Staying Updated, FTP & WTO Newsletter March 2013 - Volume 15 Issue 12 In the issue In the Issue Case Law Valuation Know-how fees paid by the importer not includible in the value of imported goods in case there is no nexus with the imported goods Others Time taken in litigation before the High Court excludable in calculating the period for filing the appeal before the Tribunal Exporter is liable to penalty where the goods were loaded on to the vessel for export and sailed before the Let Export Order given by the authorities A rectification of mistake application has to be heard by the same bench of the Tribunal Foreign Trade Policy Notifications/Circulars License holder under AA/DFIA or the EPCG penalised during previous three years for specified offences, cannot be exempted from filing BG Import policy conditions applicable on import of second hand goods streamlined Refund of TED restricted in respect of certain supplies of goods Case Law Duty cannot be demanded on goods destroyed in SEZ due to accidental fire Custom duty benefits not available under Served from India Scheme in case goods imported after the expiry of validity of such scrip Anti-dumping Duty Provisional antidumping duty imposed on the import of Meta Phenylene Diamine, originating in or exported from China PR
Case Law Classification In Parag Books Pvt. Ltd. v. CC (2013 (289) ELT 375), the Tribunal held that import of manuscript not older than 75 years although cannot be considered antiquity in terms of the Antiquities and Art Treasuries Act, 1972, are classifiable as collections and collector s pieces of..., historical, archaeological,... interest under Tariff Heading (CTH) 9705 as item need not be item of antiquity to be classified under CTH 9705. Valuation In CC v. DM International (2012 (289) ELT 196), the Tribunal held that transaction value cannot be rejected by the Authorities in the absence of any of the reasons specified under rule 12 of the Valuation (Determination of Value of Imported Goods) Rules (CVR), 2007 which, amongst others, includes contemporaneous imports at higher value. The Tribunal, in CC v. Prasad Enterprises (2013 (289) ELT 307), held that transaction value cannot be rejected without clear and cogent evidence produced by the department with regard to the quantity, quality, country of origin and place and time of 2 March 2013 - Volume 15 Issue 12 import. In Indian Oil v. CC (2013 (289) ELT 33), the Tribunal held that technical know-how fee paid to process licensors for providing process design, specification, data and review of documents are not includible to the value of goods imported under a separate agreement unless there is nexus of such fees with the imported goods. Others The Tribunal, in CC v. Mohammad Hussain Gauri (2013-TIOL-385- CESTAT-MUM), held that reasons such as heavy work pressure like investigation and issuance of notices resulting in delay in filing the crossobjections by the Department cannot be condoned as the provisions relating to appeal do not envisage such reasons as sufficient cause for permitting filing of cross-objections after expiry of the relevant period. In MSC Agency India Pvt. Ltd. v. CC (2013-TIOL-455-CESTAT-MUM), the Tribunal held that that the exporter is liable to penalty where the goods were loaded on to the vessel for export and sailed before the Let Export Order was given by the authorities as it is the responsibility of the exporter and agent to ensure that the goods are exported after completion of all the formalities.
In Gammon India Ltd. v. CC (2013- TIOL-471-CESTAT-MUM), the Tribunal held that there can be no equity or presumption to a tax as a taxing statute has to be interpreted strictly. The Tribunal, in Mohan Singh Rajpurohit. v. CC (2013-TIOL-487- CESTAT-MUM), held that a rectification of mistake application has to be heard by the same bench meaning the same members in terms of provisions of CESTAT (Procedure) Rules, 1982. In Shabeer Enterprises v. CC (2013- TIOL-498-CESTAT-MAD), the Tribunal held that delay in filing the appeal before the Tribunal, due to litigation before the High Court can be a sufficient cause for condoning the delay in filing the appeal. 3 March 2013 - Volume 15 Issue 12
Notifications/Circulars The Central Government has streamlined the import policy conditions applicable on import of second hand goods into India. Further, para 2.33 of Handbook of Procedure has been deleted which outlines the specified conditions to the fulfilled by the importer at the time of importation of second hand capital goods into India. (Notification No. 35 (RE-2012)/2009-2014 and Public Notice No. 50 (RE- 2012)/2009-2014 (RE-2012) both dated 28 February, 2013) The Central Government has amended the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list covered under Schedule 2 of Indian Trade Classification (Harmonised System). (Notification No. 37 (RE-2012)/2009-2014 dated 14 March, 2013) The Central Government has reviewed the availability of exemption from execution of Bank Guarantee (BG) required to be submitted for import under Advance Authorisation (AA) Scheme/Duty Free Import Authorisation Scheme (DFIA)/ Export Promotion Capital Goods (EPCG) and decided that where the license holder has been penalised during previous three years for specified offences, cannot be exempted from filing BG. (Circular No. 8/2013 dated 4 March, 2013) The Central Government has clarified following in respect to post-export EPCG: i. The benefit under post-export EPCG Scheme can be taken on the BCD part only. ii. The Central Government has prescribed a sequential monitoring process for post-export EPCG iii.the verification process to establish genuineness of the post-export EPCG duty credit scrip has also been provided iv. The option for not availing CENVAT credit on capital goods imported under authorisation and thereby enjoying a lower export obligation is to be backed by a certification from the central excise authorities; (Circular No. 10/2013- (NT) dated 6 March, 2013) The Central Government has clarified that following deemed export benefits are available to the suppliers of goods in respect of supply against Advance Release order (ARO)/Invalidation letter against AA: 4 March 2013 - Volume 15 Issue 12
i. For supply against ARO ii. Refund of Duty Drawback; Refund of Terminal Excise Duty (TED) For supply against Invalidation letter Outright exemption from payment of TED; AA/ DFIA for intermediate supply. (Policy Circular No. 15 (RE-2012) /2009-14 dated 21 February, 2013) The Central Government has clarified that refund of TED in terms of chapter 8 of FTP is not available in respect of the following supplies, as these supplies are outrightly exempt from payment of excise duty: Supply of goods under Invalidation letter issued against AA; Supply of goods under International Competitive Bidding; and Supply of goods to Export Oriented Unit (EOU). (Public Circular No. 16 (RE-2012)/ 2009-2014 dated 15 March, 2013) Case Law In Steelco Gujarat Ltd. v. CC (2013- TIOL-357-CESTAT-MUM), the Tribunal held that benefits under Duty Entitlement Pass Book (DEPB) scheme cannot be denied by the authorities when the same has been allowed by the Director General of Foreign Trade (DGFT) which is treated as the final authority to decide the availability of export benefits to exporters. In Jindal International v. CC (2013- TIOL-420-CESTAT-AHM), the Tribunal held that customs duty cannot be demanded on goods destroyed in Special Economic Zone due to accidental fire on the ground that the goods were not utilised for the authorised operations and have not been put to unauthorised use. The Karnataka High Court, in CC v. Natural Stone Exports Ltd. (2013 (288) ELT 341), held that in case an EOU fails to achieve positive Net Foreign Exchange Earnings (NFE), the duty foregone at the time of import (other than the duty on capital goods) shall be paid to the extent of non-achieved portion of NFE. The Delhi High Court, in P.S.G. Steel Pvt. Ltd. v. Union of India (2013 (288) ELT 338), held that custom duty benefits available under Served from India Scheme is not extended to an exporter where the goods have been imported into India after the expiry of the validity of such scrip. 5 March 2013 - Volume 15 Issue 12
The Bombay High Court, in Mavi Industrial Ltd. v. CC & CCE (2013 (289) ELT 15), held that penal action cannot be invoked against EOU on account of nonfulfilment of export obligations in respect of the first block of five years in case the original Letter of permission (LOP) has been extended by the Development Commissioner for another five years as it cannot be said to be a violation of FTP. 6 March 2013 - Volume 15 Issue 12
Anti-dumping Duty Notifications/Circulars The Central Government has imposed provisional anti-dumping duty on import of Meta Phenylene Diamine falling under CTH 2921.51.20, originating in or exported from China PR for a period of six months effective from 22 March, 2013. ( (ADD) Notification No. 2/2013 dated 22 March, 2013) 7 March 2013 - Volume 15 Issue 12
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