CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY) RULES, 2017

[Mr. M. GOVINDARAJAN]

Introduction

The Central Government, in exercise of the powers conferred by Section156 of the Customs Act, 1962 and in supersession of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 made the ‘Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 vide notification No.68/2017-Customs (NT), dated 3.06.2017.  These Rules came into effect from 01.07.2017.

Applicability of the Rules

Rule 2 provides that these rules shall apply to an importer, who intends to avail the benefit of an exemption notification issued under section 25(1) of Customs Act, 1962 and where the benefit of such exemption is dependent upon the use of imported goods covered by that notification for the manufacture of any commodity or provision of output services.  These rules shall apply in respect of such exemption notifications which provide for the observance of these rules.

Section 25(1) of Customs Act, 1962 provides that if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon.         

Information about intent to avail benefit of exemption notification

Rule 4 provides that an importer who intends to avail the benefit of exemption notification shall provide the information to the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service (‘jurisdiction’ for short), as detailed below-

• the name and address of the manufacturer;
• the goods produced at his manufacturing facility;
• the nature and description of imported goods used in the manufacture of goods or providing an output service.

Rule 5(1) provides that the importer shall furnish the following information-

• in duplicate to the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction,-

• the estimated quantity and value of the goods to be imported;
• particulars of the exemption notification applicable on such import;
• the port of import in respect of a particular consignment for a period of not exceeding one year; and

• in one set to the Deputy Commissioner/Assistant Commissioner of Customs at the Customs Station of importation.

Submission of bond

Rule 5(2) provides that the importer shall submit a continuity bond with such surety or security as deemed appropriate by the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction with an undertaking to pay the amount equal to the difference between the duty leviable on inputs but for the exemption and that already paid, if any at the time of importation along with interest, at the rate fixed by notification issued under section 28AA of the Customs Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the difference of duty that he is liable to pay.

Allowing exemption

Rule 5(3) provides that the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction shall forward one copy of the information received by him from the importer, to the Deputy Commissioner/Assistant Commissioner of Customs, at the Customs station of importation.

Rule 5(4) provides that on receipt of the copy of information the Deputy Commissioner/Assistant Commissioner of Customs at the Customs station of importation shall allow the benefit of exemption notification to the importer who intends to avail the benefit of exemption notification.

Maintaining records

Rule 6 provides that the importer shall provide the information on receipt of the imported goods in his premises where goods shall be put to use for manufacture within two days (excluding holidays, if any) of such receipt to the jurisdiction customs officer.  The importer shall maintain an account in such manner so as to clearly indicate-

• the quantity and value of goods imported;
• the quantity o imported goods consumed in accordance with the provisions of exemption notification;
• the quantity of goods re-exported, if any;
• the quantity remaining in stock bill of entry wise.

The importer shall produce the said account as and when required by the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction.

Filing return

Rule 6(3) provides that the importer shall submit a quarterly return to the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction by the 10^th day of the following quarter.

The following information is to be furnished in the said return-

• Sl. No;
• Bill of Entry Number and date;
• Description of goods importedat concessional rate;
• Opening balance on the 1^st day of the quarter;
• Details of goods imported during the year-

• Value of the goods received during the quarter;
• Quantity of goods received during the quarter;
• Total of opening balance + quantity of goods received during the quarter;
• Quantity consumed for the intended purpose, during the quarter;
• Quantity re-exported during the quarter;
• Quantity cleared in to the domestic market during the quarter;

• Closing balance on the last day of the quarter;
• Specified purpose for procuring the goods at concessional rate of duty;
• Goods manufactured during the quarter/output service provided-

• Description;
• Quantity;

• Whether the goods used for specified purpose or not and in case of export, specify the quantity exported with the details of tax invoice.

Re-export

Rule 7 provides that the importer may re-export the unutilized or defective imported goods within six months from the date of import, with the permission of the Deputy Commissioner/Assistant Commissioner having jurisdiction.  The value of such goods for re-export shall not be less than the value of the said goods at the time of import.

The importer may also clear the unutilized or defective imported goods with the permission of the Deputy Commissioner/Assistant Commissioner of Customs having jurisdiction  within a period of six months from the date of import of duty equal to the difference between the duty leviable on such goods but for the exemption availed and that already paid, if any, at the time of importation, along with interest at the rate fixed by notification under section 28AA of the Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the difference of duty that he is liable to pay.

Recovery of duty

Rule 8 provides that the importer shall use the goods imported or take action by re-export or clearance of  unutilized or defective goods under Rule 7 and in the event of any failure, the Deputy Commissioner/Assistant Commissioner of Customs, having jurisdiction, shall take action by invoking the bond to initiate recovery proceedings of the amount equal to the difference between the duty leviable on such goods but for the exemption and that already paid, if any at the time of importation, at the rate fixed by notification issued under section 28AA of the Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the different of duty that he is liable to pay.

Discussions to this article

[Sekhar Narasimha]

Dear Shri Govindarajan sir,

Very clear explantion and very useful. Thanks for all your efforts!!.

I request you to please clarify on the below query. EOU plans to import capital goods (machinery) for manufacture. As the facility of duty free import of capital goods under the Procurement Certificate procedure will not be available. To import capital goods at zero duty, EOUs will have to follow procedure under of the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. Is there any obligation to pay IGST under these rules? If paid, how we can get refund? There is no DTA sales. In pre-GST scenerio, the EOU enjoys the benefit of exemption from all import duties on capital goods.

Sir, please share your view.

Thanks and regards,

CA PN Sekhar

[sunil kumar]

Can we avail this benefit for 100% export oriented unit????

[MARIAPPAN GOVINDARAJAN]

Dear Sir,

In my view IGST is payable.

[Anirudh Samantray]

Dear Sir,

The procedure as prescribed under the Rules is specifically for availing benefit of exemptions of existing customs duty, i.e., BCD. Therefore, the said rules has no connection with GST liability.