No. 19 /2011-Customs dt. 1st March, 2011 amends Notification No. 23/2010- dated 27th February, 2010, expanding the scope of the exemption to “parts or components for the manufacture of battery chargers, PC connectivity cables and hands-free headphones of such mobile handsets and sub-parts for the manufacture of such parts and components”
• Notfn no. 20/2011-Customs dt. 1st March 2011 amends Notification no. 20/2006 dt. 1st March 2006 to include the following items for exemptions from special duty of customs:

8443 99 Parts of inkjet and laser-jet printers
8541 40 20 Light emitting diodes (electroluminescent) imported for manufacture of LED Lights or fixtures.
Any chapter Parts of DVD Drive or DVD Writer, Combo Drives, CD-ROM Drives

• Notfn no. 22/2011-Customs dt. 1st March 2011 exempts parts, components and accessories for the manufacture of mobile handsets, etc. from the whole of the additional duty of Customs
• Notfn no. 25/2011-Customs dt. 1st March 2011 exempts packaged software or canned software, falling under Chapter 85 from a portion of the additional duty of customs

Excise Duty Notifications

• Notification No. 6 /2011- Central Excise dt. 1st March 2011makes further amends to Notification No. 6/2006-Central Excise, dated the 1st March, 2006 regarding concessional rates of duty, exemptions, etc.

Service Tax Notifications

• Notification No. 17/2011-ST dt. 1st March 2011 specifies exemptions of taxable services received by a unit in an SEZ
• Public Notice No.33(RE2010)/2009-14 dt. 15th Feb, 2011Regarding amendments in the Reward/Incentive Schemes of Chapter 3 – FTP 2009-14, App.37A & 37D of Handbook of Procedure Vol.I.

Fresh Rs.500-crore sops for exporters
ELCINA (ET Feb. 12, 2011)
The government on 11th Feb/2011 announced a Rs.500 crore annual package incentive for export for products still struggling to make an impact in the global market. The sops follow a comprehensive review of all export sectors by the Commerce Department and will be available from January 01, 2011. According to Commerce & Industry Minister Anand Sharma, every sector has not rebounded and inherent instability continues in several large markets, including the EU, which poses a challenge for exporters. Exports have grown 29.5% in the first nine months of the current fiscal, but the study has shown 617 products in sectors such as agriculture, chemicals, carpets, engineering, electronics, textiles and plastics that are yet to recover fully. The incentives announced are in the form of duty-free import scrips that can be sold for cash in the market. The commerce department will fund the fresh incentives from its own resources.

E-manufacturing clusters to rein in import bills on cards
ELCINA (FE Feb. 07, 2011)
The Centre is putting together a proposal to promote Electronic manufacturing clusters (EMCs) as part of its modified Special Incentive Package Scheme (SIPS) meant to incentivise hi-tech manufacturing — a move that reflects growing concerns in government circles about the rising import bills of electronics. China and Taiwan have raced far ahead in technology hardware manufacturing and eyebrows are being raised on India's reliance on other countries for high-end electronic components. Some industry watchers estimate the current gap between the domestic electronic market and the local production at a stupendous $23-25 billion. EMCs would create an ecosystem required to set up units for the manufacture of electronic products, semiconductor wafers, chips and its components, electromechanical components and mechanical parts of electronics among others. An EMC would comprise housing, hostels, education and healthcare facilities for employees, uninterrupted power, banking facilities and would be located close to airports and sea ports. SIPS, part of the government’s Semiconductor Policy announced in September 2007, expired on March 31 last year. It was mainly targeted at promoting semiconductor and ancillary industries. The department of information technology (DIT) is now readying a modified version of the scheme that will be available to a wider ecosystem and can be open for 10 years.

EMCs will be a major change in the policy — India has no such cluster thus far to promote high-tech investments. Taiwan’s most popular cluster, the Hsinchu Science Park, has become a nerve centre for semiconductor manufacturing and has over 400 companies. China has been promoting its technology cluster, the Suzhou Industrial Park, since 1994. EMCs will be provided subsidies, modalities of which are being worked out. It could be set up directly by either the central or the state government, through joint ventures and PPP models. Existing manufacturing clusters will be given an option to get converted under the new scheme.

Hardware industry bodies such as the India Semiconductor Association (ISA), the Electronic Industries Association of India (ELCINA ), the Telecom Equipment Manufacturer's Association (TEMA), the Manufacturer’s Association of IT Industry (MAIT), and the Consumer Electronics and Appliances Manufacturers Association (CEAMA) have been long pressing the government to take a cluster approach. When approached, Poornima Shenoy, president of ISA said that electronic hardware clusters have been successful in the Far East. “They bring in synergies of component manufacturers, save time and costs for assembly and packaging and improve competitiveness between companies with same focus. By enabling bureaucracy they expedite the processes of land acquisition and other procedures for utilities. The availability of skilled manpower and access to specialized services, suppliers and vendors adds to the attractiveness of the cluster,” she noted. Rajoo Goel of ELCINA, India's oldest Electronics Association promoting manufacturing, said high-tech manufacturing requires a more organised plug and play infrastructure. “Besides economic benefits, high-tech manufacturing is strategic as well. Everything today is driven by electronics and if we don’t invest in manufacturing, we will become more reliant on foreign technology,” he said

The Centre’s e-governance projects could soon get a leg-up from a clutch of private firms who will help reinforce the complex IT systems for their smooth roll-out. The panel set up by the finance ministry under Nandan Nilekani has recommended setting up of National Information Utilities (NIUs) to address the challenges faced by government’s IT projects, including the Goods and Services Tax Network, Tax Information Network, Expenditure Information Network and New Pension System among others. NIUs will be private companies with 26% government stake. The NIU for GST will facilitate various services including dealer registration, payment gateways, integration with banking systems, returns filing and processing among others through a common GST portal.

The government may knock off the 4% countervailing duty on imports in the forthcoming budget as part of measures to tame inflation. The proposal had figured in a meeting chaired by PM Manmohan Singh and attended by his senior cabinet colleagues on inflation on January 11. According to a senior government official, while the peak customs duty rate cannot be tinkered with to protect domestic industry, removing the special additional duty could be a better alternative. The finance ministry had allowed refund of this special duty to importers in September 2007 if they had paid appropriate sales tax or VAT. But the complex refund procedure discouraged most importers from applying for a refund. So effectively, the duty adds to the cost, pushing up the price of imported goods.

• Customs Circular No.06/2011 dt. 18th January, 2011 Norms for Execution of Bank Guarantee in respect of Advance Authorisation /Duty Free Import Authorisation (DFIA)/EPCG Schemes
• Public Notice No.22/2009-2014 (RE 2010) dt. 14th January, 2011  Re-Credit Certificate for Re-export of defective/unfit goods and/or Re-assessment of Debited Duty and/or re-exports on account of any other reason.
  

Customs Duty Relief for Solar Power Generation Project
Ref. ELCINA
(Notification No.1/2011-Customs dt. 6th January, 2011)
Ministry of Finance, Department of Revenue, has issued Notification No.1/2011-Customs dated 6th January, 2011, exempting all items of machinery, including prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control) and components, required for the initial setting up of a solar power generation project or facility, when imported into India, from so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), as is in excess of 5% ad valorem. It also provides exemption from the whole of the Additional Duty of Customs leviable thereon under section 3 of the said Customs Tariff Act, subject to the following conditions, namely:-

(1) the importer produces to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, a certificate, from an officer not below the rank of a Deputy Secretary to the Government of India in the Ministry of New and Renewable Energy to the effect that the goods are required for initial setting up of a project or facility for the generation of power using solar energy, indicating the quantity, description and specification thereof; and the said officer recommends the grant of this exemption ; and

(2) the importer furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, that such imported goods will be used for the purpose specified and in the event of his failure to comply with this condition, he shall be liable to pay, in respect of such goods as is not proved to have been so used, an amount equal to the difference between the duty leviable on such goods but for the exemption under this notification and that already paid at the time of importation.

• Notification No.1/2011-Customs dt. 6th January, 2011 Exempting items required for the initial setting up of a Solar Power Generation project.
• Policy Circular No.11 RE(2010)/2009-14 dt. 4th January, 2011 “On-line” submission of application – Clarification regarding use of manual mode for filibng application on DGFT’s server.
• Notification No.126/2010-Customs dt. 21st Dec/10 Rescinding Notification No.31/2010-Customs dt. 27th Feb/10.  The rescinded notification exempts packaged software or canned software, falling under Chapter 85 of the First Schedule of the Customs Tariff Act, 1975 (51 of 1975) from so much of the additional duty leviable thereon under sub-section (1) of section 3 of the said Customs Tariff Act, as is equivalent to the duty payable on the portion of the value of such goods determined under section 14 of the said Customs Act, or the rules made thereunder, read with sub-section (2) of section 3 of the said Customs Tariff Act, which represents the consideration paid or payable for transfer of the right to use such goods.  The condition was that the importer shall make a declaration regarding consideration paid or payable in respect of such transfer to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be
• Public Notice No.17/2009-2014 (RE-2010) dt. 6th Dec/10 Amendment in paragraph 2.27 of Handbook of Procedures, Vol.1, 2009-2014 (RE 2010) regarding import of samples.
  

FM favours rollout of GST with DTC :

Addressing a 2-day seminar on GST, organized by the Comptroller and Auditor General (CAG) of India on 14th Dec/10, the Finance Minister Pranab Mukherjee said the Centre was willing to consider a phased approach for the introduction of a Goods & Services Tax (GST) and expects the rollout of GST simultaneously with the Direct Tax Code (DTC). The Minister said that the Centre is ready to accept a dual rate structure for GST which would be to adopt a single rate, common for goods and services. Consensus was a must for the implementation of GST, and the Centre would continue to take into account the concerns of the States, and work towards forging a common ground for introducing and implementing this tax regime.x

(BS Dec 15, 2010) ELCINA

Introduction of a Goods and Services Tax (GST) could be delayed further with the Centre and the States failing to reach common ground at the meeting of the Empowered Committee of State Finance Ministers on 6th Dec/10. The meeting was attended by only eight state finance ministers and those from BJP ruled states were not present. The issue of a constitutional amendment was not discussed and there was no headway on the GST structure. The Empowered Committee will meet the Finance Minister after the winter session to discuss a constitutional amendment. The states have not reached a consensus among themselves on this issue.

(BS Dec 07, 2010) ELCINA

• Circular No.43/2010-Customs dt. 6th Dec/10 : Clarification on anti-dumping duty on parts/components of CFL from China and Hong Kong – also applicable to CFLs in CKD/SKD conditions.
• Customs Notification No.119/2010 dt. 19th Nov/10 : Continuation of anti-dumping duty on Polypropylene covered under Tariff 3902 1000 or 3902 3000.
  

IT firms can now transfer goods from STPIs to SEZs

In a significant move that would come as a huge relief to the IT sector, the Commerce Ministry in a notification (Instruction No.68 dt. 28th Oct/10) clarified that IT companies could freely transfer goods from Software Technology Parks of India (STPI) units to special economic zones (SEZ) units. The new notification issued follows the earlier notification (Instruction No.11) of August last year. Following the earlier notification issued last year, several IT companies, in a bid to centralize their operations, wanted to shift units under one roof to an SEZ, which was refused by some development commissioners. This not only created confusion but it also forced several developers to rethink their SEZ strategies.
ELCINA (FE Oct. 29, 2010)

• Circular No.40/2010-CUSTOMS dt. 28th Oct/10 : Reg. Revised Form of Bond to be furnished for availing duty exemption under Advance License and EPCG Scheme.
• Customs Circular No.39/2010 dt. 15th October, 2010 : About change in Drawback on supplies made by DTA units to SEZ, issue of drawback cheque books by jurisdictional commissioner of Customs to Central Excise Commissionerates.
• Policy Circular No.2/2009-14(RE 2010) dt.. 8th October, 2010 : Clarification on the procedure to re-credit 4% Special Additional Duty (SAD) of Customs in DEPB, VKGUY, FPS, FMS, MLFPS scrips.
  

EPCG and SHIS Schemes

Following the announcement of the Annual Supplement to the Foreign Trade Policy (FTP), 2009-14 in August, 2010, Circular No.38/2010-Cus dated 27th September, 2010 has been issued by the Ministry of Finance, Department of Revenue, regarding the new Schemes, which are given below:-

I.New schemes.

Annual Export Promotion Capital Goods scheme
The annual supplement has introduced a provision in para 5.2 D of the FTP that EPCG Authorization can also be issued for annual requirement to Status Certificate Holders and all other categories of exporters having past export performance (in preceding two years), both under zero duty and 3% duty Schemes. The authorization for annual requirement may not indicate the capital goods which can be imported under the authorization. However, the authorization shall indicate export product(s) to be exported under the authorization. The authorization holder shall submit a Nexus Certificate from an independent Chartered Engineer (CEC), certifying nexus of imported capital goods with the export product, to the Customs authorities at the time of clearance of imported capital goods. Notification No. 92/2010-Cus dated 10.09.2010 refers in this regard.

II.       Changes in the existing Export Promotion schemes

(1)   Zero duty Export Promotion Capital Goods (EPCG) Scheme
This scheme has been extended upto 31.3.2012.  Further, the scheme has been expanded by adding some more sectors like rubber products, paints and varnishes, glass and glassware, ceramics, paper, books, animal by-products, ossein and gelatine, graphite products and explosives,  marine  products, sports goods and toys, engineering products (iron & steel, pipes and tubes and ferro alloys). Notification no. 92/2010-Cus dated 10.09.2010 may please be referred.

(2)   Status Holder Incentive Scheme (SHIS)
This scheme has been extended upto 31.3.2012 and has been expanded by adding some more sectors rubber products, paints and varnishes, glass and glassware, ceramics, paper, books, animal by-products, ossein and gelatine, graphite products and explosives, sports goods and toys, electronic products, engineering products (iron & steel, steel pipes, tubes and fittings thereof and ferro alloys). Notification no. 92/2010-Cus dated 10.09.2010 has been issued in this regard.

(3)   Applicability of benefits under Zero Duty EPCG & SHIS schemes
Para 5.1A to HBPv.1(2009-14) as notified on 27-08-2009 provided that benefit of Zero Duty EPCG Scheme & SHIS shall not be simultaneously available in the same year.  The HBPv.1 (RE 2010) has made this provision clear by providing in para 3.10.3 to the effect that SHIS scrips will not be issued in the year in which Zero Duty DPCG authorization has been issued and that the SHIS scrips which are not issued in a particular year for the reason that Zero Duty EPCG authorization has been issued in that year shall not be issued in subsequent years also.  The Customs notifications Nos. 101/2009-Cus dated 11.09.2009, 102/2009-Cus dated 11.09.2009 and 104/2009-Cus dated 14.09.2009 have been accordingly amended vide notification No. 92/2010-Cus dated 10.09.2010.

Ministry of Commerce released Consolidated FDI Policy effective from 1st Oct, 2010

The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry has issued consolidated FDI Policy effective from 1st October, 2010. Circular No.2 of 2010 was released, updating all information and clarifications relating to FDI Policy as on 30th September, 2010. This was as per the commitment made that this circular would be revised every six months, when circular 1 of 2010 was released.

Commerce department to push for lowering MAT on SEZ units

The Commerce Department will push for lowering the minimum alternate tax (MAT) proposed in the direct taxes code (DTC) Bill on units in SEZs as it believes that it would not viable for units to pay such high taxes. The department will raise the issue in the presentation it will make before the parliamentary committee on DTC and will also discuss it with the finance ministry.
(ET Oct. 07, 2010)

Modified Draft Notification Rules on E-waste (including RoHS)

The Ministry of Environment & Forests has issued the Modified Draft Notification of the E-waste (Management and Handling) Rules. The Rules are proposed to come into force with effect from 1st January 2012. The notification is available on the MoEF website at http://moef.nic.in/downloads/public-information/Modified%20Draft%20E-waste.pdf.

Notifications

Customs Notification No.99/2010 dt. 30th Sept/10 : Clarifications regarding review of anti-dumping duty on Cathode Ray Colour Television Picture Tubes

Customs Notification No.98/2010 dt. 28th Sept/10 : Imposing anti-dumping duty on DVDs with effect from 12th April, 2010.

Circular No.38/2010-Cus dt 27th Sept/10 : Regarding new EPCG & SHIS Schemes under FTP 2009-14

New Focus Products added in the Foreign Trade Policy

Through Public Notice No.2(RE2010)/2009-14 dt. 23rd August, 2010, the following New Focus Products (relevant to Electronics) have been added

New Foreign Trade Policy on August 23

Commerce & Industry Minister Anand Sharma is expected to announce amendments to the Foreign Trade Policy 2009-14 on August 23, 2010. The amendments are likely to provide additional incentives to sectors such as textiles, leather, handicrafts and carpets – the segments that have not grown fast and served the government’s ‘aam aadmi’ agenda.   
(BS August 16, 2010

PMO tells DoT to examine telecom source code issue

With many telecom equipment vendors raising concerns on sharing their source code in order to address the security issues raised by the Centre, Prime Minister’s Office (PMO) has asked DoT to examine the matter. The PMO has given DoT two months to examine if an alternate mechanism in line with international best practices can be adopted to address the concerns raised by the telecom equipment manufacturers and vendors. The PMO has also asked DoT to work closely with the home ministry to see whether there was merit in any of the concerns raised by the telecom service providers and vendors of equipment, product and services.
(FE August 13, 2010)

Home Ministry asks DoT to stop all 3G services

The Union Ministry of Home Affairs (MHA) has asked the Department of Telecommunications (DoT) to direct service providers to stop the operation of all third generation (3G) mobile services across the country, “particularly in Jammu & Kashmir”, till the infrastructure to enable full tapping of lines is put in place. Noting BSNL’s launch of 3G services in Jammu, the MHA reported that apart from problems in interception of video calls, the existing lawful tapping infrastructure is severely limited in providing usable intercepts. Only BSNL and MTNL offer 3G services currently. While BSNL has a 3G subscriber base of 1.5 million, MTNL has 400,000 subscribers. Private subscribers are expected to launch 3G by end of 2010 or early 2011. Government earned over Rs.1 lakh crore from 3G and BWA auctions recently.

Commerce Ministry is nodal agency for SEZs

The government has streamlined the process of according clearance to state SEZ Bills by making Commerce Ministry the nodal agency for getting all necessary approvals from various Central Ministries and Departments. The decision was taken at a meeting between the home and commerce ministries recently.  Accordingly, the Commerce Department will now take responsibility of consultations with all departments to create consensus for state SEZ bills and send its recommendations along with the no objection certificates to the home ministry, which, in turn, will get the approval from the President.
(FE August 04, 2010 

Refund of 4% Additional Duty of Customs (4% CVD) in pursuance of Notification No.102/2007-Customs dated 14.9.2007 – Disposal of claims in respect of cases where assessments are provisional

Customs Circular No.23/2010 dated 29th July, 2010 has been issued by the Central Board of Excise & Customs, Ministry of Finance, on the above subject.  In the ELCINA Electronics Outlook of July, 2010 and the Fortnightly Newsletter dated 15th July 2010, ELCINA had covered the contents of Customs Circular No.18/2010 dated 8th July, 2010, containing instructions on the procedure to be followed by the Customs field formations in case of 4% CVD refund claims. It appears that references have been received by the Board pointing out that divergent practices are being followed as regards sanction of 4% CVD refund claims in the cases where assessments are provisional. It has been reported that in some Customs Houses, ‘date of payment’ of duty is being considered as date for determining the prescribed period of one year in terms of the Notification No.93/2008-Customs dated 1.8.2008, whereas in other Customs Houses, the relevant date is the date of finalization of provisional assessment and accordingly, the importers in those Customs Houses are filing refund claim within one year of finalization of assessment. It was requested that a suitable clarification be issued by the Board in order to ensure uniformity in procedure.
The Board, vide its latest circular dt. 29th July, 2010, has now decided that all pending 4% CVD refund claims under Notification No.102/2007-Customs dt. 14.9.2007 and Notification No.93/2008-Customs dt. 1.8.2008 should be disposed of despite the fact that the assessment continues to be provisional without awaiting for finalization of assessments.  

• Customs Circular No.23/2010 dt. 29th July, 2010  Refund of 4% Additional Duty of Customs (4% CVD) in pursuance of Notification No.102/2007-Customs dt. 14.9.2007 – Disposal of claims in respect of cases where assessments are provisional.

Centre agrees to take decisions on GST only by consensus

To nudge states towards timely implementation of GST, the Centre has agreed that any decision on tax proposals in the new GST regime will be strictly based on a consensus among all States, a climb down from the earlier proposal that gave the Union Finance Minister the final word in the matter. In a bid to resolve the tussle over the issue of veto power for the Finance Minister in the proposed constitutional amendment Bill for GST, the Centre finally may just retain the ideal “consensus of all States” principle rather than a special power to any member of the GST council that includes the Union Finance Minister.
(FE August 12, 2010

Refund of 4% Additional Duty of Customs (4% CVD) in pursuance ofNotification No.102/2007-Customs dated 14.9.2007

Upon receipt of several representations from the trade and Industry Associations in the Central Board of Excise & Customs (CBEC) complaining about the delay in refund of 4% CVD or denial of the refund on one pretext or the other, causing them great hardship, Circular No.18/2010-Customs dated 8th July, 2010 has been issued by CBEC. Through this circular, the Board has decided to further simplify the procedure for claiming 4% CVD refund in the following manner:-

>> In respect of Accredited Clients registered with Customs in terms of Circular No.42/2005- Customs dated 24.11.2005 (ACP clients), the amount of 4% CVD refund shall be sanctioned in full, on preliminary scrutiny of the following documents: (a) TR-6 Challans (in original) for CVD payment; (b) VAT/ST payment Challans (in original); (c) summary of sale invoices; and (d) certificate of statutory Auditor / Chartered Accountant, for correlating the payment of ST/VAT on the imported goods with the invoices of sale and also to the effect that the burden of 4% CVD has not been passed on by the importer to the buyer. The procedure for pre-audit for ACP clients shall be done away with and detailed scrutiny should be done only at the stage of post-audit. The refund claims shall be sanctioned within the maximum time period of 30 days in all such cases.

>> Submission of sale invoices shall be required only in electronic form (CD or other media) in respect of 4% CVD refund cases and submission of paper documents is accordingly dispensed with.

>> In order to enable timely payment of refund in case of 4% CVD, a system of optional facility of directly crediting the applicant’s bank account, through RTGS (Real Time Gross Settlement) or NEFT (National Electronics Funds Transfer) System is being prescribed. This facility is already functioning in Mumbai Customs Zone-II and has been found useful for the trade. Hence, Board has decided to extend this facility on optional basis to all other Customs formations also. Necessary authorisation for payment of refund amount directly to Bank Account may be taken in such cases from the importer/ authorised signatory of the importer in the form annexed.
(Annexure-I)

>> Some field formations have also raised certain doubts whether the audited Balance Sheet and Profit and Loss Account have to be examined in respect of the current financial year for scrutiny of unjust enrichment aspect. It is stated that a large number of refund claims relating to the current year were held up for want of such verification. In this regard, the issue has been examined by the Board and it has been decided that the field formations shall accept a certificate from Chartered Accountant for the purpose of satisfying the condition that the burden of 4% CVD has not been passed on by the importer to any other person. Further, the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person. Hence, there is no need for insisting on production of audited Balance Sheet and Profit and Loss Account in these cases.

It may also be noted that recently the Board has also notified the list of documents required to be filed by the applicant along with the refund claim (Annexure-II) which is also displayed in the departmental website. Hence, other than these aforesaid documents, no other document would be required in the normal course of granting 4% CVD refund.

Chinese telecom equipment firms must get 3rd-party plant clearance : Chinese manufacturers selling telecom equipment to India will have to agree to third-party verification of their plants, besides submitting their software code to the government for examination. They will also have to give an undertaking that their equipment does not contain any malware. The Union Home Ministry which proposed the guidelines has also identified 14 international third party certifiers from whom the vendors must get security validation. The proposal aims to clear the logjam over Chinese equipment imports. According to a top home ministry official, the proposal, which has been sent to DoT for approval, says that certifiers will have to visit manufacturing plants of Chinese firms like Huawei, ZTE and others to verify there is no spyware or other malware sneaked into their equipment. Telecom players and Chinese vendors would have to enter into model agreements with the government, which would be drawn up on the above lines.

(FE July 15, 2010) Ref: ELCINA

......................................................................................................................................................................................................

DEPB likely to live beyond Dec 31 : The popular tax incentive to exporters, duty reimbursement on imported inputs going into exports, is likely to be extended beyond the end of the year to at least till the time the proposed GST is rolled out. The Commerce Department could also seek continuation of the duty entitlement passbook (DEPB) scheme, after the GST is introduced as the import duty paid on inputs used by exporters is not covered by the new tax. According to an official in the Commerce Department, it is more or less clear that the DEPB scheme would stay beyond December 31, 2010, but they do not know what will be its fate once the GST is in place. The GST, a single indirect tax levy that will replace a plethora of indirect taxes including sales tax, is expected to be rolled out from the next fiscal. Most cesses, charges and local taxes would also be subsumed under this tax.

 (ET July 14, 2010) Ref: ELCINA
......................................................................................................................................................................................................

Export duty on goods supplied from DTA to SEZs unjustified, says SC : The government’s bid to levy export duty on goods supplied to Special Economic Zones (SEZs) from the rest of the country was scuttled with the Supreme Court saying that the extant law does not permit such a levy. Currently, sales by SEZ units to domestic tariff area (DTA) are subject to Customs duty as SEZs are designated tax free zones with an obligation to be forex earners. Although there is no provision in the law for a levy on the reverse sale, the Customs authorities have started demanding a tax. Dismissing the government’s special petitions filed against Esssar Steel, Adani Power, etc, the SC held that export duty on sales to SEZs was unjustified in the absence of any specific law in this regard.

(FE July 13, 2010) Ref: ELCINA

......................................................................................................................................................................................................

Exempted goods may attract lower tax rate in GST : The Centre is likely to offer a sweetener to goods that go out of the exempted list for excise once the goods and services tax (GST) kicks in next year. While identifying the list of products that will go out of the 350- item list, the Union Finance Ministry is looking at levying a lower rate of tax under the new regime. The Centre has already acceded to the demand from the states to settle for a two- rate structure, with essential items facing a lower rate of tax. Most of the items that come out of the exempted category would be treated on a par with essential goods and would face a lower levy.    ((BS July 02, 2010) Ref: ELCINA

......................................................................................................................................................................................................

The Karnataka Value Added Tax (Amendment) Rules 2010 dt.22.7.2010 vide notification No. FD 236 CSL 2009 issued by the Finance Dept., Government of Karnataka, has been uploaded in the website of FKCCI, Bangalore,  website: fkcci.org

________________________________________________________________________

The Honble Chief Minister & Finance Minister, Government of Karnataka, in his budget speech for the year 2010-11 had announced a Karasamadhana Scheme aiming at reducing the arrears and other amounts due under the KST Act 1957 and CST Act 1956.

Accordingly, the Finance Dept., Government of Karnataka, vide its G.O. No. FD 109 CSL 2010, dated 1.6.2010 have announced the Karasamadhana Scheme 2010, granting partial waiver of arrears of  penalty and interest payable by a dealer under the KST and CST Acts relating to assessment periods upto 31.3.2005 subject to certain conditions and procedure.

The details are available at the Commercial Tax website: http://ctax.kar.nic.in 

------------------------------------------------------------------------------------------------------------------------------------------------------

Discussion Paper on Direct Taxes Code released by the Central Board of Direct Taxes (CBDT)

for your kind reference.

This Revised Discussion Paper is available on the following websites:
finmin.nic.in and incometaxindia.gov.in.

Responses to the Revised Discussion Paper should be sent online through the link provided at these websites or at the following e-mail address: directtaxescode-rev@nic.in, on or before 30th June, 2010, with a copy to Dy. Secretary, FKCCI.

------------------------------------------------------------------------------------------------------------------------------------------------------

The Central Board of Direct Taxes (CBDT) have amended the Rules relating to TDS provisions date and mode of payment of tax deducted at source (TDS), TDS certificate and filing of ‘statement of TDS’ (TDS return) vide Notification No. 41/2010; SO No.
1261(E) dated 31.05.2010.

Ref: FKCCI email communication

The amended rules will apply only in respect of tax deducted
on or after 1st day of April 2010.

Forms for TDS certificate have been revised to include the receipt number of the TDS
return filed by the deductor. Now the Tax-deduction Account Number (TAN) of the
deductor, Permanent Account Number (PAN) of the deductee, and Receipt number of
TDS return filed by the deductor will form the unique identification for allowing tax
credit claimed by the taxpayer in his income-tax return.

Government Authorities (Pay and Accounts Officer or Treasury Officer or Cheque
Drawing and Disbursing Officer) responsible for crediting tax deducted at source to the
credit of the Central Government by book-entry are now required to electronically file a
monthly statement in a new Form No. 24G containing details of credit of TDS to the
agency authorised by the Director General of Income-tax (Systems).

Due date for furnishing TDS return for the last quarter of the financial year has been
modified to 15th May (from earlier 15th June). The revised due dates for furnishing TDS
return are

Due date for furnishing TDS certificate to the employee or deductee or payee is revised
as under :

------------------------------------------------------------------------------------------------------------------------------------------------------

Guidelines for Visa-exempt entry into Taiwan for Indian Nationals

The Taipei Economic and Cultural Center (TECC), New Delhi, has informed ELCINA about a new policy announced by the Taiwanese government for visa-exempt entry into Taiwan for Indian nationals. The guidelines for the same are given below:-

1. Indian passport holders who hold valid visas or permanent residences issued by the US, UK, Canada, Japan, Schengen Convention Countries, Australia or New Zealand, are eligible for visa-exempt entry into Taiwan and staying for up to thirty days.

2. However, before embarking, it is required to obtain a permit for visa-exempt entry through Advance Online Registration System, a website hosted by Taiwan’s National Immigration Agency (NIA). Please log into https;//nas.immigration.gov.tw/nase/ctlr?PRO=PROTask12Application

to apply for this permit. Normally, the process of clearance by NIA is instant
at the same time the applicant submit an application online, and a permit (officially referred to as an authorization certificate) can be printed out within minutes. This authorization certificate shall enable the traveler to enter Taiwan visa-exempt.

3. The entry permit (authorization certificate) is valid for third days from the issue date of the permit. During the 30-day validity, multiple entries are allowed. And for each single entry, a traveler may stay up to thirty days.

4. When arriving at the point of entry into Taiwan, the passenger must present:
a) A passport valid for at least another six months.
b) A confirmed return air/sea ticket, seat reservation, or visa for next destination (if not
returning to India), for onward departure from Taiwan.
c) Valid visas for the US, UK, Canada, Japan, Schengen convention countries, Australia or New Zealand. Expired visas are not acceptable.

Passport holders who used to be employed in Taiwan as blue-collar workers will not be eligible for visa-exempt entry into Taiwan.

...........................................................................................................................................................

RBI removes ceiling on export loan rates from July

The Reserve Bank of India (RBI) has put an end to concessional interest rates on export loans by freeing the pricing of these loans with effect from July 01, 2010. The move has worried exporters who already face the downside of a strengthening currency, but banks have said there will not be much of a change for exporters under the new regime. So far, interest rates charged on export finance by banks were capped at 250 basis points below the bank’s prime lending rate. RBI has said banks can now either lend at their base rate or above the base rate, which will be the new benchmark for all floating rate loans from July 01. The concessional loans were hitherto available for both pre-shipment rupee export credit up to 270 days and post-shipment rupee export credit up to 180 days.
ELCINA:ET April 27, 2010)
------------------------------------------------------------------------------------------------------------------------------------------------------
RBI raised key rates by 25 BPS

In its Annual Policy Statement for 2010-11 announced on 20th April, 2010, the Reserve Bank of India (RBI) raised the repo, reverse repo and CRR by 25 basis points each, in a bid to tackle rising inflation. While repo and reverse repo rates will be effective from the day of announcement, CRR will go up from 24th April, 2010. The new repo, reverse repo and CRR will be 5.25%, 3.75% and 6% respectively. An increase in policy rates signals a rise in interest rates, while CRR is used to manage liquidity. The CRR increase will take away Rs.12,500 crore from the system. Major banks like SBI, ICICI, HDFC have ruled out any immediate impact on their home lone leding rates following the increase in key rates by RBI. For full Policy Statement, please log in The Annual Policy Statement for the Year 2010-2011 .
ELCINA:BS April 21, 20
------------------------------------------------------------------------------------------------------------------------------------------------------
RBI increases cash limit for foreign travel

The Reserve Bank of India (RBI) on 5th May, 2010 enhanced the cash limit of foreign exchange to be released to travelers going abroad to $3,000 (Rs.135,000) from $2,000 (Rs.90,000) or its equivalent without the RBI’s permission. These provisions will not apply to persons going to Iraq, Libya, Islaamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States. While the annual limit on foreign travel remains unchanged at $10,000 (for a private or leisure trip) and at $25,000 (for a business trip), the amount of cash that one can carry under that limit has gone up from $2,000 to $3,000.
ELCINA:HT May)
------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Taxes Code likely to retain EEE

The proposed Direct Taxes Code (DTC) is likely to retain the exempt-exempt-exempt (EEE) regime for taxation of individual savings. The Finance Ministry, which is giving final touches to the revised DTC draft, reckons that a shift to the exempt-exempt-tax (EET) regime, as proposed in the original draft of the code, may not pass muster. In the current EEE regime, savings are exempt from tax in all the three stages – contribution, accretion and withdrawn. The EET method, which is considered to be the best global practice for taxation of savings, allows exemption at the first two stages, but provides for a tax on withdrawals at the personal marginal rate. The Finance Ministry is reportedly planning to set up a committee to suggest ways to link interest on small saving instruments. Like PPF schemes, with market rates.
ELCINA:FE May 05, 2010)
------------------------------------------------------------------------------------------------------------------------------------------------------
Fourth List may ring in GST

In a radical move, the Finance Ministry is considering a Fourth List in the Constitution to take states on board and ensure the implementation of GST from April 1, 2011. The Fourth List would stand apart for the equal powers it would assign to the Centre and States with regard to levy and collection of GST on a common base as well as the appropriation of its proceeds. Even the Concurrent List is devoid of this positive neutrality, as it allows the Centre’s view to prevail in case of a dispute. The Ministry has discussed the option of a Fourth List with the empowered committee of state finance ministers.
ELCINA:FE May 03, 2010)
------------------------------------------------------------------------------------------------------------------------------------------------------
Increase FDI in Defence, says CII survey

With the government evaluating a decision on enhancing the current 26 per cent foreign direct investment (FDI) cap in defence production, a Confederation of Indian Industry (CII) survey suggests that the India defence industry supports enhanced FDI levels, while opposing 100 per cent FDI in the sector.

A majority of Indian companies (57 per cent) favour an increase in the cap to 49 per cent or higher; a minority of just 17 per cent of India companies wants to retain the status quo; while 26 per cent “may be”.

The debate on raising FDI in defence has divided not just Indian defence companies, but also the government of India. While the Ministry of Commerce and Industry has signaled its willingness to support 100 per cent FDI in defence, the Ministry of Defence (MoD) has opposed any enhancement of the 26 per cent cap.
ELCINA:BS May 11, 2010
------------------------------------------------------------------------------------------------------------------------------------------------------
Notifications

Polytetrafluoroethylene (PTFE) falling under the customs subheading 3904 61 00 exported from Russia and Peoples of Republic of China continues to be subject to Anti-dumping Duty at US $3.42 per kilogram produced by any manufacturers and exporters
• Customs Notification No. 57/2010 dated 3rd May, 2010 shall be effective for a period of five years.
(kindly refer to Customs Notification No. 57/2010 dated 3rd May, 2010)

------------------------------------------------------------------------------------------------------------------------------------------------------

The Ministry of Labour & Employment have issued the notification dated 20th April 2010 amending the Employees State Insurance (Central) Rules 1950 enhancing the wage ceiling for coverage under ESI Act 1948 from Rs.10,000 to Rs.15,000 w.e.f. 1st May 2010.
A copy of the notification is attached for your kind information and implementation, as required.

[To be published in the Gazette of India. Part Il, Section 3, Sub-Section (i)]

GOVERNMENT OF INDIA MINISTRY OF LABOUR AND EMPLOYMENT

New Delhi, 20th April, 2010

NOTIFICATION

G.S.R. (E)- The following draft rules further to amend the Employees' State Insurance(Central) Rules, 1950 were published as required under sub-section(l) of section 95 of the Employees' State Insurance Act, 1948 (34 of 1948) in the notification of the Government of Indian in the Ministry of Labour & Employment vide No. G.S.R.164(E), dated the 26th February, 2010, in the Gazette of India, Part Il, Section 3, Sub-section (i), dated 27th February, 2010 for inviting objections and suggestions from all persons likely to be affected thereby till the expiry of the period of thirty days from the date on which the copies of the Gazette of India in which the said notification was published, were made available to the public;

And whereas the copies of the said Gazette were made available to the public on 27th February, 2010;

And whereas, objections and suggestions received from persons likely to be affected thereby have been considered by the Government;

Now, therefore, in exercise of powers conferred by section 95 of the Employees' State Insurance Act, 1948, the Central Government, after consultation with Employees' State Insurance Corporation, hereby makes the following rules further to amend the Employees' State Insurance (Central) Rules, 1950, namely:-

1. These Rules may be called the Employees' State Insurance (Central) Amendment Rules, 2010.
2. These shall come into force from the lst day of May, 2010.
3. In the Employees' State Insurance (Central) Rules, 1950, in Rule 50, for the words "ten thousand", wherever they occur, the words "fifteen thousand" shall be substituted.

[F. No. S-38025/04/2010 -SS-I]

Sd/-
S.D. XAVIER
Under Secretary

------------------------------------------------------------------------------------------------------------------------------------------------------
The Dept. of Commercial Taxes, Government of Karnataka, are introducing a new facility called 'e-Sugam', electronic - simple uploading of goods arrivals and movements, for swift clearance at checkposts w.e.f. 1.6.2010.

The details are available at the Commercial Tax website: http://ctax.kar.nic.in and FKCCI Website: fkcci.org

For kind information to all concerned

Ref. FKCCI 27.5.2010

-------------------------------------------------------------------------------------------------------------------------------------------------------

The Ministry of Defence (MoD) plans to oppose a proposal from the Ministry of Commerce & Industry to allow foreign defence corporations to establish fully-owned defence units in India. The new Consolidated Foreign Direct Investment (FDI) Policy, effective from April 01, limits FDI in defence units to 26%. But the Department of Industrial Policy & Promotion (DIPP) of the Commerce Ministry is in favour of raising this limit. The MoD apprehends that raising the FDI cap significantly would seriously damage India’s nascent defence industry, particularly the eight MoD-owned defence PSUs. According to DIPP Secretary R.P. Singh, if the defence sector is opened to FDI, its impact upon the manufacturing sector in India will be great. Foreign defence majors will be more likely to bring in sensitive technology if you allow them higher FDI. Defence production requires technology, and also huge capital investments.

(ELCINS:BS April 12, 2010)

------------------------------------------------------------------------------------

FDI hike in defence production

Govt takes first step towards GST

FDI inflows still in red; consolidated Press Note released

Finance Ministry withdraws duty drawback sops to exporters

Notifications

• Customs Notification No.37/2010 dt. 23rd March, 2010 : Imposing anti-dumping duty on import of ‘Barium Carbonate’.
• Customs Notification No.39/2010 dt. 23rd March, 2010 : Imposing anti-dumping duty on import of ‘Plastic processing or Injection Moulding Machines’.
• Central Excise Circular No.919/09/2010-CX dt. 23rd March, 2010 : Procedure for Electronic Filing of Central Excise and Service Tax Returns and for electronic payment of Excise Duty and Service Tax.
• Customs Circular No.5/2010 dt. 16th March, 2010 : Regarding verification mechanism in respect of the duty credit scrips issued under Chapter 3 schemes of the Foreign Trade Policy and in respect of Export Promotion Schemes viz. Advance Authorisation / Duty Free Import Authorisation (DFIA) / EPCG Schemes.