Government of India
Ministry of Finance
Department of Revenue
Circular No. 5 /2010-Cus.
New Delhi, the 16th March, 2010.
To,
All Chief Commissioners of Customs/Central Excise/Customs & Central Excise.
All Commissioners of Customs/Customs (P)/Customs &Central Excise/Central Excise.
All Director Generals of CBEC,
Chief Departmental Representative of Customs Excise & Service Tax Appellate
Tribunal.
Sir/Madam,
Sub: Verification Mechanism and monitoring of export obligation under duty
exemption / reward Schemes – reg.
I am directed to invite your attention to the above-mentioned subject and to say
that, several references have been received, requesting the Board to put in
place a verification mechanism in respect of the duty credit scrips issued under
Chapter 3 schemes of the Foreign Trade Policy (FTP) and in respect of the Export
Promotion Schemes viz. Advance Authorization / Duty Free Import Authorization
(DFIA) / Export Promotion Captial Goods (EPCG) schemes.
- The matter has been examined by the Board in the light of the conditions
specified in the notifications regarding monitoring of export obligation in
respect of Advance Authorization / DFIA / EPCG schemes. Board has also
considered the reports received from the field formations, which indicated
discrepancies found having revenue implications during the verification of the
duty credit scrips, issued under Chapter 3 schemes of FTP. Accordingly, it has
been decided to put in place the following procedures:-
- In case of EPCG scheme, the Jurisdictional Customs Authorities at the Port of
Import shall ensure that the installation certificates are submitted within 6
months of completion of imports as stipulated in the corresponding customs
notifications. The correctness of the installation certificates, which are
issued by the Chartered Engineers, shall be verified on a random basis through
Central Excise divisions. Further, the EPCG notifications stipulate fulfilment
of atleast 50% of export obligation within the first block. This shall be
verified in detail. In case the same is found satisfactory, the Export
Obligation Discharge Certificate issued by the Director General of Foreign Trade
(DGFT) at the end of 2nd block may be accepted without further verification
unless there is a specific intelligence suggesting need for detailed
verification.
- In case of Advance Authorization scheme, the Export Obligation Discharge
Certificate should normally be accepted unless there is an intelligence
suggesting misuse.
- The Jurisdictional Commissioner of Customs may cause random verification for
some of the authorizations issued under EPCG / DFIA / Advance Authorization
schemes registered at their port to check the correctness of the address shown
on the Authorization. This is important, as the EPCG notification requires
installation of the capital goods and the Advance Authorisation scheme (and DFIA
scheme in some cases) contemplates actual usage of the imported goods. Such
verification may be carried out during the validity of the Authorisation and
preferably through the Central Excise divisions.
- Action to safegaurd customs revenue should be initiated in case the
authorization holder does not submit the Export Obligation Discharge Certificate
within the time period stipulated in the relevant Customs notifications.
- As regards the duty credit scrips issued under Chapter 3 of FTP, the
verification of genuineness of scrips in terms of Para 3.11.3 of the HBP v.1
shall be done before allowing registration of such scrips. Further, the
Commissioner may cause random verification of the shpping bills based on which
the said duty credit scrip has been issued to ascertain the genuiness of such
shipping bills. A quarterly report on the outcome of the said verification may
be forwarded to the Board, which should include inter alia the details of the
discrepancies noticed during the verification and the measures taken to redress
such discrepancies. This procedure will be reviewed once online transmission of
the duty credit scrips issued under Chapter 3 of FTP is operationalized.
- Wherever the Export Obligation Discharge Certificates issued by DGFT bear the
requirement that the Customs department should carry out verification, then such
verification should be done. In all cases – EPCG, Advance Authorization, DFIA
and Reward Schemes, the Department would retain the right to carry out a
complete verification wherever there is specific intelligence available
suggesting misuse.
- The notifications issued under EPCG / Advance Authorization / DFIA schemes
provide that the exporter should discharge the export obligation within the
specified time period or within such extended period as may be permitted.
Further, the notifications issued under EPCG scheme stipulates that in case of
non-fulfillment of block-wise export obligation, the importer should pay the
proportional duty of unfulfilled portion of export obligation along with
specified interest from the date of clearance of the goods and such payment
should be made within 3 months from the expiry of said block. Monitoring of
export obligation is an integral part of verification mechanism. This would
facilitate faster redemption of Bonds / Bank Guarantee executed under the above
schemes. In view of above, the Jurisdictional Commissioners of Customs are
directed to put suitable systems in place to initiate timely action in all cases
of default.
- The guidelines issued in the past on the subject shall be modified to the
above extent.
- These instructions may be brought to the notice of the trade / exporters by
issuing suitable Trade / Public Notices. Suitable Standing orders/instructions
may be issued for the guidance of the assessing officers. Difficulties faced, if
any, in implementation of the Circular may please be brought to the notice of
the Board at an early date.
Receipt of this Circular may kindly be acknowledged.
Yours faithfully,
Sd-
(P.V.K. Rajasekhar)
OSD (Drawback)
F.NO.605/16/2007-DBK (Pt.)