Importer has to provide a ‘no incentive certificate’ from RA of DGFT before clearance of re-import of exported goods

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The issue regarding recovery of export benefits given under incentive and reward schemes under Chapter 3 of Foreign Trade Policy (FTP) on re-import of exported goods has been highlighted by C&AG of India via Notifications No.94/1996-Cus dated December 16, 1996, No.45/2017- Cus, No.46/2017-Cus and No.47/2017-Cus all dated June 30, 2017. In the audit observation by C & AG, it was inter-alia pointed out that there was no provision in the Customs notification to recover the duty credit given under reward and incentive schemes under Chapter 3 of FTP at the time of re-import of such goods on which such benefit has been availed at the time of export.

CBIC vide Instruction No. 03/2019-Customs dated August 13, 2019 has examined and consulted with Directorate General of Foreign Trade (“DGFT”), which administers the reward schemes under Chapter 3 of FTP as under:

  • DGFT has informed that RBI Master Direction on exports and imports issued vide F.No. RBI/2006-2007/313 A.P. (“DIR Series”) Circular No.37 dated April 5, 2007, already has a provision regarding refund of incentives taken from DGFT for such re-imports.
  • DGFT has also informed that as per para 3.24 of Handbook of Procedures issued under FTP 2015-20, a procedure for obtaining ‘no incentive certificate’ from Regional Authority (“RA”) of DGFT has been prescribed for such cases of re-import.

Thus, it is incumbent upon the importer to provide a no incentive certificate from RA of DGFT at the time of re-import of exported goods. Accordingly, it is reiterated that before allowing clearance in cases of re-import of exported goods, a ‘no-incentive certificate’ from the respective RA of DGFT shall be ensured by Customs field formations.

Further, field formations should review past cases of re-import of exported goods and take necessary action for recovery of inadmissible duty credit, if any, in coordination with DGFT authorities. A compliance report may please be sent to Drawback Division by September 30, 2019.

Note:

These instructions may be brought to the notice of all concerned by issuing suitable Standing Order and Trade Notice.

Complete instruction can be accessed at: http://www.a2ztaxcorp.com/wp-content/uploads/2019/08/cs-ins-03-2019.pdf