Operational problems being faced by BOU in GST regime consequent to amendment in Notification no. 52/2003-Customs dated 31-3-2003 - Customs - PUBLIC NOTICE NO. 11/2018

GOVERNMENT OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE OFFICE OF THE COMMISSIONER OF CUSTOMS (PREVENTIVE), JODHPUR HQRS.: NEW CENTRAL REVENUE BUILDING, STATUE CIRCLE, C-SCHEME, JAIPUR (RAJ.)-302005 C. No. VIII(H)9/CT/PN/EOU/06/2018 Date -28.03.2018 PUBLIC NOTICE NO. 11/2018 Subject: Operational problems being faced by BOU in GST regime consequent to amendment in Notification no. 52/2003-Customs dated 31-3-2003- reg. Attention of all exporters, Custom House Agents and the Members of the Trade is invited to Notification No.52/2003-Custom dated 31-3-2003 as amended vide Notification No. 59/2017- Customs dated 30-6-2017 and 78/2017- Customs dated 13.10.2017 allowing duty free imports to EOUs. 2. Some of the EOUs have brought out problems faced by them after issue of above Notification amending Notification 52/2003 in following respects. a. Exemption Certificate for duty free import by EOU as per Rule 5 of Customs (Import of Goods at Concessional Rate of duty) from Jurisdictional Assistant Commissioner after verification by Jurisdictional Superintendent is causing delay which at times result in payment of penalty due to non submission of documents within 24 hours from the date of arrival of shipment. b. There is no clarification in GST regime for Re-warehousing of duty free import of goods/raw materials. c. On import of goods 'raw materials, B-17 bond is debited but procedure to credit has not been clarified. d. MOT/ Cost recovery Charge: There is no clarification with regard to Merchant over time / cost recovery charge in the GST era. 3. Matter has been examined and following clarifications are issued in respect of points mentioned above. a. Notification No. 52/2003-Customs dated 31.03.2003 relating to duty free import of goods by EOU/EHTP/STP/BTP units has been amended vide Notification No. 59/2017-Customs dated 30.06.2017so as to provide that unit would be required to follow the procedure as prescribed under Rule 5 of the Customs (Import of goods at concessional rate of duty) Rules, 2017 for import of goods without payment of duty. Rule 5(1)(a) of Customs (Import of goods at concessional rate of duty) Rules, 2017 stipulates the importer to provide information about the estimated value and quality of goods, particular of exemption notification, port of import in duplicate to the Deputy/Assistant Commissioner of Customs having jurisdiction over the premises where imported goods would be used. Such information has to be furnished in respect of particular consignment for a period not exceeding one year. In this regard, it has been clarified by the CBEC vide Circular No. 29/2017-CUS dated 17.07.2017 that EOU/EHTP/STP/BTP may submit requirement for any shorter period than one year. It has also been clarified that there is no bar in the said Rules to amend/give additional information. Therefore, the units can amend/modify/add such information time to time as per requirement. Further, as per Rule5 (1) (b) ibid, one set of the above said information is required to be submitted to the Deputy/Assistant Commissioner of Customs at the port of import. Rule 5(4) of ibid stipulates that on receipt of the information under Rule 5(1)(b), the Deputy Commissioner of Customs or as the case may be, the Assistant Commissioner of Customs at the Customs station of importation shall allow the benefit of exemption notification. Rule 5(3) stipulates that the jurisdictional Deputy/Assistant Commissioner of Customs, where the imported goods shall be put to use for manufacture of goods or rendering the output service, shall forward the information received from the importer to Deputy/Assistant Commissioner of Customs at the Customs Station of importation. It is noticed that such information is not a condition for granting the benefit of exemption notification to the importer in as much as Rule 5(4) clearly provides that Deputy/Assistant Commissioner of Customs at Customs Station of importation will extend the benefit on the basis of information received by them under Rule The importers are, however, required to follow the procedure prescribed in the Rule with regard to maintenance of account regarding receipt/consumption etc. In view of above it is clarified that importers can approach the Deputy/Assistant Commissioner of the Customs at Customs Station of Importation for seeking benefit of exemption notification once the information as required under Rule 5(1)(b) of ibid is given without waiting for information under rule 5(3) from the jurisdictional Deputy/Assistant Commissioner of Customs, as this is not a condition precedent for exemption notification. The jurisdictional Deputy/Assistant Commissioner, however, will provide information to Deputy/Assistant Commissioner at Customs Station of importation as provided in Rule 5(3) as usual. It is further clarified that importer does not need to visit jurisdictional Deputy/Assistant Commissioner of Customs to provide information about the estimated value and quality of goods, particular of exemption notification, port of import but may do so through email to the concerned officer as per Public Notice No. 3/201 8 dated 25.01.2018. b. Vide Notification No. 44/2016-Customs dated 29.07.2016 (effective from 13.08.2016) warehousing provisions have already been dispensed with and therefore, the EOU units stand de-licensed as warehouse under Customs Act, 1962 but they are required to adhere to the provisions of notification 52/2003-Customs dated 31.03.2013, Foreign Trade Policy, HBP and other applicable notifications. CBEC has, in this regard, prescribed that unit shall maintain records of imported goods, in digital form, based upon data elements contained in form A as appended with circular No. 35/2016-Customs, The software for maintenance of digital records must incorporate the feature of audit trail which means a secure, computer generated, time stamped electronic record that allows for re-construction of the course of events relating to creation, modification, or deletion of an electronic record and includes actions at the record or system level, such as attempt to access the system or delete or modify record. While the data element contained in form A arc mandatory, the unit will be free to add or continue with any additional data fields, as per their commercial requirements. All units are required to enter data accurately and immediately upon the goods being received in or removed from the unit. The digital records should be kept updated, accurate, complete and available at the unit at all times for verification by the proper officer, whenever required. A digital copy of Form A, containing transactions for the month, shall be provided to the proper officer, each month (by the' 10 th of month) in a CD or Pen drive, as convenient to the unit. In place of the re-warehousing certificate procedure as prescribed in Para 7 of the Circular No. 35/2016-Customs was required be followed. However, now importer has to follow the procedure prescribed in the Customs (Import of goods at concessional rate of duty) Rules, 2017 c. As procedure for credit has not been amended, Credit of duty may be allowed for the duty contained in inputs used in the manufacture of finished goods exported or cleared in DTA on payment of applicable duties or destroyed as per permission of proper officers or for transfers to other warehouses/EOU/SFZ units or for duty free donation of computers. d. Prior to the Finance Act, 2016 which came into force with effect from 14.05.2016, the manufacturing activities in the bonded warehouse were governed by the manufacture and other operations in warehouse regulation, 1966, which provided for payment of cost incurred by the Government towards supervision over the activities of the warehouse. In the Finance Act, 2016, however, the provisions related to warehousing contained in Chapter IX of the Customs Act, 1962, have been completely overhauled and consequently, the mandatory warehousing for EOU/STP/EHTP units have been done away. Hence, there will be no requirement of cost recovery charges from EOU/STP/EHTP units. As regards recovery of Merchant Overtime (MOT) for rendering service by the Customs Officers, the same will continue to apply to the EOU/STP/EHTP Units as per following circulars/Notifications. CIRCULARS/NOTIFICATIONS 1 Removal of mandatory warehousing requirements for EOUs, STPs, EHTPs etc. Circular No. 35/2016-Customs dated 29.07.2016 2 Payment of Merchant Overtime Circular No. 68/98-Customs dated 07.09.1998 Circular No. 5/2002-Customs dated 17.01.2002 Circular No. 101/2003-Customs dated 05.12.2003 All the Trade Associations / Chambers of Commerce / members of Regional Advisory Committee, Customs House Brokers Association are requested to widely publicize the contents of this notice amongst their members / constituents. Difficulty if any, in implementation may be brought to the notice of the undersigned. (S. C. Agarwal) Commissioner