Benefits to Exporters under Indirect Taxation (Excise, Customs and FTP etc.) & Professional opportunities for Practicing CAs Seminar CPE Study Circle of Baroda Branch of WIRC of ICAI 1
INDEX Page No I. Legal Dispensation of Area - DTA-EOU-SEZ 05 A. DTA 06 - Status of Different Category of Exporters under DTA 07 A-1 Manufacturer Exporter Inputs Benefits 08 Capital Goods Benefits 09 Input Service Benefits 10 CENVAT Credit / ITC Benefits 11 CENVAT Refund Benefits 12 (a) Finished Goods Benefits (Indirect Taxation) 13 (b) Finished Goods Benefits FTP 14 ( c) Other FTP Benefits 15 2
INDEX Page No A-2 Merchant Exporter 16 A-3 Deemed Exporter 17 Inputs Benefits 18 Capital Goods Benefits 19 CENVAT Credit Benefits 20 CENVAT Refund Benefits 21 Finished Goods Benefits 22 A-4 Service Exporter Inputs / Input Services Benefits 23 Capital Goods Benefits 24 CENVAT Credit Benefits 25 CENVAT Refund Benefits 26 Finished Services Export Benefits 27 3
INDEX Page No B EOU 28 EOU Benefits 29 C SEZ 30 SEZ General 31 Special Provisions 32-35 Indirect Tax Exemptions 36-39 Drawback 40 Re-warehousing 41 SEZ In & Out ward Transaction 42-43 Foreign Trade Incentives to DTA Supplier 44 D Direct Tax Benefits 45 E Various Requirement of CA Certificates 46-47 4
Legal Dispensation of Area DTA EOU SEZ 5
DTA 6
Status of Different Category of Exporters under DTA DTA Goods Services Manufacturer Exporter Merchant Exporter Deemed Exporter Service Exporter 7
DTA Goods - Manufacturer Procurement of Inputs Without Duty / Re-imbursement Central Excise - Annexure-1 (Domestic)(ED) 43/2001-CE (N.T.) (Free) - Input Rebates 21/2004-CE (N.T.) (Domestic ED/CVD) (Re-imbursement) Customs -DBK Brand Rate Rule-6 / 7 (Both Central Excise / Customs) (Re-imbursement) FTP - Advance Authorization 96/2009-Cus 99/2009-Cus - DFIA 98/2009-Cus (Free) 8
DTA Goods - Manufacturer Procurement of Capital Goods Without Duty FTP EPCG 0% Duty 102/2009-Cus ( 6 / 6 ) (Free) EPCG 3% Duty 103/2009-Cus ( 8 / 8 ) (Only 3% Duty) 9
DTA Goods - Manufacturer Procurement of Input ServiceBy way of Exemption / Re-Imbursement Service Tax 2 Services Exempted (GTA & Commission) 18/2009-ST (Free) 18 Services Refund on Actual Basis ( or Percentage Basis ) 52/2011-ST (Re-imbursement) -Either 18 Services refund or % on F.G. FOB as per 52/2011. -In case GTA Exemption is availed u/r 18/2009, then option to opt 17 services for refund on actual basis under Noti. No. 52/2011 is available ( But No percentage route is available ) 10
DTA Goods - Manufacturer CENVAT Credit / VAT ITC on Inputs / C.G. / Input Services for the Exporter Central Excise VAT CENVAT ITC Inputs Capital Goods Input Services Inputs Capital Goods 11
DTA Goods - Manufacturer CENVAT Refund Central Excise VAT Excess Cenvat Credit Refund 5/2006-CE (N.T.) (Input & Input Services) Finished Goods Rebate 19/2004-CE (N.T.) (Input + Capital Goods + Input Services) Input ITC Portion Refund Rule-15(6)&(7) / Section-37 (Input) 12
DTA Goods - Manufacturer Finished Goods Central Excise Service Tax Customs VAT F.G. Rebate 19/2004-CE (N.T.) LUT/Bond 42/2001-CE (N.T.) & 45/2001-CE (N.T.) (Bhutan) (01-03-2012) % on Services On FOB 52/2011-ST DBK All Industry Rate 68/2011-Cus (N.T.) No VAT / CST On Exports (Traders Form-H ) Basically the concept of AIR (DBK) is nothing but a Adhoc Advance Payment of Inputs Duties reimbursement. If we have not satisfied with AIR (DBK) then we can go for Special Brand Rate. Incase if there is no AIR (DBK) at all then we can go for fixation of Brand Rate. 13
DTA Goods - Manufacturer Finished Goods FTP Normal Goods Agri Goods Old (Resciend) FMS / NFMS / SFMS 93/2009 -Cus F.P.S./ Sp. FP T&S / MLFPS/ NFPS/ NSFPS/ NMLFPS/ FPBB/ SBB 92/2009 -Cus S.H.I.S. 104/2009 -Cus VKGUY 94/2009- Cus Sp.VKGUY / New VKGUY / VKGUY Product / Agri & Other Product/ Forest Product / Gram Udyog / Oleoresins / Forest Produce 95/2009-Cus DEPB 97/2009- Cus Target Plus & DFCEC 105/2009- Cus 14
Other FTP Benefit MAI (Market Access Initiative) MDA (Market Development Assistance) To P.C. T.R. (Expenses Reimbursement STATUS (Status Category) 15
DTA Goods Merchant Exporter Merchant Exporter All the benefits narrated herein above for Manufacturer exporter are equally applicable to Merchant Exporters. In few cases the Merchant Exporter can directly avail and in few cases supporting manufacturer can avail. 16
DEEMED EXPORTS what? 1. Supply of goods against Advance Authorisation / Advance Authorisation for Annual requirement / DFIA 2. Supply of goods to EOU / STP / EHTP/ BTP 3. Supply of Capital goods to EPCG Authorisation holders 4. Supply of goods to Projects financed by multilateral or bilateral Agencies / Funds as notified by DEA / ICB / Supply and installation of goods and equipment to projects finance by multilateral or bilateral Agencies / Funds as notified by DEA, MoF under ICB 5. Fertilizer plants (5 TH Five year plan) 6. Supply of goods to any project or purpose which the MoF by a notification 7. Supply of goods to power projects / refineries 8. Marine freight containers 9. Projects funded by UN Agencies 10.Nuclear power projects / as opposed to ICB 17
DTA Goods Deemed Exporter Procurement of Inputs Without Duty / Re-imbursement Central Excise - Annexure-1 (Domestic)(ED) 44/2001-CE (N.T.) (Free) Customs -DBK Brand Rate Rule-6 / 7 (Both Central Excise / Customs) (Re-imbursement) FTP - Advance Authorization 96/2009-Cus 99/2009-Cus - DFIA 98/2009-Cus (Free) 18
DTA Goods Deemed Exporter Procurement of Capital Goods Without Duty FTP EPCG 0% Duty 102/2009-Cus ( 6 / 6 ) (Free) EPCG 3% Duty 103/2009-Cus ( 8 / 8 ) (Only 3% Duty) Deemed Exporter can complete Export Obligation when he clear the goods to the categories of 10 (of page No. 17) of above 19
DTA Goods Deemed Exporter CENVAT Credit / on Inputs / C.G. / Input Services for the Exporter Central Excise CENVAT Inputs Capital Goods Input Services 20
DTA Goods Deemed Exporter CENVAT Central Excise Finished Goods Rebate TED Refund (Input + Capital Goods + Input Services) In Some Cases Exemption as per Customs Noti. No. 06/2006 Dt-01-03-2006 as per Sr. 91 & 91-A. In other cases TED Refund (Non Mega Power Projects / Refineries. ) 21
DTA Goods Deemed Exporter Finished Goods Received from the AAH Invalidation + Annexure-1 Clearance without payment of duties / or If paid then TED Refund (without Annexure-1) Note Other than Adv. License cases the local Deemed Exporter can also avail DBK-AIR 22
DTA Services Exporter Re-Imbursement of Inputs & Input Services Service Tax Finished Service Exports 12/2005-ST 23
DTA Services Exporter Procurement of Capital Goods Without Duty Central Excise FTP SFIS (Domestic) 34/2006-CE SFIS (Import) 91/2009-Cus EPCG 0% Duty ( 6/6 ) 102/2009-Cus EPCG 3% Duty ( 8/8 ) 103/2009-Cus 24
DTA Services Exporter CENVAT Credit Inputs Capital Goods Input Services 25
DTA Services Exporter CENVAT Refund Central Excise Service Tax Excess Cenvat Credit Refund 5/2006-CE (N.T.) Finished Services Rebate 11/2005-ST 26
DTA Services Exporter Finished Services Export Service Tax FTP Export of Services 9/2005-ST SFIS 91/2009-Cus 27
EOU 28
EOU 1. EOU can procure duty free indigenous / imported raw materials / Capital Goods 2. HSD Refund (Non CENVATABLE) and CST Refund available 3. EOU can clear manufactured goods into DTA. (Duty is payable 50% C.D.) DTAs Sales from free Procured Imported R.M. is also available. 4. All benefits narrated to DTA manufacturers are equally applicable related to FTP benefits as long as Income Tax benefits are not claimed (except DBK-AIR / AA / DFIA / EPCG). 29
SEZ 30
SEZ The First FTZ in India came up in 1965 Later, the Government set up five more multiproduct EPZs SEZ policy in April 2000 The Parliament passed the SEZ Act in 2005, which came into force together with the SEZ Rules,2006 on the 10 th of February 2006. SEZs territories deemed to be outside the customs territory of India. The special status given to SEZs under section 53 of SEZ Act as areas deemed to be outside the Custom territory of India is for the limited purpose of conducting the authorized operations and to facilitate the import export activities in a simplified manner. 31
SEZ Special Provisions / Important Provisions of SEZ Act / Rules etc. Section-2(m) Supplies to SEZs and intra or inter-sez supplies qualify as physical exports and are eligible for export benefits Section : 07 Imports Exports exempted from duties & taxes Section : 26 Special fiscal benefits Section : 27 Income tax benefits Section : 30 Levy of duties Section : 51 Over-riding effect of SEZ Act Section : 53 SEZ as deemed foreign territory & Port 32
SEZ Rule : 11 Demarcation and fencing of SEZ and leasing premises Rule : 24 Procedure for export benefits on supplies from DTA Rule : 27 Imports and procurements Rule : 30(8) Reimbursement of Duty (RoD) in lieu of drawback for supply of goods to developers against payment in Indian Rupees Rule : 41 Sub-contracting Rule : 45 Exports Rule : 46(1) Let Export order is given on the basis of self certification 33
SEZ Rule : 46(10) Exports through a merchant exporter or a status holder is permitted subject to the requirements Rule : 46(11) Procedure for third party exports Rule : 47 DTA Sales Rule : 53 Foreign exchange earning requirements Rule : 75 Rule : 76 Self-clearances Trading for the purposes 34
SEZ Instruction :11 Transfer from DTA of used capital goods Instruction :59 Inter-SEZ transfer of units Instruction No.68, 70, 11: Transfer of used Capital Goods: There are no provisions in the SEZ Act / Rules preventing transfer of old capital goods. The only deterrent is nonavailability of Income Tax exemption where the value exceeds 20% of the total capital goods installed in a year. 35
SEZ Indirect Tax exemptions 1) Exemption from Customs duties on imports. 2) Exemption from Central Excise duties. 3) Exemption from payment of Central Sales Tax on sale or purchase of goods (other than newspapers) under Central Sales Tax Act, 1956. 4) Exemption from Service Tax, education cess and secondary and higher education cess leviable on services received by units. 36
SEZ Services from DTA to SEZ ( Notification No. 17/2011-ST Dt-01-03-2011) Group of Services Exempted Payable Refund can be obtained or not Group -I Services are exempted If - the property situated at SEZ Payable if the property is not situated at SEZ Refund can be applied after making payment of Service Tax Group-II Services are exempted If - the Services are performed at SEZ Payable if the Services are not performed at SEZ Refund can be applied after making payment of Service Tax Group-III Services are exempted If - the SEZ units is Exclusively situated at SEZ (No Business outside) Payable if the SEZ has Business outside the SEZ also Refund can be applied after making payment of Service Tax 37
SEZ Are you ( from DTA ) sending your goods to SEZ unit or developer? Need not to pay the excise duty. ( it is like a normal physical exports to you). or incase if your wish to pay the duty, you can obtain the rebate of Central Excise duty paid under rule 18 of the Central Excise Rules, 2002. 1. Circular : 6/2010 cus dated 19 th March, 2010. ( related to rule 18 rebates) 2. Definition is mentioned in the section 2 (m) of the SEZ Act, 2005. 3. Exemption for excise duty on goods supplied from DTA to an SEZ unit or developer as per section 26 (c). 4. Over riding effect to the provisions of the SEZ Act over any other law is as per Section 51. 5. Procedure is mentioned in regard to removal as per rule 30 of SEZ Rules 2006. 6. Exemption is also specifically told in the CBEC circular 29 / 2006 cus dated 2nd December, 2006. 38
SEZ Sale by DTA ( Gujarat ) to SEZ (Gujarat ) : No VAT by the DTA ( as per section 5 A of Gujarat VAT Act, 2003 ) Sale by DTA (Gujarat) to SEZ (for e.g. say Mumbai) : Sale against Form I ( No VAT by the DTA) ( section 8 (8) of CST Act, 1956 ) 39
SEZ Even SEZ can get the DBK Subject to NOC Received from DTA. (Circular No 39/2010-Customs Dated : 15-10- 2010) 40
SEZ As per Rules 30 (4) of SEZ rules 2006 the rewarehousing certificate to be received within 45 days. Receipt of both the customs endorsed Bill of Export, copy of ARE-1 are called as re-ware housing certificate. Incase if you dispatch without receipt of the bill of export to the SEZ, then we loose the exports EXIM benefits. 41
SEZ SEZ inward Transaction Import Into DTA to EOU / SEZ SEZ SEZ To SEZ Customs Duty --- --- --- Excise Duty --- --- --- Service Tax --- Note See page No. 37 --- VAT / CST --- --- --- 42
SEZ SEZ Outward Transaction Exports From SEZ SEZ to DTA SEZ to EOU Customs Duty --- Payable at Effective Rate (All Customs duties including CVD) 100% EOU has to file Bill of Entry at SEZ Customs.. EOU Provide Procurement Certificate to SEZ. Excise Duty --- --- --- Service Tax --- SEZ has to pay SEZ has to pay VAT / CST --- Payable (In case if VAT Payable No SAD) Payable (In case if VAT Payable No SAD) 43
SEZ Foreign Trade Incentives to DTA Supplier 1. Adv. Authorization / DFIA 2. EPCG 3. DBK 4. Focus Product Scheme (FPS) 5. Focus Market Scheme (FMS) 6. Served from India Scheme (SFIS) 7. SHIS Yes Yes Yes Yes No No No SEZ will not get any incentives upon Exports from SEZ to foreign countries. 44
Direct Tax DTA EOU / STP / EHTP / BTP SEZ Section-80HHC Omitted w.e.f. AY-2005-06 Section-10A / 10B Omitted w.e.f. AY-2012-13 Section-10AA Available -100% Profits forfirst 5 AYs -50% Profits for Next 5 AYs -50% Profits for Next 5 AYs * * Provided special reserve Is to be created MAT is introduced from AY 2012-13 @18.50% on SEZ profits 45
Various Routine CA Certificates to be obtained under FTP/Refund Cases/Taxation Sr. No Appendix/ Forms/Notification/Public Notice Purpose Licence/ Scrip Stage 1. ANF 3A Status Holder Certificate Status Certificate At the time of application 2. ANF 3B Served From India SFIS Scrip At the time of application 3. ANF 3D Agri Infrastructure Incentive VKGUY At the time of application 4. ANF 3E Status Holder Incentive Scrip SHIS Scrip At the time of application 5. Appendix 11 A Production consumption data Advance License At the time of application 6. Appendix 14-I-I For CST reimbursement CST Refund At the time of Refund application 7. Appendix 14-I-F Legal Agreement for EOU Guidelines With Annual Report 8. Appendix 14-I-H Permission for Sale of goods in DTA by EOU Permission At the time of application 9. Appendix 15 A For duty free Import of R&D Equipments Duty Free Import Allowance Certificate At the time of application 10. Appendix 15 B Export Performance of non EOUs Other than Pharma & Biotechnology Sectors Duty Free Import Allowance Certificate At the time of application 11. Appendix 19 A Authority letter to be present in meetings on behalf of company FIEO membership At the time of application 12. Appendix 22 D Certificate for OFFSETTING of Export Proceeds In lieu of Bank Certificate of Exports and realization At the time of application 13. Appendix 23 For RM Consumption Advance Licence At the time of Redemption of Licence 14. Appendix 26 For EPCG License past 3 years Exports performance EPCG Licence At the time of application 15. Appendix 26 A Records verification confirmation EPCG Licence At the time of Redemption of EPCG Licence 16. Appendix 35 DBK Claim (AIR)/Fixation of DBK claim/ TED Refund Deemed Exports DBK/Refund At the time of application 17. Customs Public Notice No. 37/2011 Realization made against Exports under DBK (AIR) DBK (AIR) Exports realization If more than Six months period is involved 18. Customs Public Notice No. 23/2010 Factory Stuffing Permission Permission At the time of application 19. CBEC circular 16/2008 & JNPT P.N. 53/2010 4% SAD Refund Claim Refund Claim At the time of Refund application 46
Various Routine CA Certificates to be obtained under FTP/Refund Cases/Taxation Sr. No Appendix/ Notice Forms/Notification/Public Purpose Licence/ Scrip Stage 20. CBEC Circular 120/01/2010 dtd. 19.01.10 Refund of Unutilized CENVAT credit of Inputs and Services (Rule 5) Refund At the time of Refund application 21. Service Tax Notification No. 52/2011 For obtaining Service Tax Refund on actual basis Refund claim At the time of Refund application 22. Form No. 217 (As per Section 63) For VAT audit report Audit Report At the time of submission of audit report 23. Section 44AB of Income Tax Act Tax audit report Audit Report At the time of submission of audit report 24. Form No. 10CCAC/10CCB of Income Tax Act Certificate for claiming Exemption in respect of Area Based units Certificate At the time of application 25. Form No. 15CB of Income Tax Act For import of Services Certificate At the time of remittance 47
Thanks 48