Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
Circular No. 21 /2013-Customs
New Delhi, dated 16th May, 2013
To,
All Chief Commissioners of Customs.
All Chief Commissioners of Customs & Central Excise.
All Chief Commissioners of Central Excise.
Subject: Difficulties being faced in availing exemption relating to the Oil
Exploration Sector
– Regarding.
Sir / Madam,
Representations have been received from the trade and the field formations
regarding
difficulties being faced in availing/extending exemption relating to the Oil
Exploration Sector
under Sl. Nos 356, 358 and 359 of
notification No.12/2012-Customs, dated
17-03-2012.
- Board has examined the issues raised and the clarifications thereon are as
under:
2.1 Whether the goods imported for petroleum operations can be diverted from one
eligible project to another without payment of duty on the basis of EC issued by
DG,
Hydrocarbons.
2.1.1 Field formations are not allowing transfer of imported goods from one
eligible project
to another in the absence of a specific provision to this effect in the
notification. As a result,
the contractors/sub-contractors are first re-exporting the goods and then
re-importing the
same for use in another eligible project by the same or another
contractor(s)/subcontractor(s).
2.1.2 As a measure of trade facilitation, it has been decided to allow the
imported goods to
be transferred from one eligible project to another project, subject to certain
safeguards to
prevent any misuse of this facility. In this regard, notification
No.28/2013-Customs, dated the
16th May, 2013 amending the Condition Nos.41, 43 and 44 of notification
No.12/2012-
Customs, dated 17-03-2012, may be referred to for details.
2.2 Whether it is necessary to furnish a re-export bond for goods
imported under this exemption.
2.2.1 Notification No.12/2012-Customs, dated 17.03.2012 does not stipulate any
condition
for execution of re-export bond. The requirement under the notification is that
of an
undertaking only. Once the goods are used for the eligible project, the
requirement of reexport is optional. In case of any un-authorised diversion,
action could be initiated in terms of
the conditions of the exemption notification.
2.2.2 It is, therefore, clarified that execution of re-export bond shall not be
insisted upon at
the time of clearance of goods under the said notification.2.3 Whether
individual member companies constituting a Consortium are eligible to
import goods under the aforesaid exemption even though the contract has been
signed
by the Consortium.
2.3 Whether individual member companies constituting a Consortium are
eligible to import goods under the aforesaid exemption even though the
contract has been signed by the Consortium.
2.3.1 “Consortium” unlike a “Joint Venture” is not a distinct legal entity
capable of
importing the goods by themselves. Hence, the duty-free import facility extended
to a
Consortium under the said notification can be made use of only if the individual
constituents
of the Consortium are allowed to import. Therefore, it appears that the option
to import by
individual constituents was always available implicitly under the impugned
condition.
2.3.2 It is, therefore, clarified that an individual constituent of a Consortium
with its name
as importer on the Essentiality Certificate (EC) is allowed to import and avail
of the
exemption.
2.4 Whether each sub-contractor (of a contractor) is required to enter into a
contract with the GOI or his name should figure in the contract agreement signed
between the contractor and GOI for availing the benefit of this exemption.
2.4.1 Field formations are not allowing the benefit of exemption to imports made
by the
sub-contractor if his name does not figure in the contract signed between the
GOI and the
Contractor on the ground that as per the condition of the exemption, the
importer is required
to produce a certificate from DG, Hydrocarbons, that the imported goods have
been imported
under a contract signed under the New Exploration Licensing Policy, and
containing the
name of such sub-contractor.
2.4.2 The condition (c)(i) in all the Sl. Nos. of the said notification requires
that the
importer should produce an EC, which should indicate that the goods have been
imported
under a contract entered between the Government and the contractor; and it
should also
contain the name of the sub-contractor. The requirement of containing “the name
of the subcontractor” is in the EC issued by the DG Hydrocarbons and not in the
original contract
entered into by the contractor with the GOI. If the sub-contractor is required
to enter into a
contract with the GOI, then the condition viz an affidavit to the effect that
such subcontractor is a bona-fide sub-contractor of the contractor would be
superfluous. Moreover, at
the time of entering into contract, the contractor normally does not know the
name of his subcontractor. Hence, it is not possible to include his name in the
original contract.
2.4.3 It is, therefore, clarified that non-mention of the name of sub-contractor
in the
agreement signed between the contractor and GOI cannot be a ground for denying
the benefit
of the exemption and that the exemption should be allowed based on the EC issued
by the
DG, Hydrocarbons.
- The above position may be brought to the notice of formations under your
charge.
Difficulties, if any, faced in the implementation of the instructions may be
brought to the
notice of the Ministry at an early date.
Yours faithfully,
(Prashant Kumar Jha)
Technical Officer (TRU)
F.No.B1/20/2013 -TRU