Home India Ministry of Commerce and Industry Corrigendum to Public Notice No.16 dated 4th June, 2015 in r...
Date: 2015-06-09 Category: Extra Ordinary State: Union Government Country: India

Corrigendum to Public Notice No.16 dated 4th June, 2015 in respect of amendments in Paragraphs 4.38 (viii) (b)&(c) and paragraph 4.42(c) of Hand Book of Procedure

Issued by Ministry of Commerce and Industry · Department of Commerce

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Executive Summary & Key Takeaways

Executive Summary: This public notice, issued by the Directorate General of Foreign Trade on June 9, 2015, announces a corrigendum to Public Notice No. 16 dated June 4, 2015, regarding amendments to paragraphs 4.38 viii b & c and 4.42 c of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-2020. The corrections are effective from April 1, 2015. It addresses composition fees and export obligations. Key Points / Main Content: Amendments to Paragraph 4.38 viii b & c (Clubbing of Authorizations): * For authorizations with an initial obligation period of 18 months and a shipment date within 30 months, exports up to 30 months from the earliest authorization date will be considered for clubbing. * Accounting of exports is subject to a composition fee of 0.5% of FOB value for exports made after 18 months but up to 24 months from the earliest authorization date. * For exports after the 24th month until the 30th month, the composition fee is 0.5% per month of the FOB value of exports. * The same conditions apply when authorizations with an initial obligation period of 36 months are clubbed with those of 18 months. Amendment to Paragraph 4.42 c (Export Obligation Period and Extension): * A further extension of six months after the initial extension can be considered by the Regional Authority if the authorization holder has fulfilled a minimum of 50% of the export obligation in quantity and value on a pro-rata basis. * This extension is subject to a composition fee of 0.5% per month on the unfulfilled FOB value of the export obligation. * No further extension beyond 12 months from the expiry date of the Export Obligation period will be granted. * For the second extension, a certificate from an independent Chartered Accountant/Engineer is required, confirming the availability of unutilized imported/domestically procured inputs with the applicant. * The composition fee for the second extension of authorization is 0.5% per month of the FOB value of exports made. * Corrections have been made in Paragraph 4.38 viiibc to align with paragraph 4.38viiia. * A typographical error in paragraph 4.42c has been corrected. Impact Analysis: Authorisation Holders: Impact: Changes in composition fees, export obligation periods, and extension conditions affect financial planning and compliance requirements for exports. The additional requirement of a certificate from a Chartered Accountant/Engineer for the second extension adds to the compliance burden. Action Required: Review and adjust export strategies to comply with the revised composition fee structure and extension conditions. Ensure proper documentation and certification for seeking extensions. Regional Authorities: Impact: Must adhere to the new rules for granting extensions on export obligations and verify compliance with the required conditions, including the 50% fulfillment of export obligations and submission of necessary certifications. Action Required: Implement the revised guidelines for processing extension requests, including verifying the fulfillment of export obligations and the submission of the required certificate from a Chartered Accountant/Engineer.

Key Entities Referenced

Foreign Trade Policy, 2015-2020: A policy governing import and export in India; this public notice makes amendments to the Handbook of Procedures of this policy. Directorate General of Foreign Trade: The organization responsible for implementing the Foreign Trade Policy in India and issuing public notices related to it. Handbook of Procedures: A document that provides detailed procedures and guidelines for implementing the Foreign Trade Policy. New Delhi: The location of the Directorate General of Foreign Trade, and place of publication, Delhi, India. Advance Authorisations: An authorization issued to allow duty-free import of inputs which are physically incorporated in export product. Regional Authority: A regional authority which can consider request for extension of six months after first extension as in b above can be considered by Regional Authority Pravir Kumar: Director General of Foreign Trade. Chartered Accountant: An independent Chartered Accountant/Chartered Engineer who certifies that unutilized imported/domestically procured inputs are available with the applicant.
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No. 01/94/180/333/AM15/PC 4.— In exercise of powers conferred under paragraph 1.03 of the Foreign Trade Policy, 2015-2020, the Director General of Foreign Trade hereby notifies the corrigendum to Public notice 16 dated 4th June, 2015, amending Paragraphs 4.38(viii)(b)&(c) and 4.42(c) of Handbook of Procedures of FTP 2015-20. These corrections shall be deemed to have come into force with effect from 1st April, 2015. 1. Correction in paragraphs 4.38(viii)(b)&(c) Corrected paragraphs 4.38(viii)(b)&(c) shall read as under:-¹Hkkx Iµ[k.M 1º Hkkjr dk jkti=k % vlk/kj.k 3 “4.38. Facility of Clubbing of Authorisations (viii) (b) Where Authorisations are issued with initial obligation period of 18 months and last date of shipment is within 30 months: In such cases, exports made upto 30 months from the date of issuance of earliest authorization only will be taken into consideration for clubbing. Accounting of exports shall be subject to payment of a composition fee @ 0.5% of FOB value of exports made after 18 months from the date of earliest authorisation but upto 24 months. For the exports effected after 24th month till 30th month from the date of earliest Authorisation, the composition fee will be @ 0.5% per month of FOB value of exports made. (c) Where Authorisation(s) with initial obligation period of 36 months is clubbed with authorization(s) with initial obligation period of 18 months. In such cases, exports made upto 30 months from the date of issuance of earliest authorization only will be taken into consideration for clubbing. Accounting of exports shall be subject to payment of a composition fee @ 0.5% of FOB value of exports made after 18 months from the date of earliest authorisation but upto 24 months. For the exports effected after 24th month till 30th month from the date of earliest Authorisation, the composition fee will be @ 0.5% per month of FOB value of exports made. 2. Correction in paragraph 4.42 (c) Corrected paragraph 4.42 (c)shall read as under:- “4.42. Export Obligation (EO) Period and its Extension (c) Request for further extension of six months after first extension as in (b) above can be considered by Regional Authority, provided Authorisation holder has fulfilled minimum 50% export obligation in quantity as well as in value, on pro-rata basis. This will be subject to payment of composition fee @ 0.5% per month on unfulfilled FOB value of export obligation. No further extension shall be allowed by Regional Authority. This provision shall also be applicable to Advance Authorisations issued during FTP 2009-2014. However, only two extensions of six months each as given in sub-para (b) and in this sub-para can be allowed subject to payment of composition fee and under no circumstance Regional Authority shall allow any extension beyond 12 months from date of expiry of EO period. At the time of filing application for second extension, authorisation holder will have to submit a certificate to RA from an independent Chartered Accountant/Chartered Engineer certifying that unutilised imported/domestically procured inputs are available with the applicant. Effect of this Public Notice: In case of second extension of authorisation, the composition fee shall be charged @0.5% per month of FOB value of exports made. Accordingly, corrections have been made in Paragraphs 4.38 (viii)(b)&(c) to align the same with paragraph 4.38(viii)(a). Typographical error in paragraph 4.42(c) has been corrected. PRAVIR KUMAR, Director General of Foreign Trade Printed by the Manager, Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

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