Benefits to Exporters under
Indirect Taxation
(Excise, Customs and FTP etc.) &
Professional opportunities for Practicing
CAs
Seminar – CPE Study Circle of
Baroda Branch of WIRC of ICAI
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
1
INDEX
Page No
I.
A.
-
Legal Dispensation of Area - DTA-EOU-SEZ
DTA
Status of Different Category of Exporters under DTA
A-1
Manufacturer Exporter
•
•
•
•
•
•
•
•
Inputs Benefits
Capital Goods Benefits
Input Service Benefits
CENVAT Credit / ITC Benefits
CENVAT Refund Benefits
(a) Finished Goods Benefits (Indirect Taxation)
(b) Finished Goods Benefits – FTP
( c) Other FTP Benefits
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
05
06
07
08
09
10
11
12
13
14
15
2
INDEX
Page No
A-2
A-3
Merchant Exporter
Deemed Exporter
16
17
•
•
•
•
•
Inputs Benefits
Capital Goods Benefits
CENVAT Credit Benefits
CENVAT Refund Benefits
Finished Goods Benefits
18
19
20
21
22
A-4
Service Exporter
•
•
•
•
•
Inputs / Input Services Benefits
Capital Goods Benefits
CENVAT Credit Benefits
CENVAT Refund Benefits
Finished Services Export Benefits
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
23
24
25
26
27
3
INDEX
Page No
B
EOU
28
•
EOU Benefits
29
C
•
SEZ
SEZ – General
30
31
•
Special Provisions
32-35
•
Indirect Tax Exemptions
36-39
•
•
•
•
Drawback
Re-warehousing
SEZ In & Out ward Transaction
Foreign Trade Incentives to DTA Supplier
40
41
42-43
44
D
E
Direct Tax Benefits
Various Requirement of CA Certificates
45
46-47
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
4
Legal
Dispensation
of Area
DTA
EOU
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
SEZ
5
DTA
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
6
Status of Different Category of Exporters under DTA
DTA
Goods
Manufacturer
Exporter
Merchant
Exporter
Services
Deemed
Exporter
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
Service
Exporter
7
DTA – Goods - Manufacturer
Procurement
of Inputs
Without Duty /
Re-imbursement
Central
Excise
- Annexure-1
(Domestic)(ED)
43/2001-CE (N.T.)
Customs
-DBK–Brand
Rate
Rule-6 / 7
(Free)
(Domestic ED/CVD)
(Both Central
Excise /
Customs)
(Re-imbursement)
(Re-imbursement)
- Input Rebates
21/2004-CE (N.T.)
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
FTP
- Advance
Authorization
96/2009-Cus
99/2009-Cus
- DFIA
98/2009-Cus
(Free)
8
DTA – Goods - Manufacturer
Procurement
of Capital
Goods
Without Duty
FTP
EPCG 0% Duty
EPCG 3% Duty
102/2009-Cus
103/2009-Cus
(6/6)
(8/8)
(Free)
(Only 3% Duty)
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
9
DTA – Goods - Manufacturer
Procurement of
Input ServiceBy way of
Exemption / Re-Imbursement
Service Tax
2 Services
Exempted
(GTA & Commission)
18 Services
Refund on Actual Basis
( or Percentage Basis )
18/2009-ST
52/2011-ST
(Free)
(Re-imbursement)
-Either 18 Services refund or % on F.G. FOB as per 52/2011.
-In case GTA Exemption is availed u/r 18/2009, then option to opt 17 services for
refund on actual basis under Noti. No. 52/2011 is available ( But No percentage route
is available )
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
10
DTA – Goods - Manufacturer
CENVAT Credit / VAT ITC on
Inputs / C.G. / Input Services for the Exporter
Inputs
Central
Excise
VAT
CENVAT
ITC
Capital
Goods
Input
Services
Inputs
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
Capital
Goods
11
DTA – Goods - Manufacturer
CENVAT
Refund
Central
Excise
VAT
Excess Cenvat
Credit Refund
Finished Goods
Rebate
Input ITC
Portion Refund
5/2006-CE (N.T.)
19/2004-CE (N.T.)
(Input &
Input Services)
(Input + Capital Goods
+ Input Services)
Rule-15(6)&(7) /
Section-37
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
(Input)
12
DTA – Goods - Manufacturer
Finished
Goods
Central
Excise
Service
Tax
LUT/Bond
F.G.
Rebate
19/2004-CE
(N.T.)
42/2001-CE
(N.T.) &
45/2001-CE
(N.T.)
(Bhutan)
(01-03-2012)
% on
Services
On FOB
52/2011-ST
Customs
VAT
DBK
All Industry
Rate
No VAT / CST
On Exports
(Traders
Form-H )
68/2011-Cus
(N.T.)
Basically the concept of AIR (DBK) is nothing but a Adhoc Advance Payment of Inputs Duties
reimbursement. If we have not satisfied with AIR (DBK) then we can go for Special Brand
Rate. Incase if there is no AIR (DBK) at all then we can go for fixation of Brand Rate.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
13
DTA – Goods - Manufacturer
Finished
Goods
FTP
Normal
Goods
FMS /
NFMS /
SFMS
93/2009
-Cus
F.P.S./
Sp. FP T&S /
MLFPS/
NFPS/
NSFPS/
NMLFPS/
FPBB/
SBB
92/2009
-Cus
Agri
Goods
S.H.I.S.
104/2009
-Cus
VKGUY
94/2009Cus
Old
(Resciend)
Sp.VKGUY /
New VKGUY /
VKGUY Product /
Target Plus
Agri & Other Product/ DEPB
& DFCEC
97/2009Forest Product /
105/2009Cus
Gram Udyog /
Cus
Oleoresins /
Forest Produce
95/2009-Cus
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
14
Other FTP Benefit
MAI
(Market
Access
Initiative)
MDA
(Market
Development
Assistance)
To P.C.
T.R.
(Expenses
Reimbursement
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
STATUS
(Status
Category)
15
DTA – Goods – Merchant Exporter
Merchant Exporter
All the benefits narrated herein above for
Manufacturer exporter are equally applicable
to Merchant Exporters. In few cases the Merchant
Exporter can directly avail and in few cases
supporting manufacturer can avail.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
16
DEEMED EXPORTS what ?
1. Supply of goods against Advance Authorisation / Advance
Authorisation for Annual requirement / DFIA
2. Supply of goods to EOU / STP / EHTP/ BTP
3. Supply of Capital goods to EPCG Authorisation holders
4. Supply of goods to Projects financed by multilateral or bilateral
Agencies / Funds as notified by DEA / ICB / Supply and
installation of goods and equipment to projects finance by
multilateral or bilateral Agencies / Funds as notified by DEA,
MoF under ICB
5. Fertilizer plants (5TH Five year plan)
6. Supply of goods to any project or purpose which the MoF by a
notification
7. Supply of goods to power projects / refineries
8. Marine freight containers
9. Projects funded by UN Agencies
10.Nuclear power projects / as opposed to ICB
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
17
DTA – Goods – Deemed Exporter
Procurement
of Inputs
Without Duty /
Re-imbursement
Central
Excise
- Annexure-1
(Domestic)(ED)
44/2001-CE (N.T.)
(Free)
Customs
-DBK–Brand
Rate
Rule-6 / 7
(Both Central
Excise /
Customs)
(Re-imbursement)
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
FTP
- Advance
Authorization
96/2009-Cus
99/2009-Cus
- DFIA
98/2009-Cus
(Free)
18
DTA – Goods – Deemed Exporter
Procurement
of Capital
Goods
Without Duty
FTP
EPCG 0% Duty
EPCG 3% Duty
102/2009-Cus
103/2009-Cus
(6/6)
(8/8)
(Free)
(Only 3% Duty)
Deemed Exporter can complete Export Obligation when he clear the
goods to the categories of 10 (of page No. 17) of above
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
19
DTA – Goods – Deemed Exporter
CENVAT Credit / on
Inputs / C.G. / Input Services for the Exporter
Central
Excise
CENVAT
Inputs
Capital
Goods
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
Input
Services
20
DTA – Goods – Deemed Exporter
CENVAT
Central
Excise
Finished Goods
Rebate
TED Refund
(Input + Capital Goods
+ Input Services)
In Some Cases Exemption as per Customs Noti. No. 06/2006 Dt-01-03-2006 as per Sr. 91
& 91-A. In other cases TED Refund (Non Mega Power Projects / Refineries. )
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
21
DTA – Goods – Deemed Exporter
Finished Goods
Received from the AAH
Invalidation + Annexure-1
Clearance without
payment of duties / or
If paid then TED Refund
(without Annexure-1)
Note – Other than Adv. License cases the local Deemed Exporter can also avail
DBK-AIR
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
22
DTA – Services Exporter
Re-Imbursement
of Inputs &
Input Services
Service Tax
Finished Service
Exports
12/2005-ST
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
23
DTA – Services Exporter
Procurement
of Capital
Goods
Without Duty
Central
Excise
FTP
SFIS
SFIS
(Domestic)
(Import)
34/2006-CE
91/2009-Cus
EPCG
0% Duty
EPCG
3% Duty
( 6/6 )
( 8/8 )
102/2009-Cus
103/2009-Cus
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
24
DTA – Services Exporter
CENVAT
Credit
Inputs
Capital
Goods
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
Input
Services
25
DTA – Services Exporter
CENVAT
Refund
Central
Excise
Service Tax
Excess Cenvat
Credit Refund
Finished
Services Rebate
5/2006-CE (N.T.)
11/2005-ST
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
26
DTA – Services Exporter
Finished
Services
Export
Service Tax
FTP
Export of
Services
SFIS
9/2005-ST
91/2009-Cus
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
27
EOU
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
28
EOU
1.
EOU can procure duty free indigenous / imported raw
materials / Capital Goods
2.
HSD Refund (Non CENVATABLE) and CST Refund
available
3.
EOU can clear manufactured goods into DTA. (Duty is
payable 50% C.D.) DTAs Sales from free Procured
Imported R.M. is also available.
4.
All benefits narrated to DTA manufacturers are equally
applicable related to FTP benefits as long as Income
Tax benefits are not claimed (except DBK-AIR / AA /
DFIA / EPCG).
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
29
SEZ
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
30
SEZ
• The First FTZ in India came up in 1965
• Later, the Government set up five more multiproduct EPZs
• SEZ policy in April 2000
• The Parliament passed the SEZ Act in 2005, which came
into force together with the SEZ Rules,2006 on the 10th of
February 2006.
• SEZs territories deemed to be outside the customs territory
of India.
• The special status given to SEZs under section 53 of SEZ
Act as areas deemed to be outside the Custom territory of
India is for the limited purpose of conducting the authorized
operations and to facilitate the import export activities in a
simplified manner.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
31
SEZ
Special Provisions / Important Provisions of
SEZ Act / Rules etc.
• Section-2(m) Supplies to SEZs and intra or inter-SEZ
supplies qualify as physical exports and are
eligible for export benefits
• Section : 07 Imports Exports exempted from duties &
taxes
• Section : 26 Special fiscal benefits
• Section : 27 Income tax benefits
• Section : 30 Levy of duties
• Section : 51 Over-riding effect of SEZ Act
• Section : 53 SEZ as deemed foreign territory & Port
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
32
SEZ
• Rule : 11
Demarcation and fencing of SEZ and leasing
premises
• Rule : 24
Procedure for export benefits on supplies from
DTA
• Rule : 27
Imports and procurements
• Rule : 30(8) Reimbursement of Duty (RoD) in lieu of
drawback for supply of goods to developers
against payment in Indian Rupees
• Rule : 41
Sub-contracting
• Rule : 45
Exports
• Rule : 46(1) ‘Let Export’ order is given on the basis of
self certification
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
33
SEZ
• Rule : 46(10)
Exports through a merchant
exporter or a
status holder is
permitted subject to the
requirements
• Rule : 46(11)
Procedure for third party
exports
• Rule : 47
DTA Sales
• Rule : 53
Foreign exchange earning
requirements
• Rule : 75
Self-clearances
Prepared & Presented By 34
Sreeram Kaza Dated-31-01-2012
• Rule : 76
Trading for the purposes
SEZ
• Instruction :11 Transfer from DTA of used capital goods
• Instruction :59 Inter-SEZ transfer of units
• Instruction No.68, 70, 11: Transfer of used Capital Goods:
There are no provisions in the SEZ Act / Rules preventing
transfer of old capital goods. The only deterrent is nonavailability of Income Tax exemption where the value
exceeds 20% of the total capital goods installed in a year.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
35
SEZ
Indirect Tax exemptions
1) Exemption from Customs duties on imports.
2) Exemption from Central Excise duties.
3) Exemption from payment of Central Sales Tax on sale
or purchase of goods (other than newspapers) under
Central Sales Tax Act, 1956.
4) Exemption from Service Tax, education cess and
secondary and higher education cess leviable on
services received by units.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
36
SEZ
Services from DTA to SEZ ( Notification No. 17/2011-ST Dt-01-03-2011)
Group of
Services
Exempted
Payable
Refund can be
obtained or not
Group -I
Services are exempted
If - the property situated
at SEZ
Payable if – the
property is not
situated at SEZ
Refund can be
applied after
making payment
of Service Tax
Group-II
Services are exempted
If - the Services are
performed at SEZ
Payable if – the
Services are not
performed at
SEZ
Refund can be
applied after
making payment
of Service Tax
Group-III
Services are exempted
If - the SEZ units is
Exclusively situated at
SEZ (No Business outside)
Payable if – the
SEZ has Business
outside the SEZ
also
Refund can be
applied after
making payment
of Service Tax
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
37
SEZ
• Are you ( from DTA ) sending your goods to SEZ unit or
developer ?
• Need not to pay the excise duty. ( it is like a normal physical exports
to you). or incase if your wish to pay the duty, you can obtain the
rebate of Central Excise duty paid under rule 18 of the Central
Excise Rules, 2002.
1. Circular : 6/2010 – cus dated 19 th March , 2010. ( related to rule 18 rebates)
2. Definition is mentioned in the section 2 (m) of the SEZ Act, 2005.
3. Exemption for excise duty on goods supplied from DTA to an SEZ unit or
developer as per section 26 (c).
4. Over riding effect to the provisions of the SEZ Act over any other law is as per
Section 51.
5. Procedure is mentioned in regard to removal as per rule 30 of SEZ Rules 2006.
6. Exemption is also specifically told in the CBEC circular 29 / 2006 – cus dated 2nd
December, 2006.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
38
SEZ
• Sale by DTA ( Gujarat ) to SEZ (Gujarat )
:
No VAT by the DTA ( as per section 5 A of Gujarat VAT Act,
2003 )
• Sale by DTA (Gujarat) to SEZ (for e.g. say Mumbai) :
Sale against Form – I ( No VAT by the DTA) ( section 8 (8)
of CST Act, 1956 )
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
39
SEZ
• Even SEZ can get the DBK Subject to NOC Received
from DTA. (Circular No 39/2010-Customs Dated : 15-102010)
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
40
SEZ
• As per Rules 30 (4) of SEZ rules 2006 the rewarehousing certificate to be received within 45 days.
Receipt of both the customs endorsed Bill of Export,
copy of ARE-1 are called as re-ware housing certificate.
• Incase if you dispatch without receipt of the bill of export
to the SEZ, then we loose the exports EXIM benefits.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
41
SEZ
SEZ inward Transaction
Import Into
SEZ
DTA to
SEZ
EOU / SEZ
To SEZ
Customs Duty
---
---
---
Excise Duty
---
---
---
Service Tax
---
Note – See page No.
37
---
VAT / CST
---
---
---
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
42
SEZ
SEZ Outward Transaction
Exports
From SEZ
SEZ to
DTA
SEZ to
EOU
Customs
Duty
---
Payable at
Effective Rate (All
Customs duties
including CVD)
100% EOU has to file Bill of
Entry at SEZ Customs..
EOU Provide Procurement
Certificate to SEZ.
Excise Duty
---
---
---
Service Tax
---
SEZ has to pay
SEZ has to pay
---
Payable (In case if
VAT Payable No
SAD)
Payable (In case if VAT
Payable No SAD)
VAT / CST
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
43
SEZ
Foreign Trade Incentives to DTA Supplier
1. Adv. Authorization / DFIA
Yes
2. EPCG
Yes
3. DBK
Yes
4. Focus Product Scheme (FPS)
Yes
5. Focus Market Scheme (FMS)
No
6. Served from India Scheme (SFIS)
No
7. SHIS
No
• SEZ will not get any incentives upon Exports from SEZ to foreign
countries.
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
44
Direct Tax
DTA
EOU / STP /
EHTP / BTP
SEZ
Section-10AA
Available
Section-80HHC
Section-10A / 10B
Omitted w.e.f.
AY-2005-06
Omitted w.e.f.
AY-2012-13
-100% Profits forFirst 5 AYs
-50% Profits for Next 5 AYs
-50% Profits for Next 5 AYs *
* Provided special reserve
Is to be created
MAT is introduced from AY
2012-13 @18.50% on SEZ profits
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
45
Various Routine CA Certificates to be obtained under FTP/Refund Cases/Taxation
Sr. No
Appendix/ Forms/Notification/Public Notice
Purpose
Licence/ Scrip
Stage
1.
ANF 3A
Status Holder Certificate
Status Certificate
At the time of application
2.
ANF 3B
Served From India
SFIS Scrip
At the time of application
3.
ANF 3D
Agri Infrastructure Incentive
VKGUY
At the time of application
4.
ANF 3E
Status Holder Incentive Scrip
SHIS Scrip
At the time of application
5.
Appendix 11 A
Production consumption data
Advance License
At the time of application
6.
Appendix 14-I-I
For CST reimbursement
CST Refund
At the time of Refund application
7.
Appendix 14-I-F
Legal Agreement for EOU
Guidelines
With Annual Report
8.
Appendix 14-I-H
Permission for Sale of goods in DTA by EOU
Permission
At the time of application
9.
Appendix 15 A
For duty free Import of R&D Equipments
Duty Free Import Allowance
Certificate
At the time of application
10.
Appendix 15 B
Export Performance of non EOUs Other than
Pharma & Biotechnology Sectors
Duty Free Import Allowance
Certificate
At the time of application
11.
Appendix 19 A
Authority letter to be present in meetings on
behalf of company
FIEO membership
Appendix 22 D
Certificate for OFFSETTING of Export Proceeds
In lieu of Bank Certificate of
Exports and realization
At the time of application
12.
13.
Appendix 23
For RM Consumption
Advance Licence
At the time of Redemption of Licence
14.
Appendix 26
For EPCG License past 3 years Exports
performance
EPCG Licence
At the time of application
15.
Appendix 26 A
Records verification confirmation
EPCG Licence
At the time of Redemption of EPCG Licence
16.
Appendix 35
DBK Claim (AIR)/Fixation of DBK claim/ TED
Refund
Deemed Exports DBK/Refund
At the time of application
17.
Customs Public Notice No. 37/2011
Realization made against Exports under DBK
(AIR)
DBK (AIR) Exports realization
If more than Six months period is involved
18.
Customs Public Notice No. 23/2010
Factory Stuffing Permission
Permission
At the time of application
19.
CBEC circular 16/2008 & JNPT P.N. 53/2010
4% SAD Refund Claim
Refund Claim
At the time of Refund application
At the time of application
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
46
Various Routine CA Certificates to be obtained under FTP/Refund Cases/Taxation
Sr. No
Appendix/
Notice
Forms/Notification/Public
20.
CBEC
Circular
19.01.10
21.
Purpose
Licence/ Scrip
Stage
Refund of Unutilized CENVAT credit of
Inputs and Services (Rule 5)
Refund
At the time of Refund application
Service Tax Notification No. 52/2011
For obtaining Service Tax Refund on actual
basis
Refund claim
22.
Form No. 217 (As per Section 63)
For VAT audit report
Audit Report
At the time of submission of audit report
23.
Section 44AB of Income Tax Act
Tax audit report
Audit Report
At the time of submission of audit report
24.
Form No. 10CCAC/10CCB of Income
Tax Act
Certificate for claiming Exemption in respect
of Area Based units
Certificate
At the time of application
25.
Form No. 15CB of Income Tax Act
For import of Services
Certificate
At the time of remittance
120/01/2010
dtd.
At the time of Refund application
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
47
Thanks
Prepared & Presented By Sreeram Kaza Dated-31-01-2012
48