Executive Summary:
Notification No. 38/2023, dated October 19, 2023, amends the import policy conditions for IT hardware under Chapter 84 of Schedule I of ITC HS, 2022. The amendment exempts certain imports from requiring an import authorization, specifically IT hardware manufactured in Special Economic Zones (SEZ) and imports by private entities for supply to Central and State Governments for defense or security purposes. It also revises conditions for exemptions related to R&D, testing, and product development.
Key Points / Main Content:
SEZ Manufacturing Exemption:
* IT hardware manufactured in SEZs may be imported into the Domestic Tariff Area (DTA) without import authorization, subject to applicable duties.
* Repacking, labeling, refurbishing, testing, and calibration within the SEZ are not considered manufacturing for this exemption.
Government Supply Exemption:
* Private entities importing IT hardware for supply to Central Government (or its agencies/undertakings) for Defence/Security, or to State Governments for Security purposes, are exempt from import authorization.
* These entities must provide a valid End User Certificate from the relevant government entity to Customs Authorities at the time of import.
R&D and Testing Exemption Amendment:
* Exemption from import authorisation is provided for up to 20 items per consignment for R&D, Testing, Benchmarking and Evaluation, Product Development purposes.
* Given Exemption is further provided for import for repair and/or return and/or replacement of IT Hardware sold earlier as well as reimport of such items repaired abroad on self-certification basis.
* Imported goods must be used only for the stated purposes and not be sold. After the intended purpose, the products must be destroyed beyond use or re-exported.
Impact Analysis:
Directorate General of Foreign Trade:
* Impact: Responsible for implementing and enforcing the amended import policy conditions.
* Action Required: Update relevant guidelines and procedures to reflect the changes introduced by this notification.
Customs Authorities:
* Impact: Responsible for verifying compliance with the amended import policy conditions at the time of import.
* Action Required: Ensure that IT hardware imports meet the new exemption criteria, including SEZ manufacturing or valid End User Certificates for government supplies.
Importers of IT Hardware:
* Impact: Benefit from exemptions from import authorization under specific conditions.
* Action Required: Assess eligibility for the exemptions (SEZ manufactured goods or supply to government entities). Provide required documentation (End User Certificates) to Customs.
Special Economic Zones (SEZ):
* Impact: SEZ-based manufacturers of IT hardware can export to DTA without import authorization.
* Action Required: Ensure that activities within the SEZ qualify as manufacturing and not merely repacking, labeling, etc.
Central and State Government Entities (Defence/Security):
* Impact: Easier procurement of IT hardware through private entities without import authorization hurdles.
* Action Required: Issue valid End User Certificates to private entities importing IT hardware on their behalf.
Key Entities Referenced
Foreign Trade Development Regulation Act, 1992: A law that grants the central government powers regarding foreign trade.
Foreign Trade Policy, 2023: A policy document outlining guidelines and objectives for foreign trade.
ITC HS, 2022: Abbreviation for Indian Trade Clarification based on Harmonized System of Coding, 2022 version, used for classifying goods in import/export.
Directorate General of Foreign Trade: A government organization responsible for implementing foreign trade policy.
Vanijya Bhawan: The location of the Directorate General of Foreign Trade office.
Special Economic Zones SEZ: Specifically delineated duty-free enclaves to promote export and investment.
Domestic Tariff Area DTA: The area within India which is not classified as a Special Economic Zone.
Santosh Kumar Sarangi: Director General of Foreign Trade and Ex officio Addl. Secretary to the Govt. of India
[To be published in the Gazette of India Extraordinary Part-II, Section-3, Sub-section (II)
Government of India
Ministry of Commerce and Industry
Department of Commerce
Directorate General of Foreign Trade
Vanijya Bhawan
Notification No. 38 /2023
New Delhi, Dated: 19'" October 2023
Subject: Amendment in Policy Condition no. 4 of Chapter 84 of schedule 1 (import policy)
of ITC (HS), 2022 -reg.
S.0.(E): In exercise of powers conferred by Section 3 and Section 5 of Foreign Trade
(Development & Regulation) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade
Policy, 2023, as amended from time to time, and referring to previous Notifications 23/2023
dated 03.08.2023 & Notification 26/2023 dated 04.08.2023, the following changes in Import
Policy Conditions are hereby notified:
1. Additional conditions are introduced under Policy condition 4 of Chapter 84 of Schedule I
of ITC (HS), 2022 as follows:
vii. IT hardware restricted for Import vide Notification 23/2023 dated 03.08.2023 which are
manufactured in Special Economic Zones (SEZ) may be imported into Domestic Tariff
Area (DTA) without an Import Authorization, on payment of applicable duties (if any).
Activities such as re-packing, labelling, refurbishing, testing, and calibration alone within
the SEZ are not considered as manufacturing for the purpose of availing this exemption
from Import Authorization.
viii. Private entities importing the said IT Hardware for supply to ~
a. Central Government or agencies, undertakings owned and controlled by the
Central Government, for Defence or Security purposes;
b. State Government for Security purposes;
are exempt from requiring an import authorization. However, these private entities at the time of
import, must provide to the Customs Authorities, a valid End User Certificate issued by the
relevant government entity.
Yo2. Policy Condition 4(iv) of Chapter 84 of Schedule-I of ITC(HS) 2022 is amended as follows —
Existing Condition
Revised Condition
Exemption from import licence is provided | Exemption from import authorisation is
for up to 20 such items per consignment for | provided up to 20 items per consignment for
the purpose of R&D, Testing, Benchmarking | R&D, Testing, Benchmarking — and
and Evaluation, repair and_ re-export, Evaluation, Product Development purposes.
Product Development purposes. Given Exemption is further provided for import
imports shall be allowed subject to condition | for repair and/or return and/or
that the imported goods shall be used for the | replacement of IT Hardware sold earlier
stated purposes only and will not be sold. | as well as re-import of such items repaired
Further, after the intended purpose, the | abroad on self-certification basis.
products would either be destroyed beyond
use or re-exported.
Effect of the Notification: Import of IT Hardware manufactured in SEZ into DTA shall be
exempt from an Import Authorisation. Import by private entities on behalf of Central & State
Government Entities, for Defence & Security purposes, shall be exempt from an Import
Authorisation.
This is issued with the approval of Minister of Commerce & Industry.
\
(Santosh Kumar Sarangi)
Director General of Foreign Trade &
Ex- officio Addl. Secretary to the Govt. of India
E-mail: dgft@nic.in
(Issued from F.No.01/89/180/39/AM-13/PC-2[A ]/E-2261)