9911796707
TMI BlogDuty Free Import Authorization (DFIA) Scheme - availment of facility under rule 18/ 19(2) of the Central Excise Rules, 2002 or Cenvat credit under CENVAT Credit Rules, 2004 amendment of Notification number 40/06-Cus dated 1.5.06 by Notification No. 17 /2009-CUSTOMS dated 19th February, 2009 and issuance of Circular No. 11 /2009-Cus. dated 25th February, 2009X X X X Extracts X X X X X X X X Extracts X X X X ..... CHAs and all concerned is invited to the Boards circular No. 11 /2009-Cus. dated 25th February, 2009 issued from F.NO.605/109/2006-DBK. 2. The DFIA Scheme was introduced in the Foreign Trade Policy (FTP) in 2006 and it allowed, inter alia, duty free import of inputs for manufacture of export goods and transfer of the Authorization or the inputs imported against it after completion of the EO subject to fulfillment of certain conditions. One of the conditions stipulated in paragraph 4.4.7 of the FTP (2006) was that no Cenvat credit facility shall be available for inputs either imported or procured indigenously against the Authorization. Condition(v) of the corresponding customs notification No.40 / 2006- Cus dt 1.5.2006, issued to implement the DFIA scheme, accordingly provided that the EO would be discharged by exporting resultant products, manufactured in India which were specified in the said authorization and in respect of which the said facilities have not been availed of in respect of materials imported / procured against the said authorization. 3. Several reports were received in the Ministry which indicated that, some exporters taking advantage of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FIA simultaneously as it amounts to double benefit and against the spirit and object of the scheme. 5. Finally, the position that emerged after the discussions between the DOC / DGFT and the DOR was that unintended benefits may have occured in cases where the duty free inputs, imported / procured subsequent to completion of EO using indigenously procured inputs and on which Cenvat credit has been availed of by the exporter, are transferred or used in the manufacture of non excisable /exempted /nil duty goods. The transferee in such cases obtains the duty free raw materials and escapes the levy of excise duty on finished products in domestic market sale. The position holds good even under actual user imports if the replenished materials are utilized in the manufacture of non-excisable/exempted/nil-duty products. 6. The DOC/ DGFT therefore modified the provisions of the DFIA Scheme in FTP 2007 and 2008. Para 4.4.2 of the FTP-2008 now states that where Cenvat credit facility on inputs used in the manufacture of goods exported under the DFIA scheme has been availed, even after completion of EO, the imported goods shall be utilized in the manufacture of dutiabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of central excise duty; (ii) if the materials are imported against an authorisation transferred by the Regional Authority, or the imported materials are transferred with the permission of Regional Authority, then the importer has to pay an amount equal to the additional duty of customs. In case, the duty is not paid then interest @ 15% from the date of clearance of the said materials till the date of payment has to be paid; (iii) the importer also has an option to pay additional duty of customs on the imported materials and clear his goods without furnishing any bond as specified in condition No. (iiia) of the notification number 17/09-Cus dated 19.2.09. This additional duty of customs so paid shall be eligible for availing CENVAT Credit under CENVAT Credit Rules, 2004. (b) In respect of imports made after the discharge of export obligation in full, and if said facilities have not been availed, then the imported materials can be cleared without furnishing a bond specified in condition (iiia) ibid. However, the importer will have to furnish a proof to the assessing officer to the effect that the said facilities have not been availed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee imports. Further, this action shall be taken in respect of all duty free imports affected during the years 2006-07, 2007-08 and 2008-09; (b) appropriate action to safeguard revenue may be taken in case imports /domestic procurement against Authorizations have been transferred. As per para 4.4.6 of the FTP (2007), this transfer should have taken place after payment of additional duty of customs / excise duty, as the case may be. It needs to be verified whether the practice as specified in the FTP was actually followed for the years 2007-08 and 08-09. If not, action to recover revenue needs to be taken accordingly; (c) appropriate action to safeguard revenue may be taken in case the Authorization itself has been transferred. As per para 4.4.6 of the FTP(2007) and para 4.72 of the HBP, this transfer should have taken place after payment of additional duty of customs / excise duty, as the case may be. It needs to be verified whether the practice as enjoined in the FTP has actually been followed for the years 2007-08 and 08-09. If not, action to recover revenue needs to be taken; (d) as regards the authorizations issued prior to 1.4.2007, the DO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fifteen percent per annum from the date of clearance of the said materials: Provided further that if the importer pays additional duty of customs leviable on the imported materials but for the exemption contained herein, then the imported materials may be cleared without furnishing a bond specified in this condition and the additional duty of customs so paid shall be eligible for availing CENVAT Credit under the CENVAT Credit Rules, 2004; (iiib) that in respect of imports made after the discharge of export obligation in full, and if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule 2 of rule 19 of the Central Excise Rules, 2002 or CENVAT credit under CENVAT Credit Rules, 2004 has not been availed and the importer furnishes proof to this effect to the satisfaction of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs as the case may be, then the imported materials may be cleared without furnishing a bond specified in condition (iiia); 12. Difficulties faced, if any, in implementation of the above instructions may please be brought to the notice of the unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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