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.
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