Staying Updated, FTP and WTO newsletter October 2013: Volume 16 Issue 7 In the issue In the issue Notifications and circulars Regularisation of Export Obligation default under export incentive schemes such as DFIA, EPCG, etc on payment of differential customs duty and interest up to the duty amount Interest to accrue on warehoused goods only beyond 90 days from the date of deposit Case law Valuation Technical know-how fee for postimport activity not includible in value of goods imported as no nexus with the import of goods Others Refund of SAD cannot be rejected on the ground of nonendorsement of CENVAT credit on the invoice to buyers in case the customer is not eligible to take credit Foreign Trade Policy Notifications and circulars Central Government notifies greater scrutiny requirement where benefit of IEIS for Incremental exports exceeds specified limits Case law Third time Education Cess not levied on clearance of goods from EOU to DTA Levy of anti-dumping duty extended on imports of ductile iron pipes falling under chapter 29, originating in, or exported from the People's Republic of China, for a period of five years from 10 October, 2013
Notifications and circulars The Central Government has notified that bona fide default in export obligation (EO) under export incentive schemes such as Advance Authorization/Duty Free Advance Authorization (DFIA) and Export Promotion Capital Goods (EPCG) can be regularized by payment of applicable customs duty corresponding to the shortfall in the EO along with interest. In such cases, the interest amount shall not exceed the duty amount. However, cases where EO period is not yet over are not covered under this option. (Notification No. 46/2013- dated 26 September, 2013 and Circular No. 40/2013 dated 9 October, 2013) The Central Government has clarified that an importer availing concessional Basic Duty (BCD) on import of steam coal under India-ASEAN Free Trade Agreement (FTA) can simultaneously avail of the concessional countervailing duty in lieu of excise (CVD) @ 2% under Notification No. 12/2012- dated 17 March, 2013 as the concession under an FTA is limited to BCD. (Circular No. 41/2013- dated 21 October, 2013) The Central Government has clarified that there is no interest on bonded goods for a period of 90 days from the date of deposit of the goods in the warehouse. (Circular No. 39/2013- dated 1 October, 2013) Case law Valuation In Arushi Exports v CC (2013-TIOL- 1445-CESTAT-MUM), the Mumbai Tribunal held that transaction value declared by the importer cannot be rejected by the authorities on the ground that an international cartel determines the price, without any corroborative evidence or significantly higher value of contemporaneous imports in terms of Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR). The Mumbai Tribunal, in Maruti Udyog Ltd v CC (2013 (295) ELT 628), held that technical-know how and licence fees paid in relation to post-importation activities of design, manufacture, quality control, etc. for production of cars in India is not includible in the value of goods imported as there is no nexus of such fees with the import of goods. 2 October 2013 - Volume 16 Issue 7
In CC v Rainbow Impex (2013 (296) ELT 207), the Delhi Tribunal held that the declared value of imported goods cannot be rejected only on the basis of value appearing in the NIDB data for import of similar goods in the absence of evidence permissible under CVR such as availability of contemporaneous imports at higher price. The Ahmedabad Tribunal, in CC v Grasim Industries Ltd (2013 (296) ELT 39), held that the demurrage charges were includible in the assessable value from the date of coming into force of CVR, 2007 and not before that date, as the erstwhile rules did not provide for inclusion of such charges. In Aarti Impex v CC (2013- TIOL-1474- CESTAT-DEL), the Delhi Tribunal held that value of imported goods cannot be enhanced in the absence of higher assessable value of identical goods, matching in terms of country of origin, time of import, quality and quantity of goods or other legally permissible grounds in terms of CVR such as evidence showing extra payment to the foreign supplier above the invoice value. However, the assessable value can be re-determined on the basis of NIDB data where there is mis-declaration in respect of country of origin and the importer cannot produce evidence to the contrary. Others In Srinivasa Trading Company v CC (2013 (295) ELT 614), the Chennai Tribunal held that for deciding the classification, the onus lies on the authorities, while for claiming the benefit of the notification, the onus lies on the importer, to establish that the conditions of the notification are fulfilled. The Mumbai Tribunal, in Patel Wood Syndicate v CC (2013- TIOL-1485- CESTAT-MUM), held that penalty cannot be imposed where there is no mis-declaration with intention to evade customs duty. In Ahmedabad Strips Pvt Ltd v CC (2013- TIOL-1552-CESTAT-MUM), the Mumbai Tribunal held that refund of Special Additional Duty (SAD) of customs does not lie in a case where the importer fails to prove that the same goods have been sold on payment of applicable sales tax. In Opal Leathers Pvt Ltd v CC (2013- TIOL-1432-CESTAT-MUM), the Mumbai Tribunal held that the service of Order-in-Original through speed post is not proper service in terms of the Act, 1962 as applicable at the time of dispute. 3 October 2013 - Volume 16 Issue 7
The Mumbai Tribunal, in Maruti Suzuki India Ltd v CC (2013 (296) ELT 100), held that where the invoice issued by the importer to the buyer does not separately indicate the SAD amount nor does it endorse the non-entitlement to Cenvat credit of the buyer, refund of SAD cannot be rejected on the ground of non-endorsement as the buyers in the instant case cannot take Cenvat credit. The Bangalore Tribunal, in CC v LGC Promochem India Pvt Ltd (2013 (296) ELT 227), held that refund claim without appeal cannot be denied in respect of duty assessed on postal receipt as the declaration accompanying post parcels cannot be treated as an assessment order. The Chennai Tribunal in Web Knit Exports (P) Ltd v CC (2013 (295) ELT 612), held that where drawback was allowed by the Tribunal, interest was not payable on delayed drawback prior to date of Tribunal s order, as the exporter became a legitimate claimant of drawback from the date of Tribunal s order. In Ajay Industrial Corporation Ltd v CC (2013- TIOL-1419-CESTAT-MUM), the Mumbai Tribunal held that where there are two exemption entries in a notification that cover the goods, the importer is entitled to get the benefit of that exemption entry in the notification which may give him higher relief. 4 October 2013 - Volume 16 Issue 7
Foreign trade policy Notifications and circulars The Central Government has made following changes in Incremental Export Incentivisation Scheme (IEIS): benefit of scheme for Incremental export during last quarter of 2012-13 compared to exports made during last quarter of 2011-12 will be limited to 25% growth or INR 100 Mn in value, whichever is less; benefit of scheme for Incremental export during FY 2013-14 compared to exports made during FY 2012-13 will be limited to a scrip of value not exceeding INR 10 Mn per Importer- Exporter Code (IEC); and claims in excess of value mentioned above will be subject to greater scrutiny like evidence of manufacture/export and evidence to justify export growth. (Notification No. 43(RE 2013)/2009-14, Notification No. 44(RE 2013)/2009-14 and Public Notice No. 28 (RE-2013)/ 2009-2014 all dated 25 September, 2013) The Central Government has amended ITC (HS) to provide that export of edible oils in branded consumer packs of up to 5 kilograms are permitted with a minimum export price of USD 1400 per MT. (Notification No. 45 (RE 2013)/2009-14 dated 9 October, 2013) The Central Government has clarified that mono cartons containing strips/ vials/ bottles are to be treated as primary level packaging so that export consignment of pharmaceuticals and drugs can be traced and tracked. (Public Notice No. 31(RE-2013)/2009-2014 dated 17 October, 2013) Case law The Delhi Tribunal, in Namco Steels Pvt Ltd v CC (2013-TIOL-1522-CESTAT- DEL), held that policy existing as on the date of issue of licence is the relevant policy to be applied in respect of import/export under such licence subsequent amendment would not be applicable. The Ahmedabad High Court, in Claris Lifesciences Ltd v UOI (2013-TIOL-802- HC-AHM-CX), held that once excise duty equivalent to customs duty is calculated for goods cleared from 100% Export Oriented Unit (EOU) to Domestic Tariff Area (DTA), computation of Education Cess separately on such excise duty does not arise. 5 October 2013 - Volume 16 Issue 7
In Sushant Minerals (P) Ltd v CC (2013- TIOL-1533-CESTAT-MUM), the Mumbai Tribunal held that the benefit of EPCG scheme is liable to be denied in case imported capital goods are given on rent to another person since it is violation of the actual user condition. In Pudumjee Plant Laboratories Ltd v CCE (2013 (295) ELT 593), the Mumbai Tribunal held that on debonding, capital goods can be cleared from EOU under EPCG scheme on payment of duty on the depreciated value of such capital goods at the rate applicable under EPCG scheme. The Kolkata Tribunal, in Bilati (Orissa) Ltd v CCE (2013 (296) ELT 124), held that concessional customs duty is not available on clearance of goods from EOU to DTA in cases where positive Net Foreign Exchange has not been achieved by the EOU. In Super Spinning Mills Ltd v CCE (2013 (296) ELT 133), the Chennai Tribunal held that concessional rate of excise duty is available on clearance of goods from EOU to DTA which are manufactured wholly by use of domestically procured raw material, even if some imported consumables are used in the manufacturing process. The Ahmedabad High Court, in CC v Pasupati Acrylon Ltd (2013 (296) ELT 182), held that there is no levy of education cess on imports made under Duty Entitlement Pass Book (DEPB) scheme of goods that are fully exempt from payment of duty. Foreign Trade Agreements (FTA) Notifications The Central Government has increased the customs duty concession on import of specified goods from Malaysia under India-Malaysia Comprehensive Economic Cooperation Agreement (CECA). Some items on which the BCD benefit has increased are: For television camera tubes, image convertors and intensifiers; and other photo-cathode tubes, the rate has been reduced from 2.5% to 0%. For motorcycles with reciprocating internal combustion piston engine of a cylinder capacity not exceeding 800cc, the rate has been reduced from 5% to 0%. (Notification No. 47/2013- dated 10 October, 2013) 6 October 2013 - Volume 16 Issue 7
Notifications The Central Government has imposed definitive anti-dumping duty on imports of Bulk Drug Cefadroxil Monohydrate falling under chapter 29, originating in or exported from the European Union for a period of five years from 10 October, 2013. ( (ADD) Notification No. 22/2013 dated 10 October, 2013) The Central Government has extended the levy of anti-dumping duty on imports of ductile iron pipes falling under CTH 7303.00.30 or CTH 7303.00.90, originating in, or exported from the People's Republic of China, for a further period of five years effective from 10 October, 2013. ( (ADD) Notification No. 23/2013 dated 10 October, 2013) 7 October 2013 - Volume 16 Issue 7
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