TMI BlogDuty Free Import Authorization (DFIA) Scheme - availment of facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or Cenvat credit under CENVAT Credit Rules, 2004 under Notification numberX X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Rules, 2002 or Cenvat credit under CENVAT Credit Rules, 2004 (here in after referred to as the 'said facilities') in respect of raw materials used in the manufacture of goods exported towards fulfillment of export obligation (EO) under Duty Free Import Authorization (DFIA) scheme, as well as duty free imports against the Authorization so obtained in terms of the DFIA scheme, simultaneously. 2. The matter has been examined by the Ministry. The DFIA Scheme was introduced in the Foreign Trade Policy (FTP) in 2006 and it allowed, inter alia, duty free import of inputs for manufacture of export goods and transfer of the Authorization or the inputs imported against it after completion of the EO subject to fulfillment of certain conditions. One of the conditions stipulated in paragraph 4.4.7 of the FTP (2006) was that no Cenvat credit facility shall be available for inputs either imported or procured indigenously against the Authorization.Condition(v) of the corresponding customs notification No.40 / 2006- Cus dt 1.5.2006 , issued to implement the DFIA scheme, accordingly provided that the EO would be discharged by exporting resultant products, manufactured in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouble benefits. The Law Ministry clarified that from a perusal of the DFIA scheme and the conditions laid therein it appeared that the authorization holder cannot avail Cenvat credit on the inputs used in the manufacture of the goods exported under the DFIA scheme as well as duty free imports under the DFIA simultaneously as it amounts to double benefit and against the spirit and object of the scheme. 5. Finally, the position that emerged after the discussions between the DOC / DGFT and the DOR was that unintended benefits may have occured in cases where the duty free inputs, imported / procured subsequent to completion of EO using indigenously procured inputs and on which Cenvat credit has been availed of by the exporter, are transferred or used in the manufacture of non excisable /exempted /nil duty goods. The transferee in such cases obtains the duty free raw materials and escapes the levy of excise duty on finished products in domestic market sale. The position holds good even under actual user imports if the replenished materials are utilized in the manufacture of non-excisable/exempted/nil-duty products. 6. The DOC/ DGFT therefore modified the provisions of the DFIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified under sections 3,8 and 9A of the said Customs Tariff Act respectively and cess as applicable. The term 'dutiable goods' has been defined in the explanation to the notification and would mean all excisable goods which are not exempt from Central Excise duty and which are not chargeable to 'nil' rate of central excise duty; (ii) if the materials are imported against an authorisation transferred by the Regional Authority, or the imported materials are transferred with the permission of Regional Authority, then the importer has to pay an amount equal to the additional duty of customs. In case, the duty is not paid then interest @ 15% from the date of clearance of the said materials till the date of payment has to be paid; (iii) the importer also has an option to pay additional duty of customs on the imported materials and clear his goods without furnishing any bond as specified in condition No. (iiia) of the notification number 17/09-Cus dated 19.2.09 . This additional duty of customs so paid shall be eligible for availing CENVAT Credit under CENVAT Credit Rules, 2004. (b) In respect of imports made after the discharge of export obligation in full, and if 'said fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme, and thereafter used the imported/ locally procured duty free replenishments in the manufacture of non dutiable goods. This would mean collection of all duties of customs which were exempted in the notification no. 40/06-Cus while permitting duty free imports. Further, this action shall be taken in respect of all duty free imports affected during the years 2006-07, 2007-08 and 2008-09; (b) appropriate action to safeguard revenue may be taken in case imports /domestic procurement against Authorizations have been transferred. As per para 4.4.6 of the FTP (2007) , this transfer should have taken place after payment of additional duty of customs / excise duty, as the case may be. It needs to be verified whether the practice as specified in the FTP was actually followed for the years 2007-08 and 08-09. If not, action to recover revenue needs to be taken accordingly; (c) appropriate action to safeguard revenue may be taken in case the Authorization itself has been transferred. As per para 4.4.6 of the FTP(2007) and para 4.72 of the HBP , this transfer should have taken place after payment of additional duty of customs / excise duty, as the case may be. It needs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or Cenvat credit under CENVAT Credit Rules, 2004 was availed in respect of such inputs? 3. The details of the shipping bills under which the above exports took place and the details of the authorizations issued against the said exports and the port of registration. 4. Whether the DFIAs so obtained have been used to import / procure duty free replenishments? 5. If so, whether the said replenishments have been used in the manufacture of dutiable goods. If yes, a certificate from the jurisdictional Central Excise Superintendent to this effect may be furnished. If not, then the proof of payment of all duties of customs on replenishments used in the manufacture of non dutiable goods may be furnished. 6. If the replenishments have been transferred, whether applicable additional customs duty/ excise duty has been paid in terms of Para 4.72 of the Hand Book of Procedures. The proof of payment i.e the copy of TR-6 Challan may be furnished. 7. Whether the DFIA so obtained has been transferred? If yes, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
