All Industry Rates of Duty Drawback, 2011-12 - Reg.

F.No. 609/82/2011-DBK

Government of India

Ministry of Finance

(Department of Revenue)

Central Board of Excise & Customs

Circular No. -  48/2011-Customs

New Delhi, dated 31^st October, 2011

To

All Chief Commissioners of Customs / Customs (Preventive).

All Chief Commissioners of Customs & Central Excise / Central Excise / Authorized Representative.

All Director Generals under CBEC.

All Commissioners of Customs / Customs (Preventive). 

All Commissioners of Customs & Central Excise / Central Excise /

Authorized Representative.

Subject:  All Industry Rates of Duty Drawback, 2011-12 - Reg.

Sir/ Madam,

             As you are aware, the All Industry Rates (AIR) of Duty Drawback 2011-12 were notified vide Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. These rates have come into effect on 01.10.2011. Subsequently, the Ministry has received representations on the Drawback Schedule 2011-12 from Export Promotion Councils, Trade associations and individual segments of industry. The representations broadly relate to doubts on classification of items (mainly erstwhile DEPB items) in the Schedule, duty drawback rates, value caps and other miscellaneous matters.

2.         The representations have been duly examined and certain amendments / changes, wherever required, have since been carried out vide Notification No.  75 / 2011-Cus. (N.T.), dated 28.10.2011. The Notification may please be downloaded from CBEC website www.cbec.gov.in and perused for details.

3.         Some of the major changes / amendments carried out in the above mentioned notification are discussed below.

4.         Parts and components made of iron, steel or aluminium through casting or forging process which were earlier covered under various serial numbers of product group 61 (Engineering) of DEPB scheme were incorporated in Chapter 73 or 76, as the case may be, in the Drawback Schedule. Many representations were received stating that these goods merit classification more appropriately under different headings of Chapter 84 or 85 or 87, for which no specific tariff entry has been provided. To resolve this problem, the said entries have been appropriately replicated under headings 8487, 8548 and 8708 to enable exporters to claim drawback on such parts or components, irrespective of classification of such goods at any other four digit level in the Chapter 84 or 85 or 87 of the Schedule. In this regard a new note (3A) has been inserted in the Notes and Conditions of the Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011.

5.         Further, representations have also been received from the trade that certain items merit classification more appropriately under different chapter / heading, instead of the classification as has been provided in the Drawback Schedule. All such representations have been examined and wherever there was merit in the representation, it has been decided to replicate the existing entry/entries appropriately under the tariff heading as has been sought by exporters. However, while replicating these entry/entries, the existing entry/entries in the Schedule have been retained so as to avoid any disputes. Further, in all such cases where existing entries have been replicated, due care has been taken to ensure that the rates of duty drawback / value caps (wherever assigned) are the same for both the existing entries as well as the replicated entries.

6.         It may be noted that the replication of entries as discussed in para 4 and 5 above and the insertion of Note 3(A) as discussed in the preceding para 4  above, is a purely transitory arrangement and with a view to resolving classification disputes.

7.         In some cases, representations have been received for creating new entries as well as for making changes in drawback rates, value caps and in the description of the goods in the Drawback Schedule. All such representations have been examined and wherever the representation was found to have merit, the same has been considered and necessary changes have been carried out as reflected in the amending notification. Thus, for example, composite rate of duty drawback has been provided for all goods falling under headings 7318 and 7418; a single entry under heading 6117 and 6214 has been created for Shawls, Scarves, Stoles, Mufflers, Mantillas & Veils and appropriate value caps provided on per piece basis; Duty drawback rate has also been provided for knitted fabric having a blend of Cotton and MMF (Man Made Fibre).

8.         Certain doubts have been expressed about classification of few erstwhile DEPB items in the drawback schedule wherein it has been pointed out that the classification under drawback schedule does not match with the classification as provided in the Customs Tariff. In this regard attention is invited to the para (1) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. It is hereby reiterated that the tariff items and descriptions of goods in the drawback schedule are aligned with the tariff items and descriptions of goods in the Customs Tariff only upto four-digit level. Hence, so long as the alignment is there at the four digit level, there should not be any difficulty for exporters to claim drawback as per the rate specified in the Drawback Schedule, notwithstanding the fact that there may be difference in the classification of the said item at six or more digit level.

9.            Doubts have been expressed regarding simultaneous availment of benefits under Advance License / Advance Authorization Scheme along with All Industry Rates of duty drawback. In this regard attention is invited to the sub para (b) of para (8) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. It stipulates that the All Industry Rate of drawback is not available if the goods are exported in discharge of export obligation against Advance Licence except under certain conditions. It is clarified that in general, the benefits of All Industry Rates of duty drawback and Advance Licence Scheme are not available simultaneously. However, in such cases the exporter can always avail the brand rate of duty drawback under rule 6 or rule 7 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, as the case may be and subject to the conditions stipulated therein, for the duty paid inputs used in the manufacture of export goods.

10.        Representations have also been received seeking clarification on the admissibility of duty drawback on Multi Utility Vehicle (MUV) / Sport Utility Vehicle (SUV). It is clarified that MUV / SUV would, for the purpose of drawback, be classifiable under tariff item 870302 as motor cars.

11.        Field formations have expressed some difficulties on the classification of Leather Garments exported under Chapter 42 of drawback schedule. The dispute is over mixed leather and fabric garments which has less than 40% of their surface area made of fabric, and whether they are classifiable under 420301, as “Articles of apparel, made of leather” or under 420302 as “ Articles of apparel, made of leather in combination with other materials”. In this regard attention is invited to the para (17) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22.09.2011, which defines the article of leather as any article wherein 60% or more of the outer visible surface area is of leather. It is therefore clarified that the leather garment is classifiable under tariff item 420301 as “Articles of apparel, made of leather”, if 60% or more of the outer visible surface area is of leather and under tariff item 420302 as “Articles of apparel, made of leather in combination with other materials” if the area of leather is less than 60% of the outer visible surface area.

12.        It may please be noted that all changes / amendments as have been carried out through the amending notification No. 75 / 2011-Cus. (N.T.), dated 28.10.2011, come into effect retrospectively from October 1, 2011. In all such cases, wherever it is required, the exporters shall be allowed to file supplementary drawback claims and these claims shall be processed accordingly.

13.        Public Notices and Standing Orders for guidance of the trade and staff may be issued. Difficulties faced, if any, in implementation of the changes may be brought to the notice of the Board immediately. 

   Kindly acknowledge receipt of this Circular.

(Najib Shah)

Joint Secretary (Drawback)

*****

Eligibility of assessment of construction equipments under Project Imports Regulations (PIR), 1986 – Instructions - regarding.

Circular No.49/2011

F.No.528/14/2008-Cus (TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

229-A, North Block,

New Delhi-110001.     

4^th November,2011

To

All Chief Commissioners of Customs / Customs (Prev).

All Chief Commissioners of Customs & Central Excise.

All Commissioners of Customs / Customs (Prev).

All Commissioners of Customs (Appeals).

All Commissioners of Customs & Central Excise,

All Commissioners of Customs & Central Excise (Appeals)            

All Directors General under CBEC

Subject:  Eligibility of assessment of construction equipments under Project Imports Regulations (PIR), 1986 – Instructions - regarding.

***

Sir / Madam,

            References have been received that divergent practice are being followed by field  formations regarding assessment of import of  construction equipments required for the initial setting up of a unit, for a specified project under Customs Tariff Heading No. 98 01 (Project Imports).

2.         The issue has been examined by Board in view of decision of Hon’ble Supreme Court in the case of Commissioner of Customs, Mumbai vs. M/s. Toyo Engineering India Ltd., 2006(201) ELT 513 SC where in the it has been observed;  “The goods imported by the respondent such as hydle truck cranes, excavator, shovel loader, truck, forklift truck, power generators, diesel welder, welding rectifier, containers tools and tackles instruments, level Nako with tripod and theodlite Nako with accessories & tripod would certainly be auxiliary equipments which would help in the initial setting up of the industrial plant.” It is also observed by Hon’ble Apex Court in Punjab Power State Electricity Board [1997(91) ELT 247(SC), “that the vehicles, which are used in the shifting of the transformers would not constitute integral activity of the project”.

3.         In view of above said decisions it is clarified that the scope of the items eligible for import under the Project Import Regulations 1986, shall cover construction equipments as auxiliary equipment; if essentially required for initial setting up or substantial expansion of registered projects.

4.         Further it is clarified that the construction equipments may be permitted to be  transferred to other registered project under CTH 9801, after completion of its intended use,  on recommendations of sponsoring authority.  

5.         It is also clarified that ‘Plant Site Verification Certificate’ (PSVC) required to be submitted for finalization of project as per Circular No. 14/2006-Cus F.No. 528/9/2006-Cus (TU) shall also incorporate the details of construction equipments imported and used for the project, to ensure proper utilization of goods imported.

6.         These instructions should be brought to the notice of all the concerned by way of issuance of instructions /trade notice.

7.         Difficulty faced if any, may be brought to the notice of the Board. 

Yours faithfully,

 (Alok Agarwal)

OSD (Tariff Unit)

Clearance of goods from Custom Bonded warehouses utilizing duty credit scrips of SFIS, VKGUY, FMS, FPS, SHIS -Reg.

Circular No. 50 / 2011-Customs

F.No.605/53/2011-DBK

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, dated 9th November, 2011

To,

All Chief Commissioners of Customs / Customs (Prev.).

All Chief Commissioners of Customs & Central Excise.

All Commissioners of Customs / Customs (Prev.).

All Commissioners of Customs & Central Excise.

All Director Generals under CBEC.

Subject: - Clearance of goods from Custom Bonded warehouses utilizing duty credit scrips of SFIS, VKGUY, FMS, FPS, SHIS -Reg.

Sir / Madam,

I am directed to invite your kind attention to an issue which has been raised before the Board as to whether duty credit scrips issued under the Chapter 3 schemes of the Foreign Trade Policy (FTP) viz Served from India Scheme (SFIS), Vishesh Krishi Gram Udyog Yojana (VKGUY), Focus Market Scheme (FMS), Focus Product Scheme (FPS) and Status Holder Incentive Scheme (SHIS) can be utilized for clearance of goods from Custom Bonded warehouses.

2.         The matter has been examined. Clearance of goods from Custom Bonded warehouses is allowable by utilizing DEPB credit scrips as per procedure mentioned in Circular No. 68/2000 dated 18.8.2000 and Circular No. 72/2003-Cus dated 11.8.2003. However, since the schemes such as SFIS, VKGUY, FMS, FPS, SHIS have come into being only after issuance of these circulars, these schemes do not find specific mention in the said circulars.

3.         All the schemes vizSFIS, VKGUY, FMS, FPS, SHIS provide for duty credit scrips which can utilized for import of goods subject to conditions and limitations detailed in the Foreign Trade Policy (2009-14). It is clarified that duty credit scrips of these schemes are allowed for clearance of goods from Custom Bonded warehouses under the same  procedure as prescribed for DEPB scrips under Circular 68/2000 dated 18.8.2000 and 72/2003-Cus dated 11.8.2003 and subject to the conditions and limitations mentioned in Foreign Trade Policy(2009-14).

 Yours faithfully,

 G.S. Bains

(Technical Officer –Drawback)

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Location of Foreign Exchange Counters at International airports -regarding

Circular No. 51/2011-Customs

F.No.520/25/2008-Cus.VI (pt.)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

227-B, North Block,

New Delhi -110001.

11^th November, 2011.

To,

All Chief Commissioners of Customs / Customs (Prev.).

All Chief Commissioners of Customs & Central Excise.

All Commissioners of Customs / Customs (Prev.).

All Commissioners of Customs (Appeals).

All Commissioners of Customs & Central Excise.

All Commissioners of Customs & Central Excise (Appeals).

All Directors General under CBEC.

Subject: Location of Foreign Exchange Counters at International airports -regarding

Sir / Madam, 

            References have been received in the Board from field formations seeking clarification on the issue of location of Foreign Exchange Counters in departure / arrival hall of international airports.

2.         It is reported that, Foreign Exchange Counters located after immigration and before Customs (green / red channel) in the arrival hall and after Customs in the departure hall, are posing problems in enforcement of FEMA regulations / RBI guidelines in regard to import and export of Indian Currency by Indian resident passengers as well as well as non resident passengers / foreign tourists.

 3.        The matter has been examined in consultation with RBI. RBI vide letter No. RBI/2011-12/234, [A.P. (DIR Series) Circular No. 38] dated Oct 25, 2011, in respect of Foreign Exchange Counters (full-fledged branches / extension counters) opened by Authorised Dealer Category-I banks, Authorised Category-II and Full Fledged Money Changers beyond the Domestic Tariff Area in international airports in India, has clarified that:

(a) Foreign Exchange Counters in the arrival halls in international airports in India shall ideally be established after the Customs Desk (Green Channel/Red Channel).  However, Foreign Exchange Counters may also be established between the Immigration Desk and the Customs Desk in international airports in India, subject to the condition that these counters shall only purchase Foreign currency and sell Indian Rupees (INR) and ‘Encashment Certificates’, shall invariably be issued by the money changers to the customers. 

(b) Similarly, Foreign Exchange Counters in the departure halls in international airports in India shall be established only before the Customs Desk or the Immigration Desk, whichever comes first. Putting up suitable display at these counters, reminding the passengers that the area is the last point for non-residents to possess Indian Rupees (INR) may be followed up with the Airport Authorities.

(c)  The Foreign Exchange Counters of Authorised Dealers Category-I banks, Authorised Dealers Category-II and Full Fledged Money Changers, not conforming to the above, should be relocated in accordance with the above instructions, latest by 31.12. 2011. 

4.         All Commissioners in charge of International airports are directed to ensure that the directions contained in the said Circular are complied with scrupulously.

5.         Wide publicity may be given to the above directions of the RBI for compliance by all concerned. 

Yours faithfully

(R. P. Singh)

Director (Customs)

Customs Tariff classification of TV Tuners used with ADP machines of Harmonised Customs Tariff 8471

Circular No. 52/2011-Customs

F. No. 528/122/2011-STO (TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

229A, North Block, New Delhi,

11^th November, 2011.

To

All Chief Commissioners / Commissioner of Customs / Customs (Prev.),

All Chief Commissioners / Commissioners of Customs & Central Excise,

All Director Generals under CBEC.

Subject:   Customs Tariff classification of TV Tuners used with ADP machines of Harmonised Customs Tariff 8471 - Regarding

****

Sir / Madam,

            References have been received on divergent practices being followed by field formations regarding classification of TV tuners. It was reported that external TV tuners are being classified in heading 8528 or 8529, and internal PCI TV tuners / cards are being classified in subheading 8528 or 8529 or subheading 8473. 

2.         These issues were discussed during Conference of Chief Commissioners of Customs held on 9^th-10^th May, 2011 in Bangalore. There was agreement on principal function ofTV tuners and it was held that said device provide the television function through the reception of broadcast signal from television station and conversion in to audio and video information of the broadcast signal enabling television broadcasts to be viewed on the screen. Broadly, there are two types of TV tuners, viz., (i) internal PCI TV Tuner / card, and (ii) external TV Tuner.

3.         Reportedly, an internal PCI TV tuner is a device that is connected to the expansion port of the motherboard of Automatic Data Processing (ADP) machine of heading 8471. An external TV Tuner is generally not connected to the PC expansion bus. Reportedly, in such cases the TV signals are controlled and processed by the tuner and the television is operated independently from the regular computer functions without the use of any software and the computer does not have to be turned on for one to receive television broadcast signals. Some external TV tuners are connected as USB device as well. TV Tuner is a device for reception of television broadcast signal as well as a conversion device. However, even if this device does function as a dual device with each function operating independently, the principal function of the device is critical in determining its classification in terms ofNote 3 to Section XVI of first Schedule to the Customs Tariff Act, 1975, which states that unless the context requires otherwise, machines adapted for the purpose of performing two or more complimentary or alternative functions are to be classified as if consisting only of that component or being that machine which performs the principal function.

4.         The principal function of TV tuner is reception of television broadcast signal and hence the applicable subheading under consideration is in 8528 which includes: “Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus:

85287100: Not designed to incorporate a video display or screen”

-2-

Harmonised System Commodity Explanatory Notes to heading 8528 states that, “Monitors and projectors may be capable of receiving a variety of signals from different sources.  However, if they incorporate a television tuner they are considered to be reception apparatus for television.” Further, for subheading Reception Apparatus for Television Harmonised System Commodity Explanatory Notes mentions that, “receivers are intended to be used with video recording or reproducing apparatus, monitors, projectors or televisions.  However, devices which simply isolate high-frequency television signals (sometimes called video tuners) are to be classified as parts in heading 85.29.”

5.         The issues raised have been examined by the Board. External TV Tuners merit classification under CTH 8528 on application of GIR 1, 6 and read with Note 3 to section XVI and Chapter Notes. As regard to Internal TV Tuners cards it is observed that generally these cards are connected to the ADP via a peripheral component interconnect PCI slot.  The internal TV tuner works with the software installed on the computer and can not function without the ADP machine. It even fulfils the conditions stipulated under paragraph 5(C) of Chapter Note 84. However, it can qualify as a part of ADP systems only if it is outside the ambit of items listed in paragraph 5 (D) and those which meet the criteria stipulated in paragraph 5 (E) to chapter Note 84. In this regard, it is seen that paragraphs D (ii) covers apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network). Whether external or internal, the principal function of TV tuner cards remains the same, that is, to provide the television function through the reception of broadcast signal from television station. The conversion into audio and video information of the broadcast signal enabling television broadcasts to be viewed on the screen remains the secondary reception. Taking into consideration the principal function of TV tuners, and provisions of paragraph 5(D) and 5(E) to chapter 84, internal TV tuner cards are found to be outside the ambit of heading 8473.

6.         Also TV tuners are other than those devices which simply isolate high-frequency television signals (sometimes called video tuners) and hence can not be classified as parts in the heading 85.29. Therefore, on application of General Interpretative Rules (GIR) 1 and 6, read with Note 3 to Section XVI and Chapter Notes 5(C) to Chapter 84, it is clarified that TV tuners, both internal and external are more appropriately classifiable in Harmonised Customs Tariff in tariff item 85287100.  

7.         Suitable instructions may be given to the field formation and all pending assessments, if any, may be finalized accordingly. Difficulty faced, if any, may be brought to notice of the Board.

Yours faithfully, 

(Subodh Singh),

OSD (Customs), Tariff Unit,

Fax-011-23092173

Regarding classification of Chloroparaffins / Chlorinated Paraffins

Circular No. 53/2011-Cus

F.No. 528/130/2011-STO (TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

(Tariff Unit)

******************

229A, North Block, New Delhi

 2^nd December, 2011

To

All Chief Commissioners of Customs/ Customs (Prev.)/ C&CE,

All Directors General of CBEC,

All Commissioners of Customs / Customs (Prev.) / C&CE

All Commissioners of Customs & Central Excise (Appeals).  

           

Subject: Classification of Chloroparaffins/Chlorinated Paraffins- reg.

Sir/Madam,

            References have been received regarding divergent practices being followed by field formations regarding classification of Chlorinated Paraffins/Chloroparaffins.

2.         The matter has been examined by the Board. As regards classification of Chlorinated Paraffin Waxes (in solid form), the HSN Explanatory Note (B)(a) to Heading 27.12 of CTH clarifies that artificial waxes obtained by the chemical modification of lignite wax or other mineral waxes are classifiable under Heading 34.04. Also in the Budget, 2010, the specific sub heading 27122010 covering Chlorinated Paraffin Waxes has been deleted from the tariff. This item is therefore, classifiable under 340490 of Customs Tariff Act, 1975. Further, regarding classification of Chlorinated Paraffins / Chloroparaffins (in liquid form), the HSN Explanatory Notes  (B) (9) under Heading 38.21 clarifies that Chloroparaffins in Liquid from are covered under the heading 3824.

3.         Accordingly it is clarified that:

(a)           Chlorinated Paraffin Waxes (in solid form) are classifiable under sub-heading 340490 of Customs Tariff Act, 1975 after the budget, 2010.

(b)           Chlorinated Paraffins/Chloroparaffins (in liquid form) are classifiable under subheading 382490 of Customs Tariff Act 1975;

2.             Suitable instructions may accordingly be given to the field formations.

Yours faithfully,

(A.K.Goel)

Senior Technical Officer,

Tariff Unit