Q: What is STPI?
A: Software Technology Parks of India (STPI), is a society set up by the Department of Communication & Information Technology, Government Of India in 1991, with the objective of encouraging, promoting and boosting the Software Exports from India. Equipments including Computers are allowed for duty free imports subject to provisions in Acts for STPI Registered units in India.
Q: What is SEZ
A: SEZ: “Special Economic Zone”-a scheme developed by Govt. of India especially for exports/ trade
Q: What is EOU
A: It is “Export Oriented Unit” in India. 100% EOU have many benefits/ incentives in India
Q: What is meant by “EPCG”
A: It is “Export Promotion Capital Goods”. It is a scheme by Directorate General of Foreign Trade in India to assist Industries importing second hand or used machines as capital equipments for production of goods manufactured using these machines for promotion of exports. Upon commitment to fulfill export obligation, the relaxation in custom duty is given as declared from time to time
Q: What are different types of registrations related to trade as an importer /exporter in India?
A: “Manufacturer Importer” or “Trader Importer”
Q: What type of capital goods are allowed to be imported freely in India?
A: All type of second hand Capital Goods and its spares -refurbished or un-refurbished except PCs and Laptops can be imported freely
Q: What are the restrictions about “condition” of the machines or spares allowed for import?
A: The machines shall have at least 80% residual life of original machine.
Q: Who certifies the balance life of the machine to be exported to India?
A: A Chartered Engineer has to certify the balance life. Again the Customs or any other Central or State Government authority may avail of services of Inspection and Certification Agencies in Appendix 5 of the HBP v1, for certifying residual life as well as valuation / purchase price of capital good. Ravi Energie Inc. being an Agency enlisted in Appendix-5 and as Ravi Energie has Chartered Engineers on role, can certify both.
Q: Is the export “price” for used machines mentioned in the commercial invoice accepted by Customs in India as realistic “value” for Custom clearance?
A: No- as mentioned above, Customs or any other Central or State Government authority may avail of services of Inspection and Certification Agencies in Appendix 5 of the HBP v1, for certifying residual life as well as valuation / purchase price of capital good. Ravi Energie Inc. being an Agency enlisted in Appendix-5 and as Ravi Energie has Chartered Engineers on panel as professionals and can certify both.
Q: What are provisions related to valuation of plant/ machines in India?
A: Value’s registered with Income Tax Department of Government of India are mandated/authorized to give opinion about “value” for Plant and Machinery. Ravi Energie Inc. has professionals on panel who are “VALUERS” registered with Government of India.
Q: What are the provisions related to temporary imports of Capital Goods?
A: It is possible to import with prior permissions of related Government Departments and subject to terms and conditions thereof. Oil well drilling equipments are similar type of equipments certified by Ravi Energie for many multinationals.
Q: What are the provisions for transfer of manufacturing facility from some other country to India?
A: Export to India will be treated as Second Hand Capital Goods. It can be at zero price or at depreciated value, but, the “Value” for the Customs purpose can be higher as mentioned earlier
Q: What are other guide lines/ provisions related to Valuation by Customs?
A: Please see http://www.dov.gov.in/newsite3/cir3.asp and http://www.ahmedabadcustoms.gov.in/st_orders_2008/so_13.Doc
Q: How is “Installation Certification” important?
A: As per DGFT Public Notice No. 81/2011 dated 16th May 2011, for Verification of Manufacturer Exporter status under EPCG scheme – by Jawaharlal Nehru Customs house, Installation Certificate pertaining to earlier imports of capital goods issued by a Chartered Engineer is required. And in such cases Manufacturing Premises is required to be post verified by the Jurisdictional Superintendent of Central Excise: http://www.jawaharcustoms.gov.in/newsite/PublicNotices/pn2011/PN-81-11.htm
Please check the following links from Chennai Customs website to better understand the implications of non-fulfillment of the provisions related to Installation certifications and other issues related to import of second hand machinery (the list may not be exhaustive and other provisions may be applicable):
Q: Who can provide Installation Certifications?
A: Ravi Energie can arrange for inspections of installations and can provide certifications accordingly for the respective machines
Q: Where do we find notifications related to Ravi Energie’s enlistment in Appendix 5 of Hand Book of Procedure?
A: Following are the links from “public notices” published on DGFT’s website where the notifications can be seen:
Q: What are the requirements for Coastal Conversion as required by Customs/ Director General of Shipping?
A: All vessels with a foreign flag are required to get permission which is normally known as “Coastal Conversion” for operations or voyages between Indian ports. As per the new guidelines, the circular at http://www.cbec.gov.in/ub1213/do-jstru1.pdf along with the shipping manual http://www.cbec.gov.in/ub1213/cs12-2012.pdf and other applicable rules may be referred to and correctly interpreted. The vessels being used, as per the new Requirements/Rules (from April 2012), a Chartered Engineer’s certificate may be demanded by Customs/ other Authorities for valuation and/or lease rent which is required for calculation of payment of duties (1/120th of applicable duty). Ravi Energie can provide such services.
Q: What are the provisions for Coastal Conversion in detail?
A: For Ships, Vessels and Dredgers - Full exemption from Central Excise duty (and hence Countervailing Duty commonly known as CVD) available to ships, vessels and dredgers (goods of Chapter 89) was withdrawn in the last Budget and a concessional duty of 1% was imposed on the condition that no Cenvat Credit is taken by the manufacturer. Correspondingly, CVD of 5% became Levi-able on the import of these goods. By virtue of notification no.38/2011-CE dated 29th July, 2011 full exemption was granted to all goods of heading 8901 in respect of which a general license under section 406 of the Merchant Shipping Act, 1958 has been granted by the Director General Shipping.
The following changes have been made in the duty structure applicable to ships, vessels and dredgers:
- Full exemption from excise duty available to ships and vessels shall now be available subject to fulfillment of the following conditions:
- If the ship or vessel is procured by a company or person holding a general license- Indian/ foreign issued by the Director General, Shipping under section 406 of the Merchant Shipping Act, 1958 for the ship or vessel
- If the ship or vessel is used only for this purpose
- If such company or person undertakes to pay:
- full duty on the vessel if it converts to coastal status against a general license;
- 1/120th part of the aggregate duty payable on the vessel for each month (or part thereof) of operation as a coastal vessel if such conversion is for a specified period. Notification No. 12/2012-Central Excise dated 17th March, 2012 has been issued for this purpose.
- For the removal of doubts, a retrospective exemption from additional duty of customs (CVD) has been provided to “foreign-going vessels” imported into India for the period from 1st March, 2011 to 16th March, 2012 [Clause 125 of the Finance Bill, 2012 refers]. This shall come into effect on the date of enactment of the Bill.
- For the period starting 17th March, 2012, also full exemption from additional duty has been provided to “foreign-going vessels” imported into India but on the fulfillment of certain conditions viz. that a Bill of entry shall be filed for the vessel when it converts into a “coastal” vessel and additional duty would be payable on the following basis:
- if the license obtained for coastal trade at the time of conversion is a general one i.e. without specified period of validity, duty would be payable as if there were no exemption
- if the license for coastal trade is for a specified period , and
- import is by the owner of the vessel or his agent, then 1/120th part of the aggregate duty would be payable on the vessel for each month (or part thereof) of stay in India as a coastal vessel; or
- if the import is against a lease agreement/ contract, then duty shall be payable on the lease value of the contract.
Illustration I: If a vessel imported by a Shipping Line ABC Company as a foreign-going vessel converts into a coastal vessel for 6 months and the value of the vessel declared by the importer is Rs. 2 crore, the duty payable would be calculated in the following manner:
(2*0.0618) * 6/120 = Rs. 61,800, where the rate of duty is 6.18%
Illustration II: If a vessel is imported by an Indian corporate on lease basis for use after import on payment of a total rental of Rs. 50 lakh for a period of 3 months, the duty payable would be calculated in the following manner:
50* 0.618 = Rs. 3.09 lakh, where the rate of duty is 6.18%. Notification No. 12/2012-Customs dated 17th March, 2012 has been issued for this purpose.
- Unlike other vessels, dredgers do not qualify for treatment as “foreign-going vessels” as they are not engaged in the carriage of goods or passengers In the case of import of dredgers too, additional duty would be payable on the basis of length of stay in India or lease value (as discussed for foreign-going vessels at sub-para (b) above). However, this duty would be payable at the time of import of the dredger. Notification No. 19 and 20/2012-Customs both dated 17th March, 2012 have been issued for this purpose