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Regarding New Exim Policy 2002-2007 and Handbook of Procedures, 2002-2007
- Amendment in the Provisions Relating to Gem & Jewellery Export Promotion
Schemes
Customs
Circular No. 37 dated 28th June 2002
I
am directed to invite your attention to the new Export and Import Policy and
Handbook of Procedures, 2002-2007 announced by Ministry of Commerce &
Industry on 31st March 2002. The new five-year Export and Import
Policy and the Handbook of Procedures replace the old EXIM Policy and Handbook
of Procedures, Vol. I 1997-2002. In the new EXIM Policy & HOP, Certain
changes have been introduced in the provisions relating to Gem and Jewellery
Export Promotion Schemes. To implement the changes, amendments have been made in
the notifications governing duty free import of goods by Gem and Jewellery units
vide notification No. 64/2002-Cus, dated 26-6-2002. Further, a fresh
notification (No. 60/2002-Cus, dated 7-6-2002) has been issued for allowing
import of pearl, precious and semi-precious stones against replenishment
licences without payments of duty in supercession of notification No.
35/2001-Cus, dated 30-3-2001. A copy each of the notifications is enclosed for
easy reference introduction of new EXIM Policy and HOP has also necessitated
amendments in existing circulars/ instructions and the same has been made
wherever necessary. The salient features of the changes are explained below:
(i)
Amendment in Exim Policy:
2.
Under the provisions Exim Policy and HOP, the diamond, gem and jewellery
export promotion schemes were under chapter 8. In the new EXIM Policy and
Handbook of Procedures Vol. I, 2002-2007, gem and jewellery export promotion
schemes have been shitted to chapter 4.
3.
In the existing notifications relating to gem & jewellery export
promotion schemes, at several places, references have been made to various
paragraphs of the EXIM Policy and HOP Consequent to the re-numbering of Chapter
and Paragraphs in the new Exim Policy & Handbook, these notifications have
been amended suitably so as to correctly reflect the new Chapter and Paragraph
numbers. Further, in these notifications, references have been made to the
Export and Import Policy, 1997-2002 and Handbook of Procedures, 1997-2002. As
the old Policy and HOP and Have been replaced by the new Exim Policy and
Handbook of Procedures, Vol. I, 2002-2007, notification Nos. 41/99-Cus, dated
28-4-99; 42/99-Cus, dated 28-4-99; 56/2000-Cus, dated 5-5-2000-Cus, dated
8-5-2000 and 55/2001-Cus, dated 16-5-2001 have been suitably amended so as to
align them with the new Exim Policy and HOP 2002-2007.
(ii)
Paragraph 4.4.16 (para 8.13 under old Exim Policy): Diamond Imprest
Licence (DIL)
4.
Paragraph 8.3 of the previous Policy provided that Diamond Imprest
Licence (DIL) may be issued, in advance for import of rough diamonds. It also
provided that DIL may be issued for import of cut & polished diamonds for
mixing with other cuts & polished diamonds and export thereafter or for
exports as it is. Such licences carry an export obligation. Now, this provision
has been amended so as to allow import of semi-processed diamonds, half-cut
diamonds and broken alongwith the cut & polished diamonds under DIL
(paragraph 4.4.16 of the new policy)
5.
At present, notification No. 42/99-Cus dated 28-4-99 allows import of cut
& polished diamonds and gemstones upto 5% of the FOB value of the preceding
financial year�s export of cut & Polished diamonds or studded jewellery
without payment of duty subject to re-export of the same within a period of one
year. The facility to import cut & polished diamonds is allowed only to
status holder and actual users. The maximum size of diamonds allowed to be
imported under the notification has been fixed at one-forth of a carat or less.
6.
To implement the change in the Policy, notification No. 42/99-Cus, dated
28-4-1999 has been suitably amended so as to allow import of semi processed,
half cut and broken diamonds along with cut and polished diamonds against
diamonds Imprest Licence issued under Paragraph 4.4.16 of the Exim Policy.
(iii)
Export of Cut & Polished Diamonds for Certification/ Grading and
Re-import thereof
7.
In the last Exim Policy, in para 8.13(b) (now para 4.4.2 of new Policy),
a new provision was made to allow gem & jewellery exporters with a track
record of at least three years and having an annual average turnover of Rs. 5
Crore and above during the preceding three licensing years to export cut &
polished diamonds each weighting 0.50 of a carat and above for the purpose of
certification/ grading by specified laboratories/ agencies as mentioned in the
said para and for re-import thereof without payment of duty. The diamond
exported are to be re-imported within a period of three months. The diamonds
would be exported subsequently as per the provisions of the policy. At the time
of the export of the diamonds for certification purposes, all the essential
particulars necessary for establishing identity of the goods at the time of
re-import are required to be furnished by the exporters.
8.
A notification (No. 55/2001-Cus, dated 16-5-2001) has been issued to
implement the above policy provision. Under new policy, this provision has been
amended to allow authorized offices/ agencies of such institutes/ laboratories
to export cut and polished diamonds and re-import the same after certification
or grading. To implement the changes in the Policy, notification No.
55/2001-Cus. dated the 6.5.2001 has been suitably amended.
(iv)
Abolition Licenses for import of Rough Diamonds
9.
Hitherto, the exporters of Gem & Jewellery were allowed to import
rough diamonds, pearl, precious & semi-precious stones without payment of
duty against various licenses e.g. Diamond Imprest license, Bulk license, Gem
Rep Licenses etc as specified in the Policy & HOP under notification No.
35/2001-Cus, dated 30-3-2001.
10.
In the new Exim Policy, the following licenses for import of rough
diamonds have been done away with.
(i)
Replenishment license issued under, and in accordance with paragraph 8.2
of the Exim Policy;
(ii)
Replenishment licenses issued under and in accordance with paragraph 8.37
of the Exim Policy;
(iii)
Bulk licenses issued under and in accordance with the paragraph 8.10 of
the EXIM Policy;
(iv)
Replenishment license issued under and in accordance with paragraph
8.13(a) of the Exim Policy read with paragraph 8.26 of the HOP;
11.
Further, the import duty on rough diamonds has been reduced from 5% to
Nil vide notification No. 37/2002-Cus. dated 11-4-2002. This means that now for
import of rough diamonds, no exemption notification allowing duty free import
against replenishment license is required.
12.
Consequent to discontinuation of certain licenses in the new Exim Policy
and HOP and abolition of duty on import of rough diamond, notification No.
35/2001-Cus, dated 30-3-2001 has been superceded and replaced by a fresh
notification No. 64/2002-Cus dated 7-6-2002 so as to allow duty free import of
raw pearl, natural or cultured and precious (other than rough diamonds) or
semi-precious stones, unset & uncut against gem rep licences (para 4.4.13)
and replenishment license (para 4.4.1) of the Exim Policy.
(v)
Exports through Exhibition/ Export Promotion Tours/ Export of Branded
Jewellery.
13.
Under paragraph 8.57 (a) (ii) of the HOP 1997-2002, personal carriage of
gold/ silver/ platinum jewellery, precious, semi-precious stones, beads and
articles as samples upto US $ 1,00,00 (one lakh) for export promotion tours and
temporary display/ sale abroad was permitted the approval of gem & Jewellery
Export Promotion Council subject to the condition that the exporter would bring
back the jewellery/ goods or repatriate the sale proceeds within 45 days from
the date of departure through normal banking channel. The said paragraph has
been modified and the new paragraph 4.71.2 (a) (ii) of the HOP, 2002-2007 now
specifically includes cut and polished diamonds in the category of goods allowed
to taken out through personal carriage for the purpose specified in the para.
14.
Diamond fall in the category of precious stones. Therefore, technically
speaking personal carriage of diamonds is already allowed under the policy.
However, for the purpose of clarity, the same has been specifically mentioned in
paragraph 4.17.2 (a) (ii) of the HOP. Personal carriage of diamonds for export
promotion tours may, therefore, be allowed. However, to establish the identity
of goods, it may be ensured that the specifications such as size, shape,
circumference, cartages (weight), colour, cut & height etc of the cut and
polished diamonds would be declared by the exporter at the time of export so
that the same could be matched at the time or re-import of the goods into the
country.
(vi)
Wastage Norms
15.
Under paragraph 8.28 of the HOP, 1997-2002, chains/ bangles of gold/
platinum/ silver manufactured by a full-mechanized process were allowed wastage
of 1.25%. The said paragraph has been modified and the new paragraph 4.56 of the
HOP now allows the same wastage norm for any unstudded jewellery/ articles of
gold/ platinum/ silver manufactured by a fully mechanized process. This means
that any unstudded jewellery articles manufactured by a fully mechanized process
would be eligible for 1.25 percent wastage or manufacturing loss.
(vii)
Value addition
16.
Under paragraph 8.28 A of HOP, 1997-2002, the value addition prescribed
for plain gold/ silver/ platinum jewellery articles and ornaments like Mangal
sutra containing black beads/ imitation stones/ cubic zirconia etc. was 10%.
This has been amended vide paragraph 4.56.1 of the HOP 2002-2007 so as to reduce
the value addition norm from 10% to 7%.
17.
Under paragraph 8.28 A of HOP, 1997-2002, the value addition norm for
gold/ platinum/ silver unstudded chains and bangles manufactured by a fully
mechanized process was 3%. The same value addition has been prescribed in the
new HOP for all unstudied jewellery/ articles manufactured by a fully mechanized
process.
(viii)
Replenishment Licence for Import of Consumables
18.
Under the old HOP (paragraph 8.88), plain/ studded jewellery items equal
to 2.5% of FOB value of exports of preceding year was allowed to be imported on
payment of applicable duty against a replenishment licence. This provision has
been deleted in the new Handbook of Procedures 2002-2007 (paragraph 4.80 of the
HOP).
(ix)
Personal Carriage of Gem & Jewellery Export/ Import Parcel
19.
Under the pervious HOP, foreign bound passengers were allowed to carry
gems and jewellery export parcels in baggage from all EOU/ EPZ/ SEZ units and
all firms in DTA through the airports in Delhi, Mumbai, Kolkata, Chennai &
Bangalore. This provision has been modified and paragraphs 4.81 and 4.82 of the
new HOP now allow personal carriage of gem and jewellery and import parcels
through Hyderabad and Jaipur Airport also. The Commissioners of the Customs/
Excise, Hyderabad and Jaipur may kindly make suitable arrangements for
implementation of this provision.
20.
Wide publicity may be given to the above changes by issued of a Public
Notice in this regard.
21.
Difficulties, if any, faced in implementation of the above changes may be
brought to the notice of the Board at an early date.
Kindly
acknowledge receipt of this circular.
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