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Better Understanding of Latest Notification for Exporters and Importers Post COVID-19

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Better Understanding of Latest Notification for Exporters and Importers Post COVID-19
By: Kishan Barai
May 20, 2020
All Articles by: Kishan Barai       View Profile
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The current situation of pandemic is something that no any economy was prepared for. Which ultimately is affecting the economies of several countries across the globe. Imports and exports work as the backbone of every economy. New policies are made for the Beneficent of the exporters and importers and to reduce the impact of the pandemic on the international trade. There is a strong motive of generating high revenues during the pandemic behind the Indian government’s new policies for imports and exports. Therefore, various circulars and notifications have been issued by several ministries and other authorities for the exporters and importers to sustain in this pandemic. Some major and significant are discussed in detail below.

Firstly, the one prominent agency which is involved in the circular is DGFT (Director General of foreign trade). DGFT itself is the macro controller of the India’s foreign trade and it composes the foreign trade policy of India. The foreign traded policy which had been issued by the government is for the period of 5 years i.e. the foreign trade policy was issued on 1st April 20115 and was to expire at 31st March 2020. Due to the pandemic that as it is the same policy has been extended for one more year till 31st March 2021 to make the exporters and importers work under the same policy which they are already aware of. Moreover, the benefits and comforts of this policy are discussed under a promotional scheme named as Merchandise export from India scheme. As the policy has been extended for one more year, therefore, the policy of MEIS shall be continued till the 31st March 2021 until the RoDTEP rates are announced at the end of 2020. Which means that until the end of the year 2020 or the RoDTEP rates are announced you are eligible and allowed for MEIS which was applicable in prior application of 2%, 3%or 5%. Moreover, as per the procedure the last date for the filling of MEIS application is 12 months from the LEO ( let export order date) and after that the late cut and penalty which shall be charged. But due to this pandemic for Shipping bills where LEO date falls during period 1st February 2019 to 31st May 2019 the application will be allowed to be filed in the period of 15 months instead of 12 months that is in between the pandemic of COVID-19 period. This means that MEIS benefits can be claimed between the period of 12 months to 15 months. Furthermore, coming to the service export from India scheme (SEIS) unlike the MEIS there is an application period for SEIS. The application form date for the SEIS has been extended for 31st December 2020 due to the pandemic that were to be filed within the 12 months from the end of the financial year. Government has informed that for the financial year of 2021 the scheme shall be continued or not shall be announced separately. Next, many of the exporters have a recognition certificate which is called as status holder certificate (popularly called as 1start, 2star etc.). The certificate has a validity of five years from the date of issue or 31st March 2021 whichever is later. But due to the COVID-19 the amendment has been made in which the certificate shall be valid till the 31st March 2021.

Secondly, coming to advance authorization which is a scheme by the regulators for the export of raw material. Duties exempted under advanced authorization para 4.14 included IGST and compensation Cess up to 31st March 2020. But due to the pandemic the same policy has been extended by GST council up to 31st march 2021. DGFT and customs have notified accordingly. Moreover, for DFIA where validity of imports which were expiring between 1st February 2020 to 31st July 2020 but because of the pandemic the same has and RoSTCL the last date has been extended automatically for the six months. Whereas last date of filling of online claims of rebate of state and central levies and taxes (RoSTEL); For shipping bills with LEO date from 7th March 2019 to 31st December 2019 which was 31st June 2020 will now be 31st December 2020. If machines are being imported, then another scheme is available export promotion capital good scheme for which another scheme is announced. Duties exempted under EPCG scheme para 5.01(a) included IGST and compensation Cess up to 31st March 2020. To cope up with the pandemic and for the ease of exporters in the COVID-19 pandemic the same has been extended by GST council up to 31st March 2021. EPCG has various dates of validity. Firstly, the imports validity which is aforesaid is extended for the ease of exporters. Secondly, the certification of installation of capital good whose validity is of six months which has been extended for the six months from the original due date. Thirdly, the block wise fulfillment of EO for which the period has been extended for six months from the due date of expiry.

When it comes to customs, the late filling of bills of entry are brought under consideration by the government to sustain in pandemic. Therefore, keeping in view the exigency due to the outbreak of COVID-19 and in order to facilitate the trade of clearance of the imports consignments, it is decided in the public interest that those bills of entry which pertain to IGMs field on or after 20th March 2020, if filed late late for clearance of imports consignment will not attract any late fee charges for the time being and till further orders. Moreover, if any company is manufacturing medical kits, medicines artificial respiration or ventilators or other medical apparatus, face masks or surgical masks, personal protection equipment or COVID-19 testing kits or any other related manufacturing items then customs has provided the manufacturer the exemption of basic custom duties and health Cess for that they can easily bring it to India during the situation of pandemic of COVID-19. Moreover, if manufacturers are importing good and storing it to the warehouses for only export or import purpose then there was implementation of e-sealing to be set up. Due to the outbreak that e-sealing set up has been postponed until 1st July so that there is a simplified procedure followed as it was followed earlier.

The other most important amendment which is the second part of the custom and CBIC which is made about the return filing which comes under GST. Hence, the standard which is need to be followed is GSTR-1 that is the late fee shall be charged if that is not filed by every end of 10th month on daily basis. But if that is filed accumulatively then there shall not be any late fee.

Due to this COVID-19, there has been a great change in the cost of the freight and delivery charges. This is because now the demand for the online shopping has been increased and everyone due to the quarantine season, prefers to do online shopping. Taking this huge demand of online shopping in mind, the freight in and freight out charges has been increased by a very huge margin. Due to this, it costs the buyer a double price of products along with the delivery charges. The buyers are worried because of this. They must contact their sellers. They must negotiate about the prices. They have to convey the sellers that the delivery charges has been increased by not only 10 to 20% but by a very large and unacceptable margin, which must be reduced. Therefore, it will be the duty of the buyers to negotiate with the service providers and so can make it possible to reduce the freights charges. It is advisable to opt for the FOB scenario where the exporter avoid paying the shipping price directly. So, in this way they can reduce the invoice charges. 

The second question is about Interest Equalization Scheme IES, which is to give the pre and post shipment credits to the exporters in the currency Rupees. When the global demands decreased due to any reason or crisis, like the ongoing situation, then there will be increased in the credit costs. Therefore, in this situation the Government introduced this scheme, to make the exporters able to do the appropriate and correct pricings. This would hence, enable them to compete in the market. Intended to stem the downward trend in exports, IES offered a 3% rate of interest equalization. With effect from 2nd November 2018, this was increased to 5%, although the rate remained at 3% for large manufacturers and merchant exporters. The government had earmarked ₹ 2,500 crores annually for IES, with the actual cost to revenue depending on the claims made by the exporters. It covered labor-intensive products that had a promise of employment generation. Actually the RBI will pay the other percentages of interest and you have to only pay the 3%. So, you will have deducted with the interest rate.

Now You may apply for the ECGC cover online effectively, you can approach the ECGC office via call or email & ECGC has allowed the exporters to convert the payment terms from DP to DA.

In the light of all above, all the amendments and implications are made for the betterment of exporters and importers in order to sustain in this pandemic and in order to save economy.


By: Kishan Barai - May 20, 2020



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