Executive Summary:
This notification, issued by the Ministry of Commerce and Industry, introduces amendments to Chapter 3 of the Foreign Trade Policy (FTP) 2009-2014, effective January 6, 2014. It clarifies the utilization of Duty Credit Scrips for payment of custom duties, specifically addressing scenarios involving Export Obligation (EO) defaults and the use of scrips issued under SHIS, SFIS, and AIIS schemes. The notification outlines permissible and restricted uses of these scrips concerning custom duty payments and other fees under the FTP.
Key Points / Main Content:
Duty Credit Scrip Utilization:
* Duty Credit Scrips can be used/debited for payment of Custom Duties in case of EO defaults for Authorizations issued under Chapters 4 and 5 of the Foreign Trade Policy (FTP) 2009-2014.
* Penalty/interest on customs duties related to EO defaults must be paid in cash.
* Duty credit scrips can be used for payment of composition fee and application fee under FTP, and for payment of value shortfall in EO under para 4.28 b of HBP vol. I 2009-14.
Restrictions on SHIS, SFIS, and AIIS Scrips:
* Scrips issued under SHIS, SFIS, and AIIS cannot be utilized/debited for payment of Custom Duties in case of EO defaults for Authorizations issued under Chapter 4 of the Foreign Trade Policy.
* SHIS, SFIS, and AIIS scrips cannot be used for payment of Custom duty for shortfall in EO in Advance Authorisation or DFIA i.e. default in EO for authorisation issued under Chapter 4 of Foreign Trade Policy.
Impact Analysis:
Exporters/Importers:
Impact: Affected by changes in the permissible usage of Duty Credit Scrips, SHIS, SFIS, and AIIS scrips for custom duty payments related to Export Obligation defaults under FTP.
Action Required: Review the updated guidelines to understand the revised conditions for using Duty Credit Scrips and SHIS/SFIS/AIIS scrips, and ensure compliance with the new regulations when making custom duty payments.
Authorisation Holders under Chapter 4 & 5 of FTP:
Impact: Impacted by the specific changes regarding the utilization of Duty Credit Scrips for payment of Custom Duties in case of EO defaults for Authorizations issued under Chapters 4 and 5 of the Foreign Trade Policy (FTP) 2009-2014.
Action Required: Review the updated guidelines to understand the revised conditions for using Duty Credit Scrips and SHIS/SFIS/AIIS scrips, and ensure compliance with the new regulations when making custom duty payments.
Customs Authorities:
Impact: Required to implement the revised guidelines for accepting Duty Credit Scrips and SHIS/SFIS/AIIS scrips for custom duty payments and ensure accurate processing of transactions.
Action Required: Update internal procedures and systems to reflect the changes in scrip utilization and ensure staff are aware of the new regulations.
Key Entities Referenced
Foreign Trade Policy 2009-2014: A policy document concerning foreign trade, which is being amended by this notification.
Foreign Trade Development and Regulation Act, 1992: An act of the Indian Parliament that empowers the Central Government to make provisions relating to foreign trade.
Central Government: The executive authority of the Union of India, responsible for implementing the Foreign Trade Policy.
Chapter 3 of Foreign Trade Policy 2009-2014: Specific section of the Foreign Trade Policy being amended.
Duty Credit Scrip: A type of incentive or financial instrument used in foreign trade, which can be utilized or debited for payment of custom duties in case of Export Obligation defaults.
SHIS, SFIS and AIIS: Specific scrips that cannot be utilized or debited for payment of Custom Duties in case of Export Obligation defaults for Authorizations issued under Chapters 4 of this Policy.
Chapter 4 of Foreign Trade Policy: A section within the Foreign Trade Policy related to authorizations and export obligations.
Anup K. Pujari: Director General of Foreign Trade