Prima facie exports occupies a pivotal position in augmenting foreign exchange for a country. To achieve foreign exchange, export sector plays a dominant role in achieving that object.
The Government of India from time to time issues many schemes for improving the efficiency of the export sector so that the problems or difficulties faced by the manufacturers/exporters are reduced to the barest minimum.
The conditions and procedures relating to export without payment of duties are contained in notification Nos. 42/2001-CE[NT] to 45/2001-CE[NT] all dated 26.6.2001 issued under rule 19 of the Central Excise Rules 2002.
Broadly, the duties of excise collected under the following enactments viz:
Central Excise Act 1944; The Additional duties of excise [Goods of Special Importance] Act 1957; The Additional Duties of Excise [Textiles and Textile Articles] Act 1978; The National Calamity Contingent Duty [NCCD] leviable under section 136 of the Finance Act 2001 as amended by Section 169 of the Finance Act 2003 which was amended by Section 3 of the Finance Act 2004; Any Special Excise Duty collected under the Finance Act; The Additional Duties of Excise as levied under section 157 of the Finance Act 2003; and The Education Cess on Excisable goods as levied and collected under Clause 91 read with Clause 93 of the Finance [No. 2] Act 2004.
Recently, the Board has introduced certain novel procedures for the betterment of the exporters, which were appreciated by the exporters. A brief account about this:
i.Introduction Letter of Undertaking for manufacturer exporters. ii. Merchant exporters to continue to file bond; iii. An option given to manufacturer exporter to follow bond procedure and taking self-debit/credit after fulfilling the export obligations; iv. The procedure of “acceptance of proof of exports” has been simplified; v. Creation of post as Deputy/Assistant Commissioner of Central Excise [Exports] to function similar to Maritime Commissioners ; vi. Reduction of number of copies of application of removal so that the scripty work of the manufacturers are avoided; vii. A creation of post of Maritime Commissioner in each Commissionerate under whose jurisdiction one or more Port, Airport, Land Customs Station or Post Office of exportation is located;
Broadly there are two categories of exports without payment of duty.
1. Export of finished goods without payment of duty under bond or undertaking; and 2. Export of manufactured/processed goods after procuring raw material without payment of duties under bond
Predominantly, the procedures and conditions for exports to all countries except Nepal and Bhutan are specified in Notification No. 42/2001-CE[NT] dated 26.6.2001.
An exporter shall execute bond in Form B1 or avail LUT facility. Only manufacturer exporter alone is eligible for LUT facility. The goods shall be exported within six months from the date on which they were cleared for export from the factory of production or manufacture or warehouse or other approved premises within such extended period as the Deputy/Assistant Commissioner of Central Excise or Maritime Commissioner may in a particular case allow;
When the export is from a place other than the registered factory or warehouse, the excisable goods are in original packed condition and identifiable as to their origin.
Forms to be used
ARE-1 is the export document for export clearance, which shall be prepared in quintuplicate[5 copies]. These documents shall bear a running serial number beginning from the first day of the financial year. The exporter is required to file certain basic details / declarations in the ARE-1. It should be signed by the exporter or his authorized agent. The different copies of ARE-1 should be of different colours as detailed below: Original White Duplicate Buff Triplicate Pink Quadruplicate Green Quintuplicate Blue
It will be sufficient if the copies of the ARE-1 contain a colour band on top or right hand corner in accordance with the above colour scheme.
Besides the above, an invoice under Rule-11 of the Central Excise Act also needs to be prepared.
Concept of Letter of Undertaking
The Letter of Undertaking [LUT] is to be furnished in the Form UT-1 as specified by the Board. It should be filed only to the jurisdictional Dy/Asst. Commissioners. It should not be filed before Maritime Commissioner or any other Officer authorized by the Board. An LUT shall be valid for 12 calendar months provided the exporter complies with the conditions of the LUT, especially the procedure for acceptance of proof of export. In case of persistent defaults or non-compliance causing threat to revenue, the manufacturer exporter be asked to furnish bond with security/surety.
The obligation of the manufacturer flows from statutory requirement of exporting the goods within six months or such extended period as the Dy./Asst. Commissioner of Central Excise may allow. Failing this, the exporter is required to deposit the requisite sum [duty and interest] suo motu considering that the manufacturer has to do “self assessment”. Such non-payment within 15days of expiry of the stipulated time period shall be treated, as arrears of revenue and the department will proceed to recover the same as sum due to the Government.
On repeated failure of the manufacturer exporter to comply with the conditions of Letter of Undertaking or the procedure for acceptance of proof of export, the jurisdictional authority may direct such defaulter in writing that the facility of LUT is not valid and he has to switch over to bond with surety/security procedure.
The LUT shall not be discharged unless the goods are duly exported to the satisfaction of the AC/DC of Central Excise within the time allowed for such export or otherwise accounted for to the satisfaction of such officer or until the full duties due thereon any deficiency of goods not accounted and interest if any has been paid. The LUT has to be renewed periodically by applying afresh before the jurisdictional authority by fulfilling the legal obligations.
The merchant exporters are required to file B-1 bond with security or surety. Specified categories/merchant exporters viz: status holders [Super Star Trading House, Star Trading House, Trading House, Export House] and exporters registered with recognized Export Promotion Councils would be exempted from furnishing security and or surety with the bond. The bond shall be in a sum equal to the duty chargeable on the goods for the due arrival of export goods at the place of export and subsequent export under customs area. The Officer who accepts the bond will be responsible for discharging that bond upon furnishing the proof of export by the exporter.
CT-1 Certificate have to be obtained by merchant exporters for procuring goods from a factory or warehouse.
The exporter is required to prepare five copies of application in the form ARE-1. The goods shall be assessed to duty in the same manner as the goods for home consumption, though duty is not required to be paid considering clearance is meant for export without payment of duty. A classification and rate of duty should be in terms of Central Excise Tariff Act 1985 read with exemption notification if any. The value shall be the transaction value and confirm to Section-4 or Section-4A as the case may be of the Central Excise Act 1944. It is clarified that this value may be less than equal to or more than the FOB value indicated by the exporter on the shipping bill.
The exporter may request the Jurisdictional Superintendent of CE for examination and sealing at the place of despatch hours in advance or such shorter period as may be mutually agreed upon about the intended time of removal so that arrangements can be made for necessary examination and sealing.
The Central Excise Officials will verify the identity of the goods mentioned in the application and also verify whether the duty self-assessed is correct and that the particulars of duty payable have been recorded in the records. If it is found to be correct he shall seal each package or the container ensuring that the goods cannot be tampered with after the examination. Besides, the above documents another document called examination report also needs to be filled in by the exporter and it has to be countersigned by the Supervisory Officers who attend the export.
The distribution of ARE-1 is as follows: 1. Original Duplicate these documents should be returned to the exporter after endorsements 2. Triplicate Sent to bond/LUT sanctioning authority 3. Quadruplicate Range copy 4. Quintuplicate Exporter copy
If the manufacturer wants to avail self-sealing then he can be permitted to do so. The facility of self-sealing and self-certification is extended to all categories of manufacturer exporters. For this purpose the owner, working partner, the Managing Director or the Company Secretary of the exporter duly authorized by the Owner shall certify on all the copies of the application that the description and value of goods covered by this invoice have checked by him and that goods have been packed and sealed with lead seal/one time seal under his supervision.
Export by Parcel Post
In case of export by Parcel Post after the goods intended for export have been sealed, the exporter shall affix to the duplicate application sufficient postage stamps to cover postal charges and shall present the documents together with the package or packages to which it refers to the Post Master at the office of booking.
Procedure relating to Proof of export and re-credit against such proof
The procedure relating to acceptance of proof of export has been simplified. The original and duplicate copies of the ARE-1 presented to the Customs Authorities at the place of export. The Customs Authorities certifies the actual export on these documents and distributes the copies as specified.
The exporter along with the original copies of ARE-1 with two certification of exports pass for shipment order] by Customs Authorities should file before the Divisional Authority through the Range Officer. Other supporting documents such as self-attested photocopy of bill of lading and self-attested photocopy of shipping bill also needs to be filed. The exporter is permitted to take credit in his running bond account on the basis of the statement referred to above duly acknowledged by the Range Officer or the office of the Bond Accepting Authority. To have better control it is advisable to submit a monthly statement as specified in Form Annexure-19 by the manufacturer so that the proof of export is not unnecessarily pending with bond/LUT accepting authorities.
In case of non-export within six months from the date of exports, the exporter shall himself deposit the excise duties along with interest on his own immediately on completion of the statutory time period or within 10 days of the Memorandum given to him by the Excise Authorities. Otherwise, necessary action can be initiated to recover excise duties along with interest and fine/penalty. Failing this the amount shall be recovered from the exporter together with interest in terms of the LUT furnished by the manufacturer. In case where the exporter has furnished bond the said bond shall be enforced and proceedings to recover duty and interest shall be initiated against the exporter.
Export under claim for Rebate
The conditions and procedure relating to export under claim for rebate are contained in Notification 19/2004-CE [NT] dated 6.9.2004 and Not. No. 20/2004-CE[NT] dated 6.9.2004 issued under Rule 18 of the Central Excise Rule 2002.
It is worth mentioning that as per the definition as per the term refund in section 11-B of Central Excise Act 1944, refund includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India. The procedure specified in the said rules and the notification issued there under are subject to Section 11-B of the said Act.
Broadly there are three categories of exports. They are :
export of all excisable goods to all countries except Nepal and Bhutan; export to Nepal and Bhutan; and export of Tea to any other country except Nepal and Bhutan
The procedure for export under claim for rebate is similar to bond which has been stated already excepting the fact that here the duty has been paid and rebate claim will be filed on establishing that necessary export had taken place and all obligations under the export had been fulfilled.
The rebate claim can be sanctioned by the jurisdictional Central Excise Officer [DC/AC] . The following documents shall be required for filing the claim of rebate.
A request on the letter head of the exporter containing claim of rebate, ARE-1 number and dates corresponding Invoice numbers and dates amount of rebate on each ARE-1 and its calculations; Original copy of the ARE-1; Invoice issued under Rule-11 A self-attested copy of shipping bill Self-attested copy of Bill of Lading; and Disclaimer certificate in case where claimant is other than the exporter
The rebate sanctioning authority after necessary scrutiny/verification sanctioned the rebate in full or in part. In case of any reduction or rejection of the claim an opportunity shall be provided to the exporter to explain the case and a speaking order shall be issued. This is in tune with the observance of principles of natural justice.
Where the individual rebate claim exceeds Rs. 5lakhs, they shall be pre-audited before they are despatched.
Filing of Rebate Claims by Electronic Declaration and sanction thereof through Electronic Data Interchange[EDI]
A new concept of filing of rebate claim and its sanction through EDI established by the Customs formations at different ports/airports/ICDs/CFSs has been incorporated in the procedure. The expression electronic declaration has been defined as the declaration of the particulars relating to export goods lodged with the Customs computer systems through the data entry facility provided at the service centers or the data communication networking facility provided by the Indian Customs or Central Excise Gateway called [ICEGATE] from the computer of the person authorised for this purpose.
Interest on delayed Refund
With effect from 26.5.1995 vide section 75 of the Finance Act 1995 a new section styled as section 11-BB has been created for the purpose of awarding interest to the claimants by the department. If any duty ordered to be refunded under section [2] of Section 11-B to any claimant is not refunded within three months from the date of receipt of application under sub-section-1 of that section interest needs to be paid. Interest is payable for the period of delay after three months from the date of receipt of application of refund. Such interest will not be below 5% and not exceeding 30% per annum fixed by the Government from time to time. Notification No. 67/2003 –CE[NT] dated 12.9.2003 under section 11BB fixing at the rate of 6%.
As the provision of awarding interest under section 11-BB of the Act has been made in the Act itself, it is mandatory and no formal letter or requisition needs to be filed by the claimants in case the department is not in a position to settle the claim within the statutory period of three months.
more info: http://centralexcisechennai.gov.in/chennai2/tn-47/NOTFN-42%28NT%29.htm
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