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

[Mr. M. GOVINDARAJAN]

The Central Government, vide Notification No. 09/2021-Customs (NT), dated 01.02.2021 amended the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (‘Rules’ for short).  These amendments came into effect from 02.02.2021.  Originally the Rules are having 9 rules and one return to be filed quarterly.  The amendment inserted some definitions newly to the Rules, substituted Rule 4 and 6 and inserted Rule 6A,  Rule 7(3), Rule 8(2) after renumbering the existing Rule 8 as 8(1) and Rule 8A.  The amendment also substituted the new quarterly return for the existing one.

Definitions

The amendment inserted certain new definitions, namely, capital goods, job work, manufacture, output services.

The newly inserted Rule 3(aa) defines the expression ‘capital goods’ as the goods, the value of which is capitalized in the books of account of the importer.

The newly inserted Rule 3 (ca) defines the expression  ‘job work’ as any treatment, process or manufacture, consistent with the exemption notification undertaken by a person on goods belonging to the importer except gold, jewellery and articles thereof, and other precious metals or stones; and the term “job worker” shall be construed accordingly.

The newly inserted Rule 3(e) defines the term ‘manufacture’ as the processing of raw materials or inputs by the importer in any manner that results in emergence of a new product having a distinct nature or character or use or name; and the term ‘manufacturer’ shall be construed accordingly.

The newly inserted Rule 3(f) defines the expression ‘output service’ as supply of service excluding after-sales service, utilizing imported goods.

Importer to give information

The newly substituted Rule 4 requires the importer to provide information to the Deputy Commissioner of Customs/the 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 except after-sales service, about the following particulars-

• the name and address of the importer and his job worker, if any;
• the goods produced or process undertaken at the manufacturing facility of the importer and/or his job worker, if any, or both;
•  the nature and description of imported goods used in the manufacture of goods at the premises of the importer or the job worker, if any;
• nature of output service rendered utilizing imported goods.

The erstwhile Rule 4 requires giving information where the imported goods shall be put to use for manufacture of goods or for rendering output service by the importer to avail exemption.

Receipt of imported goods

The newly substituted  Rule 6 provides that the importer shall provide information of the receipt of the imported goods in the premises, where the imported goods shall be put to use for manufacture of goods or job work or for rendering output service within two days (excluding holidays, if any) of such receipt to the Jurisdictional Customs Officer.

The Rule further requires the importer to maintain an account in such a manner to clearly indicate the quantity-

• the quantity and the value of the goods imported;
• the quantity of the imported goods consumed;
• the quantity of goods sent for job work, nature of job work carried out;
• the quantity of goods received after job work;
• the quantity of goods re-exported, if any under Rule 7; and
• the quantity of remaining in stock, according to the bills of entry.

The importer shall produce the said account as and when required by the Deputy Commissioner of Customs/the Assistant Commissioner of Customs having jurisdiction over the premises or where the imported goods shall be put to use for manufacture of goods or for rendering output service.

Quarterly return

The importer shall submit a quarterly return, in the prescribed form to the Deputy Commissioner of Customs/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, by the tenth day of the following quarter.

The amendment also substituted the new quarterly return for the existing one.  In the said quarterly return the following are to be submitted-

• Sl. No.;
• Bill of Entry No. and date;
• Description of goods imported at concessional rate;
• Opening balance on the 1^st day of the quarter;
• Details of goods imported/consumed/re-exported/cleared during the quarter;

• Value of goods received;
• Quantity of goods received;
• Total of the above two;
• Quantity consumed for the intended purpose;
• Quantity sent to the job work for the intended purpose;
• Quantity received back from the job worker (challan no. wise);
• Quantity re-exported;
• Quantity cleared into the domestic market;
• Closing balance on the last day of the quarter;

• Specified purpose for procuring the goods at concessional rate of duty-

• Description;

• Goods manufactured during the quarter/Output service provided-

• Quantity

• Whether the goods used for specified purpose or not and in case of export, specify the quantity exported with details of Tax Invoice/Shipping Bill.

Procedure for allowing imported goods for job work

The amendment inserted new Rule 6A which provides the procedure for allowing imported goods for job work.  The procedure involved in this regard is as below-

• The importer shall send the imported goods except gold, jewellery and articles thereof; and other precious metals or stones for job work, for manufacture of goods, after giving intimation in duplicate to the Jurisdictional Customs Officer of his intention to do so.
• The importer shall also specify the following particulars-

• name and address of the job worker;
• nature and description of the job work to be carried on the imported goods in the manufacturing process;
• quantity and description of the goods intended to be sent to the job worker.

•  The Jurisdictional Customs Officer shall forward a copy of the intimation along with the particulars specified above to the concerned Customs Officer under whose jurisdiction the premises of the job worker is situated.
• The importer shall send the goods to the premises of the job worker enclosing a challan, specifying the description and quantity of the goods.
• The maximum period for which the goods can be sent to the job worker shall be six months from the date of issue of challan.
• In case the importer is unable to establish that the goods sent for job work have been used as per the particulars of job work the Jurisdictional Customs Officer shall take necessary action against the importer under rules 8 and 8A.
• The job worker shall-

• maintain an account of receipt of goods, manufacturing process undertaken thereon and the waste generated, if any, during such process;
• produce the account details before the Jurisdictional Customs Officer as and when required by the said officer;

• After completion of the job work send the processed goods to the importer or to another job worker as directed by the Importer for carrying out the remaining processes, if any, under the cover of a challan or the challan of the principal manufacturer duly endorsed by him.

Re-export or clearance of unutilized or defective goods

Rule 7(1) provides that the importer who has availed benefit of an exemption notification may re-export the unutilized or defective imported goods, within six months from the date of import, with the permission of the jurisdictional Deputy Commissioner/Assistant Commissioner of Customs.  Rule 7(2) provides that the importer who has availed benefit of an exemption notification, may also clear the unutilized or defective imported goods, with the permission of the jurisdictional Deputy Commissioner of Customs/Assistant Commissioner of Customs within a period of six months from the date of import on payment of import 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  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.

The amendment inserted Rule 7(3) which provides that the importer, with the permission of the jurisdictional Deputy Commissioner/Assistant Commission of Customs, shall be put to use for manufacture of goods or for rendering output service, may clear the imported capital goods, after having been used for the specified purpose, on payment 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,  on the depreciated value allowed in straight line method, as specified below-

• for every quarter in the first year @ 4%;
•  for every quarter in the second year @ 3%;
• for every quarter in the third year @ 3%;
• for every quarter in the fourth and fifth year @ 2.5%;
• and thereafter for every quarter @ 2%.

The explanation to the said Rule clarified that-

• For the purpose of computing rate of depreciation for any part of a quarter, a full quarter shall be taken into account.
• There shall be no upper limit for such depreciation.
• The depreciation shall be allowed from the date when the imported capital goods have come into use for the purpose as specified in the exemption notification upto the date of its clearance.

Recovery of duty in certain case

The existing Rule 8 was renumbered as Rule 8(1) and a new Rule 8(2) was inserted through the amendment.  The re-numbered Rule 8(1) provides that in the event of the failure by the importer to re-export or clear the unutilized or defective goods within the time specified the Deputy Commissioner/Assistant Commissioner shall take action by invoking the Bond to initiate the 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, along with interest 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.

The newly inserted Rule 8(2) provides that notwithstanding anything specified in these rules in relation to removal and processing of imported goods for job work, the importer shall be responsible for ensuring that the said goods are used in accordance with the purposes provided in the exemption notification and in the event of failure to do so, the Jurisdictional Deputy Commissioner of Customs/Assistant Commissioner of Customs shall be put to use for manufacture of goods or for rendering output service, shall take action under these rules, without prejudice to any other action which may be taken under the Act, rules or regulations made there under or under any other law for the time being in force.

Penalty

The newly inserted Rule 8A provides for penalty.  The importer or a job worker who contravenes any of the provisions of these rules or abets such contravention, shall be liable to a penalty to an extent of the amount specified under clause (ii) of sub-section (2) of section 158 of the Act (₹ 2 lakhs) without prejudice to any other action which may be taken under the Act, rules or regulations made there under or under any other law for the time being in force

Discussions to this article

[KASTURI SETHI]

Dear Sir,

Very useful article. Thanks a lot for posting in this forum.