CBEC amends circular to aid manufacturers in getting Certificate from Development Commissioner

The Dollar Business Bureau

The Central Board of Excise & Customs circular, dated April 10^th 2017, has issued a notification with respect to difficulties faced by manufacturers (EOUs/EHTP/STP units) when availing a certificate from the jurisdictional Development Commissioner regarding duty if the manufacturers have procured goods from indigenous sources.

The Customs notified that in an earlier notification given via Circular No.74/2001-Cus dated 04.12.2001, it was clarified that in case raw materials/ capital goods etc., procured from indigenous sources by EOUs/EPZ/SEZ/EHTP/STP units are transferred/ sold back to DTA except for the purpose of replacement, the deemed export benefits already availed of against such goods shall be required to be refunded back and that the export benefits shall be deposited through TR in the designated bank. It was further clarified that the goods will be allowed to be cleared to DTA only on production of a certificate from the jurisdictional Development Commissioner to the effect that such deemed export benefits are paid back. In cases, where no deemed benefits were availed, a certificate to this effect from the jurisdictional Development Commissioner shall be produced. Only after production of such certificate, these raw materials/capital goods could be cleared on payment of appropriate central excise duty.

However the Customs Board noted that some of the manufacturers were facing challenges for procurement of the Certificate due to the reasons listed below:

1. Cases where some of the indigenous manufacturers would have shifted their manufacturing units and/or have closed their manufacturing activities.
2. The suppliers do not possess necessary documents pertaining to capital goods procured from them several years ago.
3. Unnecessary burden to indigenous manufacturers to refund / surrender deemed export benefits availed by them several years ago
4. Export benefits availed by indigenous manufacturers as prescribed under FTP leading to de-bonding of such goods.

The board has referred that goods received from Domestic Tariff Area under the benefits of deemed exports under para 8.3 (a) and (b) of the FTP would be classified hence as imported goods.

The report also clarifies that once goods are treated as imported goods and applicable customs duty paid at the time of their transfer/sale back into DTA or exit, there is no requirement of a refund of the deemed export benefits availed on such goods or for the production of a certificate from the Development commissioner regarding refund or non-availment of deemed export benefits at the time of clearance of such goods or exit.

The notification thus states that, “the indigenous goods supplied to the EOUs/EPZ/SEZ/EHTP/STP units after availing the deemed export benefits are to be treated as ‘imported goods’ and accordingly, duty as applicable to the imported goods is liable to be paid. Once the goods are treated as imported goods and applicable Customs Duty is paid at the time of their transfer/sale back into DTA or exit, there is no requirement of refund of the deemed export benefits availed on such goods or for the production of a certificate from the Development Commissioner regarding refund or non-availment of deemed export benefits at the time of clearance of such goods or exit. Alternatively, the EOU/STP/EHTP units would also be allowed to clear the domestically procured goods or on exit, on payment of Excise Duty”.