CHAPTER V

LEGISLATIVE FRAMEWORK GOVERNING SPECIAL ECONOMIC

ZONES

5.1 INTRODUCTION

The growing needs of modern States and increasing public expenditure have

made new sources of revenues essential. World War I left heavy financial burden on

most of the States. Changing economic, political and social environments made it

important for reformation of ‘Fiscal systems’. Moreover, Governments outlay on

infrastructural developments and support the economy made it imperative for the

Governments to look for various sources of revenues. Taxation has become

inevitable and the source of revenue to equalize the needs of the economy.54

5.2. EXPORT PROMOTION POLICIES

The increasing trade deficit during the Second Five Year Plan pointed the need

to promote export and since the middle of Second Plan period, a series of measures

had been initiated with the object of stepping up exports. These included

organizational changes, increased facilities and incentives and diversification of trade.

Export promotion received considerable attention in India only since the Third Five

Year Plan. The rationale, efficacy and adequacy of different export promotion

measures and their implementation have been subjected to several criticisms. A

number of committees and particularly, Committee on Export Promotion Schemes

have examined trade policies, procedures, promotional schemes etc., and in light of

their recommendations efforts have been made to improve the system. A number of

measures have been taken to promote exports. These include liberalization of

industrial import policies to encourage production of export goods, development of

54 Business Taxation, T.S.Reddy, Y.Hari Prasad Reddy, Margham Publications, Chennai, 2008

export processing zones (EPZ), promotion of hundred percent export oriented units

(EOU), rationalization and simplification schemes of export assistance and incentives

etc. The Economic policy of 2002-07 has laid great importance on Special Economic

Zones (SEZs) which is a new incarnation of Export Promotion Zones and Export-

oriented Units. Reforms are sought to improve export promotion in the form

withdrawal of Annual Advance Licence, Export promotion of Capital Goods etc,

certainly make export promotion more viable in the up-liftment of economy.

5.3. EMERGING GLOBAL SCENARIO

The new foreign trade policy takes an integrated view of the overall

development of Indian foreign trade and essentially provides a roadway for the

development of the sector. The major objective is to double India’s share of global

merchandise trade. As a part of the export promotion drive, government has, from

time to time, introduced several schemes to promote units primarily devoted to

exports. These include Export processing Zones (EPZs), hundred percent Export-

Oriented Industrial Units (EOUs), and different categories of Technology Parks (TPs).

5.4. SPECIAL ECONOMIC ZONES

Export Processing Zones can be defined as Industrial Zones with special zones

incentives, which are being setup to attract foreign investors. Export Processing can

be defined as delineated industrial estate, which constitutes a free trade enclave in the

customs and trade regime of the country. In this regime foreign manufacture firms

which produce mainly for the export, benefit from certain tax and financial incentives.

A Special Economic Zone may be setup in the Public, Private, joint sector or by State

Government as notified by the Ministry of Commerce and Industry. The existing

Export Processing Zones may also be converted into Special Economic Zone by the

Ministry of Commerce and Industry through issue of a notification. SEZ units are

established for manufacture of goods and rendering of services, production,

processing assembling, trading, repair, remaking, reconditioning, re-engineering

including making of gold, silver, platinum jewellery and articles. Units in Special

Economic Zones are permitted to export goods and services including agro-products,

partly processed jewellery, sub-assemblies and component including by-products,

rejects, waste scrap arising out of the production process.

The demanding and growing global need it becomes inevitable that export

trade had to be prioritized. The export trade is governed by various legislations and

rules. Some of the legislative measures are; Export (Quality Control And Inspection)

Act, 1963, Foreign Contribution (Regulation) Act, 1976, Foreign Trade (Development

& Regulation) Act, 1992 Carriers Act, 1865 , Central Excise Act, 1944, Conservation

of Foreign Exchange & Prevention of Smuggling Activities Act, 1974 , Customs Act,

1962, Foreign Exchange Management Act, 1999. To administer various Acts, rules

are framed and administrative authorities are appointed.

5.7. THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992

5.7.1. OBJECTIVES

The Act is to provide for the development and regulation of foreign trade by

facilitating imports into, and augmenting exports from India and for matters

connected therewith or Incidental thereto. The act came into force on the 19th day of

June 1992. The act empowers the central government to make orders and announce

Export and Import Policy. According to the Act a Director General of Foreign Trade

for the purpose of Foreign Trade, its development and regulation is appointed by the

Central Government. The Director General shall advise the Central Government in

the formulation of the export and import policy and shall be responsible for carrying

out that policy. No export or import shall be made by any person except in

accordance with the provisions of this Act, the orders and rules made under this Act

and the export and import policy.

5.7.3. DEVELOPMENT AND REGULATION

The Foreign Trade Development and Regulation Act empower the Central

Government to make provision for the development and regulation of foreign trade by

facilitating and increasing exports. The Act also empowers the Central Government

to make provision for prohibiting, restricting or otherwise regulating the import or

export of goods as and when required. All goods which are so regulated under this

sub-section shall be deemed to be goods the import or export of which has been

prohibited under the Customs Act, 1962, and all provisions of that Act shall have

effect accordingly. It may be noted that it is according to this sub-clause that the

Government has provided for negative lists of exports and imports in the Exim Policy.

5.7.5. EXIM POLICY

The Act lays down that the Central Government may, from time to time,

formulate and announce the export and import policy and may also amend that policy.

5.7.6 DIRECTOR GENERAL OF FOREIGN TRADE

The Act provides for the appointment by the Central Government, of a

Director General of Foreign Trade for the purpose of this Act. The Director General

of Foreign Trade shall advice the Central Government, in the formulation of the

export and import policy and shall be responsible for carrying out that policy.

5.7.7. IMPORT EXPORTER CODE NUMBER

The Act lays down that no person shall make any import or export except

under an Importer-Exporter Code (IEC) Numbers granted by the Director General of

Foreign Trade or the Officer authorized by him in this behalf. The Director General is

empowered to suspend or cancel the Importer-Exporter Code Number granted to any

person if there is valid reason to do so, like contravention of law relating to Central

excise or customs or foreign exchange or having conducted import/export in a manner

gravely prejudicial to the trade relations of India with any foreign country or in a way

detrimental to the interests of the country.

5.7.8. ISSUE AND SUSPENSION/CANCELLATION OF LICENSE

The Director General any other officer authorized under this Act is

empowered to suspend or cancel a license issued for export or import of goods in

accordance with this Act for good and sufficient reasons, after giving the license

holder a reasonable opportunity of being heard.

5.7.9. SEARCH INSPECTION AND SEIZURE

Where any contravention of any condition of the license or letter of authority

under which any goods are imported is suspected or made, any person authorized by

the Central Government may search, inspect and seize such goods, documents, things

and conveyances subject to such requirements and conditions may be prescribed.

5.7.10. PENALTY FOR CONTRAVENTION

Where any person makes or abets or attempts to make any export or import in

contravention of any provisions of this Act or any rules or orders made under this Act

or the Exim Policy, he shall be liable to a penalty not exceeding one thousand rupees

or five times the value of the goods involved whichever is more.

5.8. THE CONSERVATION OF FOREIGN EXCHANGE AND PREVENTION

OF SMUGGLING ACTIVITIES ACT, 1974

One of the major problems affecting foreign trade is smuggling. Violations of

foreign exchange regulations and smuggling activities are having an increasingly

deleterious effect on the national economy and thereby a serious adverse effect on the

security of the State. An Act to provide for preventive detention in certain cases for

the purposes of conservation and augmentation of foreign exchange and prevention of

smuggling activities and for matters connected therewith. The act extends to the

whole of India.

5.8.1. OBJECTIVES

The Act was enacted with a view to prevent:

(i) smuggling goods,

(ii) abetting the smuggling of goods,

(iii) engaging in transporting or concealing or keeping smuggled goods,

(iv) dealing in smuggled goods otherwise than by engaging in transporting

or concealing or keeping smuggled goods,

(v) harbouring persons engaged in smuggling goods or in abetting the

smuggling of goods,

(vi) Order for detention of such persons engaged in smuggling goods or in

abetting the smuggling of goods.

5.9. FOREIGN EXCHANGE MANAGEMENT ACT, 199955

The Central Government decided to review the Foreign Exchange Regulation

Act in the light of developments and experience in relation to foreign trade and

investment. It was at that time felt, that a better course would be repeal the Foreign

Exchange Regulation Act and enacts a new legislation. Taking into consideration the

developments such as substantial increase in foreign exchange reserves, growth in

foreign trade, rationalization of tariffs, current account convertibility etc. the Foreign

Exchange Management Bill, to repeal and replace the Foreign Exchange Regulation

55 Economic, Labour and Industrial Laws, The Institute Of Company Secretaries of India, New Delhi.

Act was introduced in the Lok Sabha. But before the bill came up for discussion and

approval, the Lok Sabha was dissolved. Subsequently, certain modifications were

made to the original Bill and a modified Bill was presented and passed by both the

Houses of Parliament. The Foreign Exchange Management Act received the assent of

the President on 9th December, 1999 and brought into force with effect from June 1st

2000. The Act defines various terms used in the Act. Some of the definitions of the

Act:

5.9.1. CAPITAL ACCOUNT TRANSACTION

Capita account transaction has been defined to mean any transaction which

alters the assets or liabilities including contingent liabilities, outside India of persons

resident in India or assets or liabilities in India of person resident outside India. The

Act empowers the Reserve Bank of India to specify, in consultation with the Central

Government, any class or classes of capital account transactions permissible and the

limit up to which foreign exchange shall be admissible for such transactions.

5.9.2. PERMISSIBLE CAPITAL ACCOUNT TRANSACTIONS

Schedule I and II to Foreign Exchange Management (Permissible Capital Account

Transactions) Regulations, 2000 classifies the capital account transactions of a person

under the following two heads viz.

1. Classes of capital account transactions of persons resident in India

2. Classes of capital account transactions of person are resident outside India.

5.9.3. CLASSES OF CAPITAL ACCOUNT TRANSACTIONS OF PERSONS

RESIDENT IN INDIA

(a) Investment by person resident in India in foreign securities;

(b) Foreign currency loans raised in India and abroad by a person resident

in India;

(c) Export, Import and holding of currency/currency notes;

(d) Loans and overdrafts by a person resident in India to a person resident

outside India;

(e) Remittance outside India of capital assets of a person resident in India;

5.9.4. CLASSES OF CAPITAL ACCOUNT TRANSACTIONS OF PERSONS

RESIDENT OUTSIDE INDIA

1. Investment in India by a person resident outside India, that is to say:

(a) Issue of security by a body corporate or an entity in India and investment

therein by a person resident outside India; and

(b) Investment by way of contribution by a person resident outside India to the

capital of a firm or a proprietorship concern or an association of persons in India.

2. Import and Export of currency/currency notes into/from India by a person resident

outside India.

5.9.5. CURRENT ACCOUNT TRANSACTION

The term current account transaction has been defined to mean a transaction

other than a capital account transaction and includes payments due in connection with

foreign trade, other current business, services and short term banking and credit

facilities in the ordinary course of business; payments due as interest on loan and as

net income from investments; remittances for living expenses of parents, spouse and

children residing abroad and expenses in connection with foreign travel, education

and medical care of parents, spouse and children.

5.9.6. FOREIGN EXCHANGE

The term foreign exchange mean foreign currency and includes deposits,

credits, balance payable in foreign currency, drafts, travellers cheques, letters of

credit, bills of exchange expressed or drawn in Indian currency but payable in any

foreign currency. Any draft, travellers cheque, letters of credit or bills of exchange

drawn by banks, institutions or persons outside India but payable in India currency

has also been included in the definition of foreign exchange.

5.9.7. FOREIGN SECURITY

Foreign Security has been defined as to mean any security, in the form of

shares, stocks, bonds, debentures or any other instrument denominated or expressed in

foreign currency and includes securities expressed in foreign currency but where

redemption or any form of return such as interest or dividend is payable in Indian

currency.

5.9.8. AUTHORIZED PERSON

It includes an authorized dealer, money changer, off-shore banking unit or any

other person for the time being authorized to deal in foreign exchange,

5.9.9. FINANCIAL TRANSACTION

Financial transaction has been defined to mean making any payment to or for the

credit of any person or receiving any payment for, by order or on behalf of any

person. Financial transactions also include drawing, issuing or negotiating any bill of

exchange or promissory note or transferring any security or acknowledging any debt.

5.9.10. REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE

Authorized persons are alone authorized to deal in foreign exchange

transaction that is transferring any foreign exchange or foreign security to any person

or making any payment to or for the credit of any person resident outside India in any

manner or receiving otherwise through an authorized person any payment by order or

on behalf of any person resident outside India. General or special permission of the

Reserve Bank of India has to be obtained.

The Act also prohibits a person to enter into any financial transaction in India

as consideration for or in association with acquisition or creation or transfer of a right

to acquire, any asset outside India by any person, except as otherwise provided in Act

and Rules or regulations.

The act allows any person to sell or draw foreign exchange to or from an

authorized person if such sale or drawal is a current account transaction which is

defined by the Act. The Act prohibits the drawal of foreign exchange of the following

transactions.

• Remittance out of lottery winnings.

• Remittance of income from racing/riding etc. or any other hobby.

• Remittance for purchase of lottery tickets, banned/prescribed magazines,

football pools, sweepstakes etc.

• Payment of commission on exports made towards equity investment in Joint

Ventures/Wholly Owned Subsidiaries abroad of Indian Companies.

• Remittance of dividend by any company to which the requirement of dividend

balancing is applicable.

• Payment of commission on exports under Rupee State Credit Route.

• Payment related to Call Back Service or telephone.

• Remittance of interest income on funds held in Non-resident Special Rupee

Account Scheme.

• Prior approval of Government of India is to be sought for the drawal of foreign

exchange for the transactions specified in Schedule II.

• Prior approval of Reserve Bank of India is to be sought for the drawal of

foreign exchange for the transaction specified in Schedule III.

The Reserve Bank of India may, by regulations, prohibit, restrict or regulate

the transfer of issue of any foreign security by a person resident in India or by a

person resident outside India. Reserve Bank of India may also regulate, prohibit or

restrict transfer of issue of any security or foreign security through any branch office,

or agency in India of a person resident outside India. Any borrowing or lending in

foreign exchange in whatever form or by whatever name called may also be regulated

or prohibited by the Reserve Bank. Similarly, RBI may also prohibit or restrict any

borrowing or lending in rupees in whatever form or by whatever name called between

a person resident in India and a person resident outside India. Deposits between

person’s resident in India and person’s resident outside India may be regulated or

prohibited by the Reserve Bank of India. RBI also regulates the export, import or

holding of currency or currency notes.

5.9.11. DIRECT INVESTMENT OUTSIDE INDIA

5.9.11. i. Prohibition on Direct Investment outside India

The Act prohibits Direct Investment outside India by a resident in India

without the prior approval of Reserve Bank of India, and no Indian party can make

any direct investment in a foreign entity engaged in real estate business or banking

business.

5.9.11. ii. Permission for Direct Investment in Certain Cases

An Indian party may make direct investment in a joint venture or wholly

owned subsidiary outside India.

5.9.11. iii. Funding of the Investment

FEMA Regulation allows an Indian party to fund the investment out of one or

more of the sources. An Indian party has also been allowed to extend a loan or

guarantee to or on behalf the join venture/wholly owned subsidiary abroad within the

permissible financial commitment, provided that it has made by way of equity capital

of the join venture.

An Indian party may make direct investment without any limit in any foreign

security out of the proceeds of its international offering of shares through the

mechanism of ADR and /or GDR, subject to the condition that the ADR/GDR issue

has been made in accordance with the Scheme for issue of Foreign Currency

Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism)

Scheme, 1993 and the guidelines issued there under from time to time by the Central

Government; and the Indian party files with Reserve Bank, in Form ODA full details

of the investment made, within 30 days of such investment.

5.9.11.i5. Investment in Financial Service Sector

An Indian party engaged in the financial services activities, also make

investment in an entity outside India engaged in financial services activities.

5.9.11.5. Investment in a Foreign Security by Swap or Exchange of Shares

of an Indian Company

An Indian party may acquire shares of a foreign country engaged in the same

core activity in exchange of ADRs/GDRs issued to the latter in accordance with the

scheme for issue of Foreign Currency Convertible Bonds(FCCB) or other shares

through Depository Receipt Mechanism Scheme 1993 and governed by guidelines

issued by Government of India in this respect.

5.9.12. EXPORT OF GOODS TOWARDS EQUITY

An Indian Party exporting goods/software/plant and machinery from India

towards equity contribution in a joint venture or wholly owned subsidiary outside

India is required to declare it on GR/SDF/SOFTEX form, as the case may be to be

super scribed as “Exports against equity participation in the Joint Venture/Wholly

Owned Subsidiary abroad”, and also quoting Identification Number if already allotted

by Reserve Bank.

5.9.13. EXPORT OF GOODS AND SERVICES

The Act specifies that Section every exporter is required to furnish to Reserve

Bank or any other authority as prescribed, a declaration containing true and correct

particulars, including the amount representing the full export value or if the full export

value of goods is not ascertainable at the time of export, the value which the exporter

having regard to prevailing market conditions expects to receive on sale of the goods

in a market outside India. Every exporter is also under obligation to furnish such

other information as may be required by the Reserve Bank for the purpose of ensuring

the realization of the export proceeds.

5.9.14. DECLARATION AS REGARDS EXPORT OF GOODS AND SERVICES

Every exporter of good or software, in physical form or through any other

form either directly or indirectly to any place outside India, other than Nepal and

Bhutan, is required to furnish to the specified authority a declaration in the prescribed

form. In respect of the export of services to which none of the forms specified apply,

the exporter may export such services without furnishing any declaration.

5.9.15. EXPORT OF GOODS OR SERVICES WITHOUT DECLARATION

Export of goods or services may be made without furnishing the declaration in the

following cases names:

1. Trade samples of goods and publicity material supplied free of cost;

2. Goods or software accompanied by a declaration by the exporter that they are

not more than twenty five thousand rupees in value;

3. Aircrafts or aircraft engines and spare parts for overhauling and/or repairs

abroad subject to their re-import into India after overhauling/repairs, within a

period of six months from the date of their export;

4. Goods imported free of cost on re-export basis;

5. The goods which are permitted by the development commissioner of the

Export Processing zones, EHTP, ESTP or Free Trade Zones to be re-exported.

These include imported goods found defective, for the purpose of their

replacement by the foreign suppliers/collaborators; goods imported from

foreign suppliers/collaborators on loan basis; goods imported from foreign

suppliers/collaborators free of cost, found surplus after production operations.

These goods may also be re-exported by the units in SEZ, under the intimation

of Development Commissioner of SEZ/concerned Assistant Commissioner or

Deputy Commissioner of Customs.

6. Replacement of goods exported free of charge in accordance with the

provisions of Exim Policy in force, for the time being.

7. Goods sent outside India for testing subject or re-import into India.

8. Defective goods sent outside India for repair and re-import provided the goods

are accompanied by a certificate from authorized dealer in India that the

export is for repair and re-import and that the export does not involve any

transaction in foreign exchange.

9. Export permitted by Reserve Bank of India.

5.9.16. CERTAIN EXPORTS REQUIRING PRIOR APPROVAL

• Export of Goods on Lease, Hire, etc.

• Exports under Trade Agreement/Rupee Credit, etc.

• Counter Trade

• Project Exports

5.9.17. CONTRAVENTION AND PENALTIES

Any person contravening any provision of the Act, or any condition subject to

which the authorization is granted by the Reserve Bank India, shall be liable for

penalty upon adjudication. In addition to the powers to impose penalty, the

Adjudicating Authority, adjudging any contravention is empowered to confiscate the

Government of India any currency, security or any other money or property in respect

of which the contravention has taken place.

5.9.18. DIRECTORATE OF ENFORCEMENT

The Central Government has also been empowered to authorize Director,

Additional Director, Special Director or Deputy Director to appoint officers of

enforcement below the rank of Assistant Director of Enforcement to exercise the

powers and discharge the duties conferred or imposed on him under the Act.

5.9.19. INVESTIGATION

The Act empowers the Director of Enforcement and other officers below the

rank of an Assistant Director to take up for investigation the contravention. In

addition, the Central Government, State Government, Reserve Bank of India, not

below the rank of Under Secretary to Government of India, to investigate any

contravention.

5.10. FOREIGN CONTRIBUTION (REGULATION) ACT, 1976

In view of widespread concerns about the unregulated receipt of funds from

foreign agencies by individuals and agencies in the country, the Government enacted

Foreign Contribution (Regulation) Act, 1976 to regulate the acceptance and utilization

of foreign contribution or foreign hospitality by certain categories of persons or

associations. Precisely, the preamble to the Act states the object of enactments as “An

act to regulate the acceptance and utilization of foreign contribution or foreign

hospitality by certain persons or associations, with a view to ensuring that

Parliamentary institutions, political associations and academic and other voluntary

organizations as well as individuals working in the important areas of national life

may function in a manner consistent with the values of a sovereign democratic

republic, and for matters connected there with or incidental thereto”.

The Act extends to the whole of India and also applies to citizens of India

outside India, associates, branches or subsidiaries outside India of companies or

bodies corporate registered or incorporated in India. However, the provisions of the

Act are not applicable to any transaction between the Government of India and the

Government of any foreign country or territory.

The Act came into force with effect from August 5, 1976. With a view to

removing certain inadequacies and practical difficulties in the administration of this

Act, the Government introduced the Foreign Contribution (Regulation) Amendment

Act, 1985. The Act specifies that the provisions are in addition to, and not in

derogation of, any other law for the time being force in various parts of India.

5.10.1. REGULATION OF FOREIGN CONTRIBUTION AND FOREIGN

HOSPITALITY

The act imposes restrictions on acceptance of foreign contribution by

candidate for election, correspondent, columnist, cartoonist, editor, owner, printer or

publisher of a registered newspaper, judge, government servant or employee of any

corporation, member of any legislature, and political party or office-bearer thereof.

No person resident in India and no citizen resident outside India, shall accept

any foreign contribution, or acquire, or agree to acquire any currency from a foreign

source, on behalf of any political party, or any person, prohibited from accepting any

foreign contribution.

No person resident in India shall deliver any currency whether Indian or

foreign which has been accepted from any foreign source, to any person if he knows

or has reasonable cause to believe that such other person intends or is likely to deliver

such currency to any political party or any person prohibited from accepting any

foreign contribution.

Imposes restrictions on a citizen of India, resident outside India from

delivering currency whether Indian or foreign which has been accepted from any

foreign source to any political party or person prohibited from accepting foreign

contribution or to any person if he knows or has reasonable cause to believe that such

other person intends or is likely to deliver such currency to a political party or to any

such person.

5.10.2. EXEMPTIONS TO PERSONS ON WHOM RESTRICTION HAS BEEN

IMPOSED FOR ACCEPTANCE OF FOREIGN CONTRIBUTION PROVIDED

THE CONTRIBUTION HAS BEEN ACCEPTED

• By way of salary, wages or other remuneration due to him or to any group of

persons working under him, from any foreign source or by way of payment in

the ordinary course of business transacted in India by such foreign source;

• By way of payment, in the course of international trade or commerce, or in the

ordinary course of business transacted by him outside India; or

• By way of remittance received, in the ordinary course of business, through any

official channel, post office, or any authorized dealer in foreign exchange

under the Foreign Exchange Regulation Act, 1973.

5.10.3. APPLICATION FOR PRIOR PERMISSION TO ACCEPT FOREIGN

CONTRIBUTION

The act requires every individual, association, organization or other person

who is required under the Act to obtain prior permission of the Central Government to

accept any foreign contribution or foreign hospitality, to make an application for such

permission to the Central Government in such form and in such manner as may be

prescribed under the rules.

5.10.4. POWER OF THE CENTRAL GOVERNMENT TO PROHIBIT PAYMENT

OF CURRENCY

The act empowers the Central Government to prohibit the payment, delivery,

transfer or otherwise dealing with any article or currency whether Indian or foreign,

which as been received by any person in contravention of any provisions of the Act.

5.01.5. PENALTY AND PUNISHMENT

The Act imposes penalty on the person on whom any prohibitory order has

been served under the Act. It provides for punishment with imprisonment for a term

which may extend to 5 years or with fine or with both for accepting or assisting any

person, political party or an organization in accepting a foreign contribution or any

currency from a foreign source in contravention of the provisions of the Act.

5.11. THE EXPORT (QUALITY CONTROL AND INSPECTION) ACT, 1963

One of the major factors that contribute to the growth of foreign trade is the

quality. To maintain strict standards and quality of goods for exports to compete in

the world market the Government India promulgated the Act, the Export (Quality

Control and Inspection) Act.

An Act to provide for the sound development of the export trade of India

through quality control and inspection and for matters connected therewith.

5.11.2. ESTABLISHMENT OF EXPORT INSPECTION COUNCIL

The Central Government by notification in the Official Gazette established a

Council to be known as the Export Inspection Council. Director of Inspection and

Quality Control is appointed by the Central Government.

5.11.4. FUNCTIONS OF THE COUNCIL

The functions of the Council are generally advisory to the Central

Government.

To advise regarding measures for the enforcement of quality control and

inspection in relation to commodities intended for export.

To draw up developmental programmes with the concurrence of the Central

Government.

The Council may also constitute specialist committees for conducting

investigations on special problems connected with its functions.

The Council is bounded by directions of the Central Government in the

performance of its functions.

5.11.5. POWERS OF THE CENTRAL GOVERNMENT IN REGARD TO

QUALITY CONTROL AND INSPECTION

Notify commodities which shall be subject to quality control or inspection or

both prior to export;

Specify the type of quality control or inspection which will be applied to a

notified commodity;

Establish, adopt or recognize one or more standard specifications for a notified

commodity;

Prohibit the export of a notified commodity unless it is accompanied by a

certificate issued certifying that the commodity satisfies the conditions relating

to quality control or inspection, or it has affixed or applied to it a mark or seal

recognized by the Central Government as indicating that it conforms to the

standard specifications applicable.

5.11.6. POWERS OF CENTRAL GOVERNMENT

Power to recognize or establish marks to denote conformity with standard

specifications

Power to obtain information from exporters etc.

Power to enter and inspect

Power to seize commodities etc

Power to seize conveyances

Search and seizure to be made in accordance with the Code of criminal

Procedure 1973

Power to confiscate

Power to confiscate conveyance

Continuance of proceedings in the event of death or insolvency of the person

Power to prosecute Suspension etc. of operation of the provisions of the Act.

Power to suspend etc. of operation of the provisions of the Act.

Powers to make rules

5.11.7. MACHINERY FOR QUALITY CONTROL AND INSPECTION

The Central Government may establish, or recognize agencies for quality

control or inspection or both.

The Central government in the public interest may withdraw any recognition

granted to any agency.

Agency examination as it thinks fit relating to quality control or inspection of

notified commodities either at the time of export or earlier. Agency may

conduct the quality control inspection in testing houses or by such surveyors

or samplers as approved by the Central Government. The Agency may charge

fees as may be prescribed for the purpose of such examination. After the

examination, the agency is of opinion that the commodity satisfies the

standard specifications laid down or other specifications stipulated in the

export contract, it may issue a certificate that the commodity satisfies the

conditions relating to quality control and inspection.

Where the agency has reason to believe that a certificate issued has been

obtained fraudulently or by misrepresentation, or the commodity in relation to

which the certificate is issued has been changed or has deteriorated in quality,

the agency may, by order, amend, suspend or cancel the certificate in such

manner and subject to such procedure as may be prescribed. Provided that

before amending, suspending or canceling any such certificate the holder

thereof shall be given a reasonable opportunity of being heard.

Appeal against certificate issued, suspended or cancellation is available to the

aggrieved person.

The decision of the appellate authority where an appeal is filed shall be final

and shall not be questioned in any court of law.

5.12. SPECIAL ECONOMIC ZONES ACT, 200556

LEGAL FRAMEWORK

The Government of India (GOI) first introduced the concept of SEZ in the

Export -Import Policy 2000 with a view to provide an internationally competitive and

hassle free environment for exports Special Economic Zones (SEZs) are hence

specifically delineated duty-free enclaves treated as a foreign territory for the purpose

of industrial, service and trade operations, with exemption from customs duties and a

more liberal regime in respect of other levies, foreign investment and other

transactions

Previously Special Economic Zones in India were governed by Chapter X-A

of the Customs Act, the Special Economic Zones Rules, 2003, and the Special

Economic Zones (Customs Procedures) Regulations, 2003 and Chapter 7 and 7A of

Foreign Trade Policy. However, w.e.f., 10th February, 2006 the activities relating to

56 Treatise on Special Economic Zones, Kanu Doshi and Yogesh Ashar Chartered Accontants, Snow White Publications Pvt Ltd, Mumbai.

Special Economic Zones are guided by the provisions contained in the Special

economic zones Act, 2005 and the Special economic zones Rules, 2006. After the

enactment of the SEZ Act, 2005 Chapter X-A of the Customs Act, the Special

Economic Zones Rules, 2003, and the Special Economic Zones (Customs Procedures)

Regulations, 2003 are not in operation. The Special Economic Zones Act 2005

consists of 8 chapters, 58 sections and 3 schedules The provisions of this Act shall

have effect notwithstanding anything inconsistent therewith contained in any other

law for the time being in force or in any instrument having effect by virtue of any law

other than this Act.

5.12.1 THE MAIN OBJECTIVES OF SEZ SCHEME

• Attract Foreign Direct Investment (FDI)

• Earn foreign exchange and contribute to exchange rate stability

• Boost the export sector, especially non traditional exports

• Create employment opportunities

• Introduce new technology

• Develop backward regions

• Stimulate sectors such as electronics, information technology, Research and

Development and tourism

• Infrastructure and human resource development that are regarded as

strategically important to the economy

• Create backward & forward linkages to increase the output and raise the

standard of local enterprise that supply goods and services to the zone

The zones are primarily developed by Governments, the Indian SEZ policy

provides for development of these zones in the government, private or joint sector.

This offers equal opportunity to both Indian and international private developers.

5.12.3. i. The Act provides for the following:

• Procedure for making proposal to establish SEZ

• Establishment of SEZ with the approval from Board of Approvals

• Notifying an area as SEZ by Central Government

• Approval by Board of Approval for establishment of SEZ

• Development Commissioner as administrative Authority for the SEZ

• Approval Committee to approve setting up of an unit in SEZ

• Single window clearance by Approval Committee for setting up unit in SEZ,

setting up an OBU and setting up an IFSC.

• Enforcement officer or agency for notified offences

• Special civil courts and criminal courts to try notified offences and appeal to

High Court

• Special Fiscal provisions for special economic zones

• Establishment of SEZ Authority

• Reference of dispute to arbitration

• Exemptions and relaxations from provisions of some Central Acts

• Power of the Central Government to make rules and to remove difficulties

5.12.5. FACILITIES/ EXEMPTIONS/ BENEFITS TO SPECIAL ECONOMIC

ZONES

Exemptions from Taxes, Duties or Cess of the Special Economic Zones Act,

2005 are outlined below:

Goods or Services exported out of, or imported into, or procured from the

Domestic Tariff Area by, (i) A Unit in a Special Economic Zone; or (ii) A Developer;

Shall, subject to such terms, conditions and limitations, as may be prescribed, be

exempt from the payment of taxes, duties or cess under all enactments specified in the

First Schedule

5.12.6. DIRECT TAX INCENTIVES FOR SEZ DEVELOPERS

• 100% tax holiday for the business of developing SEZ available for a period of

any 10 consecutive years out of 15 years beginning from the year in which the

SEZ is notified. Sec 80- IAB of Income-tax Act.

• Exemption from Minimum Alternate Tax (MAT) on income accruing or

arising on or after April 1, 2005 from business carried on or services rendered

• No Dividend Distribution Tax (DDT) payable on dividends declared,

distributed or paid from April 1, 2005 onwards out of current income.- Sec

111 -O (6) of Income-tax Act.

• Exemption on interest and capital gains available to investors in SEZ

developers. The above benefits are also available in respect of co-developers

providing infrastructure facilities.

• 15 year tax holiday (100% for first 5 years, 50% for next 5 years and up to

50% for next 5 years subject to creation of reserves) on export profits

available to units commencing business after April 1, 2005.-Sec 10AA of

Income-tax Act.

• Exemption from capital gains arising on transfer of certain assets on shifting

of undertaking from a notified urban area to any SEZ.-Sec 54GA of Income-

tax Act.

• Exemption from MAT on income accruing or arising on or after April 1, 2005

from business carried on or services rendered. - Sec 115 JB (6) of Income-tax

Act.

• Exemptions also available in respect of IFSC/OBUs located in SEZs- Sec

80LAof Income-tax Act.

5.12.7. INDIRECT TAX INCENTIVES FOR SEZ DEVELOPERS/UNITS

• Exemption from customs duty on goods/services imported or exported.

[Supplies from Domestic Tariff Area (DTA) to SEZ to be treated as exports

while those from SEZ to DTA to be treated as imports].

• Exemption from excise duty on goods procured from DTA.

• Drawback or any other admissible benefits on goods brought or services

rendered by DTA.

• Exemption from service tax on taxable input services.

• Exemption from Central Sales Tax on interstate sale or purchase of goods

except for newspaper.

• Removal of goods into DTA also permitted subject to prescribed conditions

and on payment of all applicable customs duty leviable on importation of such

goods into India

5.12.8. MONITORING OF PERFORMANCE

Performance of the Unit shall be monitored by the Approval Committee In

case the Approval Committee finds that a Unit has not achieved positive Net Foreign

Exchange Earning or failed to abide by any of the terms and conditions of the Letter

of Approval or Bond-cum-Legal Undertaking, the said Unit shall be liable for penal

action under the provisions of the Foreign Trade (Development and Regulation) Act,

1992(without prejudice to the action that may be taken under any other law for the

time being in force)

5.12.9. MAINTENANCE OF ACCOUNTS AND SUBMISSION OF

PERFORMANCE REPORT

Every Unit and Developer shall maintain proper accounts, financial year wise,

Such accounts which should clearly indicate in value terms the goods imported or

procured from Domestic Tariff Area, consumption or utilization of goods, production

of goods, including by-products, waste or scrap or remnants, disposal of goods

manufactured or produced, by way of exports, sales or supplies in the domestic tariff

area or transfer to Special Economic Zone or Export Oriented Unit or Electronic

Hardware Technology Park or Software Technology Park Units or Biotechnology

Park Unit, as the case may be, and balance in stock (iii) Unit and Developer shall

maintain such records for a period of Seven years from the end of relevant financial

year. The Unit shall submit Annual Performance Reports in Form I, to the

Development Commissioner and the Development Commissioner shall place the

same before the Approval Committee for consideration.

5.13. SPECIAL ECONOMIC ZONES RULES, 200657

LEGAL FRAMEWORK

The policy relating to special economic zones is contained in Special

Economic Rules, 2006 notified in the Gazette of India, Extraordinary No. GSR 54

(E), dated 10.2.2006.

The Rules contain 8 chapters, 77 rules, 11 forms. Amendments were made in the

Special Economic Zones Rules by way of:

1) The Special economic Zones (Amendment) Rules, 2006 which came into force on

10.08.2006

2) The Special Economic Zones (Amendment) Rules, 2007

3) The Special Economic Zones (Second Amendment) Rules, 2007

5.13.1. FEATURES

1) Simplification of procedures for development, operation, and maintenance of the

Special Economic Zones and for setting up and conducting business in SEZs; 57 Treatise on Special Economic Zones, Kanu Doshi and Yogesh Ashar Chartered Accontants, Snow White Publications Pvt Ltd, Mumbai, 2007.

2) Single window clearance for setting up of an SEZ;

3) Single window clearance for setting up a unit in a Special Economic Zone;

4) Single Window clearance on matters relating to Central as well as State

Governments;

5) Simplified compliance procedures and documentation with an emphasis on self

certification; and

6) Documentation for various activities of the units has been reduced to the barest

minimum with an emphasis on self-certification.

7) No requirement for providing bank guarantees, thereby reducing transaction costs;

8) Contract manufacturing for foreign principals allowed;

9) Option to obtain sub-contracting permission at the initial approval stage

5.13.3 APPROVAL MECHANISM

The Amended Rules now provide for a distinction between In-principle

Approvals (to be given, subject to acquisition of land, in the newly notified Form B

1), and a Formal Approval (in cases where the land is in possession), to the

Developer. Besides, The Rules provide for the validity of In-principle Approvals for a

period of one year, extendable, upon request, to a further period not exceeding two

years. For the purpose of obtaining a Notification of the SEZ, the Developer has now

to furnish also a certificate from the State Government or its authorized agency,

stating that the Developer has legal possession and irrevocable rights to develop the

identified area as an SEZ, and that the said area is free from all encumbrances. The

provision relating to the height of the boundary wall / wire mesh fencing, etc. of the

relevant areas in an SEZ have been deleted. It is now provided that the entry and exit

points shall be fully secured by taking such measures as approved by the Board. The

period of lease of land or built-up space in the processing area / FTWZ by the

Developer to the Unit shall be subject to the following conditions:

- Shall not be less than 5 years

- Shall cease on expiry or cancellation of the Unit’s letter approval

5.13.6. INFRASTRUCTURE IN NON-PROCESSING AREA

Incorporating the restriction indicated in the Notification dated 27 October

2006, the Rules now provide that infrastructure for business or social purposes in an

SEZ created in addition or excess of those approved by the Board shall not be eligible

for any exemptions, concessions or drawback.

5.13.7. IMPORT AND PROCUREMENT

The Rules have been amended to extend exemption from payment of duty,

taxes or cess, drawbacks and concessions on all types of goods and services, required

for setting up and maintenance of factory buildings, also to contractors appointed by

the SEZ Unit. The Unit shall be held responsible and liable for the proper utilization

of such goods and services.

Sub-contracting by the Developer:

The amended Rules allow a Developer, Co-developer or Contractor on their

behalf, to temporarily remove the goods procured duty free for authorized operations,

to a place in the DTA, EOU, Unit in same or other SEZ, EOU, STP Units, etc. for

sub-contracting a process with prior permission and subject to prescribed conditions.

The procedure for sub-contracting the process has been prescribed.

Forms of application by SEZ Developer / Co-developer in Form A, the following

additional aspects are to be included:

• Extent and source of Foreign Direct Investment (FDI)

• A check list which hitherto was to be submitted independent of the Application

The Central Government, while notifying any area as a Special Economic

Zone or an additional area to be included in the Special Economic Zone and

discharging its functions under this Act, shall be guided by the following, namely:-

a) Generation of additional economic activity

b) Promotion of exports of goods and services;

c) Promotion of investment from domestic and foreign sources;

d) Creation of employment opportunities;

e) Development of infrastructure facilities; and

f) Maintenance of sovereignty and integrity of India, the security of the State and

friendly relations with foreign States.

5.13.8. PROPOSALS NOT TO BE CONSIDERED

(a) Recycling of plastic scrap or waste:

(b) Enhancement of the approved import quantum of plastic waste and scrap beyond

the average annual import quantum of the unit since its commencement of operation

to the existing Units;

(c) Reprocessing of garments or used clothing or secondary textiles materials and

other recyclable textile materials into clipping or rags or industrial wipers or shoddy

wool or yarn or blankets or shawls:

(d) Import of other used goods for recycling Reconditioning, repair and reengineering

may be permitted subject to the condition that exports shall have one to one

correlation with imports and all the reconditioned or repaired or re-engineered

products and scrap or remnants or waste shall be exported and none of these goods

shall be allowed to be sold in the Domestic Tariff Area or destroyed;

(e) Export of Special Chemicals, Organisms, Materials, Equipment and Technologies

unless it fulfils the conditions indicated in the Import Trade Control (Harmonized

System) classifications of export and import items;

(f) If there is any instance of violation of law or public policy by the promoters,

having a bearing on the merits of the proposal.

5.14. THE CUSTOMS ACT, 196258

The Customs Act 1962 was passed by parliament on 13th December 1962.

The Act came into force from February 1, 1963, with the following objectives:

• To safeguard domestic trade by imposing duty in imported goods.

• To discourage imports.

• To levy and collect adequate revenue resources for the economic development

of India.

• To protect Indian industry in the interest of trade, commerce and economy.

• To provide necessary powers to the Central Government to prevent smuggling

activities.

• To ensure that the home markets do not become a dumping grounds for

foreign goods.

The Customs Act is governed by the various rules, which are:

• The customs valuation Rules, 1988

• Duty Drawback rules 1995

• Re-export of imported goods Drawback of customs rules, 1995

• The Baggage rules, 1998.

58 Business Taxation, T.S.Reddy, Y.Hari Prasad Reddy, Margham Publications, Chennai, 2008

5.14.2. REGULATIONS UNDER CUSTOMS ACT, 1962

The Central Board of customs and excise has been empowered by the Customs Act to

make regulations to carry out the purpose of the Act. The regulations under the

Customs Act are:

1. Project import regulations, 1986.

2. Provisional assessment regulations, 1963.

3. Import manifest (vessals) Regulation, 1976.

4. Bill of Entry form Regulations, 1976

5. Customs House Agents Regulations, 1984

6. Bill of Entry (Electronic Declaration) Regulations, 1995.

5.14.3. DIFFERENT TYPES OF CUSTOMS DUTIES

The tariff rates for customs duties are specified in customs Tariff Act, 1975. The

types of duties are as under:

(a) Basic customs duty

(b) National calamity contingent duty

(c) Special additional duty of customs

(d) Additional customs duty

(e) Protective duties

(f) Countervailing duty on subsidized goods

(g) Anti-Dumping duty on dumped articles

5.14.3.ii Custom duty is levied on:

Import of Goods:

Import is bringing of goods to India from any other country of the world.

Territorial water extends upto 12 nautical miles into the sea from the coast of India

and so the liability to pay import duty commences as soon as goods enter the

territorial waters of India. No duty is leviable on goods which are in transit in the

same ship or if goods are in transit from one ship to another.

Export of Goods:

Export duty is levied on export of goods. The main objective of this duty is to

simply restrict exports of certain goods. At present very few articles like skin and

leather are subject to export duty. The liability to pay export duty commences as soon

as goods leave the territorial waters of India.

5.14.4.Prohibition on Importation and Exportation of Goods

The Customs Act empowers the Central Government to prohibit the import or export

of specified goods. Prohibition is to be done by notification in the official Gazette.

Prohibition may be absolute or subject to such conditions. The main reasons for

prohibition of Imports / Exports enumerated below:

1. Maintenance of security of India

2. Prevention of smuggling.

3. Conservation of foreign exchange and the safeguarding of balance of

payments.

4. Prevention of injury to the economy of the country by the uncontrolled import

or export of gold or silver.

5. Maintenance of standards for the classification, grading or marketing of goods

in international trade.

6. Protection of national treasures of artistic, historic or archaeological value.

7. Prevention of deceptive practices.

8. Prevention of the contravention of any law for the time being in force.

5.14.5. CUSTOM DUTY DRAWBACK

‘Drawback’ in relation to any good manufactured in India and exported means-

1. The rebate of duty chargeable on any imported material or excisable material

used in the manufacture of such goods in India.

2. The rebate of duty of excise chargeable under the Central excise Act on the

goods specified.

3. Drawback implies duty relief or repayment of duty paid in respect to any

goods when they are exported out of India or used in the manufacture of goods

that are exported out of India. Drawback is equal to Customs duty paid on

imported inputs and Excise duty paid on indigenous inputs.

4. Drawback is allowed on all the items that are exported. However, drawback is

not permitted in respect of coffee, tea, and agricultural produce, as their inputs

are not subject to customs duty and excise duty.

5. Provisions relating to draw back

• Drawback allowable on re-export of duty-paid goods

• Drawback on imported material used in the manufacture of goods which

are exported.

• Prohibition and regulation of drawback in certain cases.

6. Drawback is allowable on Re-export of Duty paid Goods.

5.14.6. SPECIAL FISCAL PROVISIONS FOR SPECIAL ECONOMIC ZONES

Every Developer and entrepreneur under the Act is eligible for the following

Exemptions, drawbacks and concessions.

(a) exemption from any duty of customs, under the Customs Act, 1962 or the Customs

Tariff Act, 1975 or any other law for the time being in force, on goods imported into,

or service provided in, a Special Economic Zone or a Unit, to carry on the authorized

operations by the Developer or entrepreneur;

(b) exemption from any duty of customs, under the Customs Act, 1962 or the

Customs Tariff Act, 1975 or any other law for the time being in force, on goods

exported from, or services provided, from a Special Economic Zone or from a Unit, to

any place outside India;

(c) exemption from any duty of excise, under the Central Excise Act, 1944 or the

Central Excise Tariff Act, 1985 or any other law for the time being in force, on goods

brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on

the authorized operations by the Developer or entrepreneur;

(d) drawback or such other benefits as may be admissible from time to time on goods

brought or services provided from the Domestic Tariff Area into a Special Economic

Zone or Unit or services provided in a Special Economic Zone or Unit by the service

providers located outside India to carry on the authorized operations by the Developer

or entrepreneur;

(e) Exemption from service tax under Chapter V of the Finance Act, 1994 on taxable

services provided to a Developer or Unit to carry on the authorized operations in a

Special Economic Zone;

(f) Exemption from the securities transaction tax leviable under the Finance Act, 2004

in case the taxable securities transactions are entered into by a non-resident through

the International Financial Services Centre;

(g) Exemption from the levy of taxes on the sale or purchase of goods other than

newspapers under the Central Sales Tax Act, 1956 if such goods are meant to carry on

the authorized operations by the Developer or entrepreneur.

(h) The Central Government may prescribe the manner in which, and the terms and

conditions subject to which, the exemptions, concessions, draw back or other benefits

shall be granted to the Developer or entrepreneur.

(i) Customs Act states that the provisions of Income-tax Act, 1961 to apply with

certain modification in relation to Developers and entrepreneurs

(j) The Central Government also prescribes the period during which any goods

brought into, or services provided in to Unit or Special Economic Zone without

payment of taxes, duties or cess.

(k) The Central Government may prescribe terms and conditions for the transfer of

ownership in any goods brought into, or produced or manufactured in, any Unit or

Special Economic Zone or removal thereof from such Unit or Zone.

The Central Government in this behalf laid down the conditions specified in the rules

for the domestic clearance by the units.

(a) any goods removed from a Special Economic Zone to the domestic Tariff Area

shall be chargeable to duties of customs including anti-dumping, countervailing and

safeguard duties under the Customs Tariff Act, 1975 where applicable, as leviable on

such goods when imported; and

(b) the rate of duty and tariff valuation, if any, applicable to goods removed from a

Special Economic Zone shall be at the rate and tariff valuation in force as on the date

of such removal, and where such date is not ascertainable on the date of payment of

duty.

5.15. THE CENTRAL EXCISE ACT, 1944

Excise duty is a tax on manufacture or production of goods. Excise duty on

alcohol, alcoholic preparations, and narcotic substances is collected by the State

Government and is called "State Excise" duty. The Excise duty on rest of goods is

called "Central Excise" duty and is collected in terms of the Central Excise Act, 1944.

Sales Tax is different from the Excise duty as former is a tax on the act of sale while

the latter is a tax on the act of manufacture or production of goods.

Excise Duty is an indirect tax levied and collected on the goods manufactured

in India. Manufacturer of goods is responsible to pay duty to the Government. This

indirect taxation is administered through an enactment of the Central Government

viz., The Central Excise Act, 1944 and connected Rules - which provide for levy,

collection and connected procedures. The rates at which the excise duty is to be

collected are stipulated in the Central Excise Tariff Act, 1985. It is mandatory to pay

duty on all goods manufactured, unless exempted. For example, duty is not payable

on the goods exported out of India. Similarly exemption from payment of duty is

available, based on conditions such as kind of raw materials used, value of turnover

(clearances) in a financial year, type of process employed etc.

The Central Excise Department spread over the entire country administers and

collects the central excise duty. The apex body that is responsible for the policy and

formulation of connected rules is the Central Board of Excise and Customs which

functions under the control of the Union Finance Ministry. They are also entrusted

with the task of enforcing various allied enactments like the Foreign Trade Regulation

Act, the Foreign Exchange Regulation (now Management) Act, the COFEPOSA Act,

No license is required and a simple registration with the Central Excise

department would suffice.

The following categories of persons are required to get themselves registered

with the Central Excise department, subject to specified conditions.

(i) Every manufacturer of dutiable excisable goods;

(ii) First and second stage dealers or importers desiring to issue Cenvatable

invoices; (iii) Persons holding bonded warehouses for storing non-duty paid

goods;

(iv) Persons who obtain excisable goods for availing end-use based

exemption.

The following categories of persons need not obtain Central Excise

registration subject to specified conditions,

(i) Manufacturers of goods which are chargeable to nil rate of duty or are fully

exempt;

(ii) SSI manufacturers having annual turnover of below Rs.90 lakhs. Once

their turnover touches Rs.90 lakhs, they should give the prescribed declaration to the

Jurisdictional Superintendent of Central Excise;

(iii) Job-workers of ready-made garments if the principal manufacturer

undertakes to discharge the duty liability;

(iv) Approved/licensed units in Export Processing Zones, Special Economic

Zones and 100% Export Oriented Units.

Apply to the nearest Central Excise Division Office in Form A.1 along with a

self attested copy of the PAN issued by the Income Tax Department. After post

verification, a regular Registration certificate in form RC is normally issued

immediately, as far as possible

All goods listed in the Central Excise Tariff Act, 1985 attract Central Excise

duty unless specified to the contrary in the Act itself or under any notification issued

under the Central Excise Act, 1944 by the appropriate statutory authority.

The manufacturer who actually undertakes manufacturing activity is liable to

pay Central Excise duty. A person does not become a manufacturer simply by

supplying raw materials to the manufacturer or getting his goods manufactured

according to his own specifications, brand name or trade name, etc. However, for the

textile sector, the option is with the supplier of raw materials or with the job worker to

pay duty.

The assessee is required to inform to the Superintendent/Inspector in the

Range Office 24 hours in advance about the proposed consignment of export. The

Central Excise officer remains present while stuffing the goods in the container. After

completion of the stuffing, the container is sealed with the Central Excise seal in

presence of the said officer. Necessary documents such as ARE-1, invoice, packing

list are also signed by the said officer. Self-sealing facility is also available under

which the assessee himself stuffs the container and take clearance thereof.

The license granted by the jurisdictional Custom Officer under Section 58 of

the Customs Act, 1962 is sufficient.

Subject to prescribed conditions, no Excise duty is payable on the capital

goods, raw materials, spares, consumables, etc. procured by the 100% EOU.

5.15.1. CLEARANCE TO SEZ UNIT

The goods supplied by manufacturer in India to SEZ units are exempt from

excise duty. These are for exports. Suppliers to SEZ units are to be authenticated by

Domestic procurement Certificate issued by SEZ unit to domestic manufacturer. The

certificate is signed by Superintendent/Appraiser of customs of SEZ. The goods will

be cleared by domestic unit to SEZ on the basis of certificate.

On obtaining LOP (Letter of Permission) from the Development

Commissioner; a manufacturer is required to approach the Commissioner of Central

Excise for declaration of the place as a warehousing station. Thereafter, the

manufacturer is required to obtain private bonded warehouse license, and permission

to manufacture goods of the Customs Act from the jurisdictional Deputy/Assistant

Commissioner.

Certificate is required to be obtained from the Range Superintendent of

Central Excise on the basis of which a 100% EOU can procure duty free indigenous

goods. The 100% EOU is required to file monthly return in prescribed form. Under

certain circumstances, 100% EOUs are permitted by the Development Commissioner

to sell the goods in the local market on payment of appropriate duty.

5.15.2. ROLE OF CENTRAL EXCISE COMMISSIONERATE

Central Board of Excise and Customs (CBEC) implements law and procedures

of Central Excise law by several regional units called Central Excise Commission

rates, each covering assessees spread over a specific geographic area. The

Commissioner of Central Excise is the overall administrative head of the

Commissioner ate. Administratively, each Commissioner ate is a 3-tier set-up with its

Headquarters at the helm, 5 or 6 Divisions at the second level and 5 or 6 Ranges under

each Division at the third and final level. At Commissioner ate Headquarters, the

Commissioner is assisted by Additional Commissioners, Joint Commissioners,

Deputy Commissioners and Assistant Commissioners in addition to Superintendents,

Inspectors and other ministerial staff. There are normally several branches/sections

viz., Technical Section, Internal Audit Section,

Headquarters Preventive Unit, Judicial Cell, Legal Cell, Maritime Section,

Prosecution Cell, Vigilance Section. The Technical Section is the source of supply of

all developments to the departmental officers and also to the assessees and trade

through issue of Circulars and Trade Notices. Individual assessees desirous of getting

Trade Notices can do so by making annual subscriptions. This Section also examines

doubts raised by field officers and trade and enable clarifications. This Section is also

responsible for arranging face-to-face periodical meetings of Senior Central Excise

Officers with various Trade Associations and Chambers of Commerce.

The Internal Audit Section is responsible for periodical audit of accounts of

the registered assesses. Such audit is carried out by nominated Groups/Parties headed

by Superintendents, under prior intimation. Of late a new system of audit has been

introduced called EA 2000 which will be the only interaction media between the

assessee and the Department in the near future. The Headquarters Preventive Unit,

unlike the Audit Groups, keeps secret track of duty payment records of individual

assesses, engages informers, collects information, through market and other sources,

makes surprise visit to the factories, whether registered or not, and brings to book

duty evasion indulged in by them.

The offence cases registered are adjudicated by the Senior Officers of the

Department who are vested with quasi-judicial powers, depending upon the duty

involved in a particular offence and the Adjudication section endeavors to achieve this

objective by adhering to the principles of natural justice. The officers in the level of

Superintendents and Inspectors assist the adjudicating authorities.

The Legal and Judicial Cells of the Commissionerate headquarters have also

equal role to play, even though the officers of these Sections do not visit factories.

While Legal cell attend to all court matters, the Judicial Cell is responsible for filing

departmental appeals before the Commissioner (Appeals) and Tribunal, wherever

necessary against the adjudication orders passed by the lower departmental

authorities. The judicial cell is also responsible for defending the appeals filed by the

parties/assesses.

The Prosecution Cell is responsible for the entire prosecution proceedings as

and when sanctioned by the Commissioner against any Proprietor, firm, Company or

individual who are found guilty of an offence punishable with imprisonment in terms

of Section 9 of the Central Excise Act, 1944. The responsibility of this Cell starts

from arresting a person found guilty, remanding him to judicial custody to arrange for

a speedy and successful trial before the competent Magisterial Court. The Maritime

Section in the Headquarters office exercises the overall control over the exports taking

place from the entire Commissionerate jurisdiction.

The Vigilance Cell at the Headquarters level functions as a watch-dog and in

the event of any complaint against the departmental officers, this Cell conducts

necessary enquiry and take disciplinary action against the erring official as warranted

under the Rules. The Vigilance Cell also attends to and redress general grievance

aired by the Trade. This Cell is also responsible for conducting periodical meeting of

Public Grievance Committee to help Trade and also the Staff Grievance Committee to

attend to staff side grievance.

5.16. THE CARRIERS ACT, 1865

The maximization of human satisfaction and economic welfare are the

cardinal objectives of a modern welfare state. It is therefore essential that the scarce

resources, which have alternate uses, must flow uninterruptedly and continuously.

Transport eliminates the barriers among different countries, different places and

regions thereby permitting unrestricted movement of scarce resources. In a wider

sense, the term ‘transport’ includes all the clerical, mental and manual occupations

involved in the operation of road, rail, canal, sea and air transport. In a restricted

sense, however, it denotes the services of these various forms of transport. They aid

commerce by conveying goods from the places of their production or origin to

innumerable places of consumption at the right time they are wanted. Goods have no

use unless they made available at a place where and when they are wanted. They are

said to acquire place and time utilities when they made available at right places and

right times. Transport is, thus an integral part of commerce. Simply, transport is a

means to carry men and materials (except pipelines, which carry liquid materials,)

from one place to another resulting in creation of place and time utilities. Transport

can be divided into three important types: a. Road Transport, b. Water Transport and

c. Air Transport

Differences between common carrier and private carrier

COMMON CARRIER PRIVATE CARRIER

A common carrier is one who is engaged in regular trade or business.

A private carrier is engaged in a casual occupation and carries goods on occasions or under a special contract

He carries goods for all persons indiscriminately.

He carries goods for particular persons of his own choice.

The liability of common carrier is governed by Carriers Act 1865

There is no separate Act. The liability of a Private carrier is that of a bailee to whom goods are delivered in trust.

He carries goods for hire or reward.

A private carrier may carry goods for hire or gratuitously.

He is generally an insurer of the goods he carries. He is responsible for loss or Damage caused either by his negligence or otherwise.

He is responsible only for loss or damage Directly attributable to his negligence.

The object of the Act was not only to limit the liability of the carriers, but also

to declare the liability if the carriers any contract of bargain which seeks to defeat the

liability of the carriers as enacted by law would defeat the provisions of the Act.

Some of the interpretations of the Act are:

Common carrier. - "common carrier" denotes a person, other than the

Government, engaged in the business of transporting for hire property from place to

place, by land or inland navigation, for all persons indiscriminately:

Person. - "person" includes any association for body of persons, whether

incorporated or not.

5.16.1. Carriers not to be liable for loss of certain goods above one hundred rupees

in value unless delivered as such.-

No common carrier shall be liable for the loss of or damage to property

delivered to him to be carried exceeding in value one hundred rupees and of the

description contained in the Schedule to this Act, unless the person delivering such

property to be carried, or some person duly authorized in that behalf, shall have

expressly declared to such carrier or his agent the value and description thereof.

5.16.2. For carrying such property payment may be required at rates fixed by

carrier.-

Every such carrier may require payment for the risk undertaken in carrying

property exceeding in value one hundred rupees and of the description aforesaid, at

such rate of charge as he may fix: Provided that, to entitle such carrier to payment at

a rate higher than his ordinary rate of charge, he shall have caused to be exhibited in

the place where he carries on the business of receiving property to be carried, notice

of the higher rate of charge required, printed or written in English and in the

vernacular language of the country wherein he carries on such business.

5.16.3. The person entitled to recover in respect of property lost or damaged may

also recover money paid for its carriage.-

In case of the loss or damage to property exceeding in value one hundred

rupees and of the description aforesaid, delivered to such carrier to be carried, when

the value and description thereof shall have been declared and payment shall have

been required in manner provided for by this Act, the person entitled to recover in

respect of such loss or damage shall also be entitled to recover any money actually

paid to such carrier in consideration of such risk

5.16.4. In respect of what property liability of carrier not limited or affected by

public notice. Carriers, with certain exceptions, may limit liability by special

contract.

The liability of any common carrier for the loss of or damage to any property

delivered to him to be carried, not being of the description contained in the Schedule

to this Act, shall not be deemed to be limited or affected by any public notice; but any

such carrier, not being the owner of a railroad or tramroad constructed under the

provisions of Act 22 of 1863 to provide for taking land for works of public utility to

be constructed by private persons or Companies and for regulating the construction

and use of works on land so taken may, by special contract, signed by the owner of

such property so delivered as last aforesaid or by some person duly authorized in that

behalf by such owner, limit his liability in respect of the same.

5.16.5. Common carrier liable for loss or damage caused by neglect or fraud of

himself or his agent.

Notwithstanding anything hereinbefore contained, every common carrier shall

be liable to the owner for loss of or damage to any property delivered to such carrier

to be carried where such loss or damage shall have arisen from the criminal act of the

carrier or any of his agents or servants and shall also be liable to the owner for loss or

damage to any such property other than property to which the provisions of section 3

apply and in respect of which the declaration required by that section has not been

made, where such loss or damage has arisen from the negligence of the carrier or any

of his agents or servants.

5.16.6. Plaintiffs, in suits for loss, damage, or non-delivery, not required to prove

negligence or criminal act.

In any suit brought against a common carrier for the loss, damage or non-

delivery of goods entrusted to him for carriage, it shall not be necessary for the

plaintiff to prove that such loss, damage or non-delivery was owing to the negligence

or criminal act of the carrier, his servants or agents.

No suit shall be instituted against a common carrier for the loss of, or injury

to, goods entrusted to him for carriage, unless notice in writing of the loss or injury

has been given to him before the institution of the suit and within six months of the

time when the loss or injury first came to the knowledge of the plaintiff.

5.17. BAGGAGE RULES59

Customs Act, 1962 contains special provisions regarding baggage, goods

imported/exported. Baggage means belongings of a person traveling from one place to

another. The baggage mainly constitutes household articles or personal effects. It can

either be accompanied baggage or unaccompanied baggage.

5.17.1 TYPES OF BAGGAGE

Accompanied Baggage: These are the goods brought by the traveler in the same

transportation means of his or her arrival.

Unaccompanied Baggage: These are the goods covered by a bill of lading. These

goods must come from the country or countries of passenger origin or stay.

5.17.2. CLEARANCE

Baggage can be cleared through the following channels based on the nature of

the goods:

59 Indian Industry, Directory of Indian Suppliers, IndiaMART InterMESH Ltd, MyCityPedia Publications, Noida (UP), 2007

Green Channel

Not having any dutiable goods

Passenger can walk through this manned by Customs Officials, thereby declaring the baggage orally.

Red Channel

Having dutiable goods Passengers can walk through this channel.

5.17.3. PERSONS ELIGIBLE

Baggage is allowed clearance free of duty subject to the limitations / conditions for

the following categories of persons:

Category Purpose Indian citizens / Foreign nationals residing in India

Who go abroad on a short trip for business, recreation, medical treatment, etc.

Indian citizens Who are engaged in a profession abroad

Tourists of Foreign origin or Indian origin normally residing abroad

Who come to India for a stay not more than 6 months for business, recreation, medical treatment, etc.

Indian citizens / Foreign nationals residing abroad for more than two years

For transferring their residence to India

5.17.4. GOODS CONSIDERED AS BAGGAGE FOLLOWING ITEMS ARE CONSIDERED AS BAGGAGE

• Boats

• Canoes

• Kayaks

• Small sailing boats

• Pedal boats

• Folding craft

• Inflatable or dismountable and similar crafts (without engine)

• Skates

• Bicycles and similar items (without motor)

• Movie and video cameras

• Cameras and binocular

• Notebooks and similar objects

5.17.5. FOLLOWING ITEMS ARE NOT CONSIDERED AS BAGGAGE

• Motorcycle

• Lambrettas (with motor)

• Mopeds

• Trailers and other land automotive vehicles

• Airplanes

• Boats

• Jetskis

• Engines

• Goods whose quantity, nature and variety indicate their use for commercial or

industrial purposes.

5.17.6. EXEMPTED BAGGAGE

The following baggages are exempted from custom duty:

• Personal property which is re-imported.

• Free replacement under warranty of private personal goods of passenger.

• Foodstuffs upto Rs. 50,000.

• Free gifts and donations to Red Cross, CARE or Government of India for

relief and rehabilitation.

• Samples, price lists, prototypes, commercial samples etc.

• Goods brought for display, exhibition, fair etc., subject to various conditions.

• Agricultural products or goods manufactured or produced in Nepal.

5.17.7. ITEMS NOT ELIGIBLE FOR FREE ALLOWANCE

• Firearms and cartridges of firearms exceeding 50.

• Cigarettes exceeding 200 or cigars exceeding 50 or tobacco exceeding 250

gms;

• Alcoholic liquor & wines in excess of one litter each.

• Any article that does not accompany you (i.e. unaccompanied baggage).

• Gold in any form other than ornaments.

• Silver in any form other than ornaments.

5.17.8. BAGGAGE RULES

Passengers returning from countries other than Nepal, Bhutan, Myanmar or China

(1) Articles allowed free of duty (2)

(a) All passengers of and above 12 years of age and returning after stay abroad of more than three days.

(i) Used personal effects, excluding jewellery, required for satisfying daily necessities of life. (ii) Articles other than those mentioned in Annex. I upto a value of Rs. 25,000 if these are carried on the person or in the accompanied baggage of the passenger.

(b) All passengers of and above 12 years of age and returning after stay abroad of three days or less.

(i) Used personal effects, excluding jewellery, required for satisfying daily necessities of life. (ii) Articles other than those mentioned in Annex. I upto a value of Rs. 12,000 if these are carried on the person or in the accompanied baggage of the passenger.

(c) All passengers up to 12 years of age and returning after stay abroad of more than three days.

(i) Used personal effects, excluding jewellery, required for satisfying daily necessities of life. (ii) Articles other than those mentioned in Annex. I upto a value of Rs. 6,000 if these are carried on the person or in the accompanied baggage of the passenger.

(d) All passengers upto 12 years of age and returning after stay abroad of three days or less.

(i) Used personal effects, excluding jewellery, required for satisfying daily necessities of life. (ii) Articles other than those mentioned in Annex. I upto a value of Rs. 3000 if these are carried on the person or in the accompanied baggage of the passenger.

Passengers returning from Nepal, Bhutan, Myanmar or China

(1) (2) (i) Passengers of and above 12years of age and returning after stay abroad of more than three days.

(i) Used personal effects, excluding jewellery, required for satisfying daily necessities of life. (ii) Articles other than those mentioned in Annex. I upto a value of Rs. 6,000 if these are carried on the person or in the accompanied baggage of the passenger.

(ii) Passengers upto 12 years of age and returning after stay abroad of more than three days.

(i) Used personal effects, excluding jewellery, required for satisfying daily necessities of life. (ii) Articles other than those mentioned in Annex. I upto a value of Rs. 1500 if these are carried on the person or in the accompanied baggage of the passenger.

Professionals returning to India

(1) Articles allowed free of duty (2)

(a) Indian passenger returning after at least 3 months.

(i) Used household articles upto an aggregate value of Rs. 12,000 (ii) Professional equipment upto a value of Rs. 20,000.

(b) Indian passenger returning after at least 6 months.

(i) Used household articles upto an aggregate value of Rs.12, 000. (ii) Professional equipment upto a value of Rs. 40,000.

(c) Indian passenger returning after a stay of minimum 365 days during the preceding 2 years on termination of his work, and who has not availed this concession in the preceding three years.

(i) Used household articles and personal effects, (which have been in the possession and use abroad of the passenger or his family for at least six months), and which are not mentioned in Annex I, Annex II or Annex. III upto an aggregate value of Rs.75, 000.

Jewellery

(1) Jewellery (2)

Indian passenger who has been residing abroad for over one year.

(i) Jewellery upto an aggregate value of Rs. 10,000 by a gentleman passenger, or

(ii) Upto aggregate value of Rs. 20,000 by a lady passenger.

Tourists

(1) Articles allowed free of duty (2)

(a) Tourists of Indian origin coming to India other than tourists of Indian origin coming by land routes as specified in Annexure IV

(i) Used personal effects and travel souvenirs, if- (a) these goods are for personal use of the tourist, and (b) these goods, other than those consumed during the stay in India, are re-exported when the tourist leaves India for a foreign destination. (ii) Articles as allowed to be cleared under rule 3 or rule 4.

(b) Tourists of foreign origin other than those of Nepalese origin coming from Nepal or of Bhutanese origin coming Bhutan or of Pakistani origin coming from Pakistan.

(i) Used personal effects and travel souvenirs, if- (a) these goods are for personal use of the tourist, and (b) these goods, other than those consumed during the stay in India, are re-exported when the tourist leaves India for a foreign destination. (ii) Articles upto a value of Rs.8000 for making gifts.

(c) Tourists of Nepalese origin coming from Nepal or of Bhutanese origin coming from Bhutan.

No free allowance.

(d) Tourists – (i) of Pakistani origin coming from Pakistan other than by land routes; (ii) of Pakistani origin or foreign tourists coming by land routes as specified in Annexure IV; (iii) of Indian origin coming by land routes as specified in Annexure IV

(i) Used personal effects and travel souvenirs, if (a) these goods are for personal use of the tourist, and (b) these goods, other than those consumed during the stay in India, are re-exported when the tourist leaves India for a foreign destination. (ii) Articles upto a value of Rs.6000 for making gifts.

Transfer of residence

Articles allowed free of duty

Conditions Relaxation that may be considered

(a) Used personal and household articles, other than those listed at Annex. I or Annex. II, but including jewellery upto ten thousand rupees by a gentleman passenger or rupees twenty thousand by a lady passenger.

(1) Minimum stay of two years abroad, immediately preceding the date of his arrival on TR, (2) total stay in India on short visit during the 2 preceding years should not exceed 6 months, and (3) passenger has not availed this concession in the preceding three years.

(a) For condition (1) Shortfall of upto 2 months in stay abroad can be condoned by Assistant Commissioner of Customs or Deputy Commissioner of Customs if the early return is on account of : (i) terminal leave or vacation being availed of by the passenger; or (ii) any other special circumstances. (b) For condition (2) Commissioner of Customs may condone short visits in excess of 6 months in deserving cases. (c) For condition (3) No relaxation

(b) Jewellery taken out earlier by the passenger or by a member of his family from India.

Satisfaction of the Asst. Commissioner of Customs regarding the jewellery having been taken out earlier from India

5.18. ANTI-DUMPING60

5.18.1 INTRODUCTION

The General Agreement on Tariffs and Trade lays down the principles to be

followed by the member countries for imposition of anti-dumping duties,

60 Anti-Dumping – a guide, Directorate General of Anti-Dumping & Allied Duties, Ministry of Commerce, Government of India, New Delhi.

countervailing duties and safeguard measures. Pursuant to the GATT, 1994, detailed

guidelines have been prescribed under the specific agreements which have also been

incorporated in the national legislation of the member countries of the WTO. Indian

laws were amended with effect from 1.1.95 to bring them in line with the provisions

of the respective GATT agreements. Where dumping causes or threatens to cause

material injury to the domestic industry of India, the Designated Authority initiates

necessary action for investigations and subsequent imposition of anti-dumping duties.

5.18.2. ANTI-DUMPING DUTIES

• Essentially deal with the price behaviour of exporters.

• Dumping exists when Normal Value is more than the Export Price.

• Injury and causal linked are required to be proved.

5.18.3. LEGAL FRAMEWORK

• Based on Article VI of GATT 1994

• Customs Tariff Act, 1975 - (as amended in 1995)

• Anti-Dumping Rules [Customs Tariff (Identification, Assessment and

Collection of Anti Dumping Duty on Dumped Articles and for Determination

of Injury) Rules, 1995]

• Investigations and Recommendations by Designated Authority, Ministry of

Commerce

• Imposition and Collection by Ministry of Finance

5.18.4. DETERMINATION OF DUMPING

Dumping

Dumping occurs when the export price of goods imported into India is less than

the Normal Value of ‘like articles’ sold in the domestic market of the exporter.

Imports at cheap or low prices do not per se indicate dumping.

5.18.5. NORMAL VALUE

The normal value is the comparable price at which the goods under complaint are

sold, in the ordinary course of trade, in the domestic market of the exporting country

or territory. If the normal value cannot be determined by means of domestic sales, the

Act provides for the following two alternative methods:

• Comparable representative export price to an appropriate third country.

• Cost of production in the country of origin with reasonable addition for

administrative, selling and general costs and for profits.

5.18.6. EXPORT PRICE

The export price of goods imported into India is the price paid or payable for

the goods by the first independent buyer.

5.18.7. MARGIN OF DUMPING

Margin of dumping refers to the difference between the Normal Value of the

like article and the Export Price of the product under consideration. The margin of

dumping is generally expressed as a percentage of the export price.

5.18.8. FACTORS AFFECTING COMPARISON OF NORMAL VALUE AND

EXPORT PRICE

1. Physical characteristics

2. Levels of trade

3. Quantities

4. Taxation

5. Conditions and terms of sale

Anti-dumping action can be taken only when there is an Indian industry which

produces “like articles” when compared to the allegedly dumped imported goods.

The article produced in India must either be identical to the dumped goods in all

respects or in the absence of such an article, another article that has characteristics

closely resembling those goods.

5.18.9. INJURY TO THE DOMESTIC INDUSTRY

The Indian industry must be able to show that dumped imports are causing or are

threatening to cause material injury to the Indian ‘domestic industry’. Material

retardation to the establishment of an industry is also regarded as injury. Injury

analysis can broadly be divided in two major areas:

• The Volume Effect

• The Price Effect

The consequent economic and financial impact of the dumped imports on the

concerned Indian industry can be demonstrated, inter alia, by:

• Decline in output

• Loss of sales

• Loss of market share

• Reduced profits

• Decline in productivity

• Decline in capacity utilization

• Reduced return on investments

• Price effects

• Adverse effects on cash flow, inventories, employment, wages, growth,

investments, ability to raise capital, etc.

5.18.10. FILING AN APPLICATION

A dumping investigation can normally be initiated only upon receipt of a

written application by or on behalf of the “Domestic Industry”. Relief can be

provided to the domestic industry in the form of antidumping duties or price

undertakings.

Procedure

Applications can be made by or on behalf of the concerned domestic industry

to the Designated Authority in the Ministry of Commerce for an investigation of any

alleged dumping. The designated Authority may initiate an investigation when there is

sufficient evidence that dumped imports are causing or are threatening to cause

material injury to the Indian industry producing like articles or are materially

retarding the establishment of an industry.

Investigation Process

An application received by the Designated Authority is dealt with as follows:

• Preliminary Screening

• Initiation

• Access to Information

• Preliminary Findings

• Provisional Duty

• Oral Evidence

• Final Determination

• Disclosure of Information

Time-limit for Investigation Process

The normal time allowed by the statute for conclusion of investigation and

submission of final findings is one year from the date of initiation of the investigation.

The above period may be extended by the Central Government by 6 months.

Termination of Investigation Process

The Designated Authority may suspend or terminate the investigation in the

following cases:

• If there is a request in writing from the domestic industry at whose instance

the investigation was initiated.

• When there is no sufficient evidence of dumping or injury.

• If the margin of dumping is less than 2% of the export price.

• The volume of dumped imports from a country is less than 3% of the total

imports of the like article into India or the volume of dumped imports

collectively from all such countries is less than 7% of the total imports.

• Injury is negligible.

5.18.11. PRODUCTS IMPORTED BY UNITS IN EPZS/100% EOUS, ADVANCE

LICENCE HOLDERS AND BY OTHER EXPORTERS

Anti-dumping duty is not payable on products imported by units in EPZs and

100% EOUs, as well as imports on products imported by advance licence holders in

terms of Customs notification No. 41/97-Cus dated 30.4.1997. The final anti-dumping

duty paid on imported goods used in the manufacture of export goods are liable to be

refunded as duty drawback in accordance with the drawback rules.

CONCLUSION

Economic development is measured in terms of GNP (Gross National Product)

i.e., the output achieved in all the major sectors of the economy i.e., Agriculture,

Industry and Services. Economic policy is a statement of objectives and the methods

of achieving these objectives (policy instruments) by government, political party,

business concern, etc. Some examples of government economic objectives are

maintaining full employment, achieving a high rate of economic growth, reducing

income inequalities and regional development inequalities, and maintaining price

stability. Policy instruments include fiscal policy, monetary and financial policy, and

legislative controls Legal structure and environment should enable growth. Small and

medium enterprises usually have maximum potential for employment. Industrial

estates, special economic zones, export oriented parks, etc., have high employment

potentials. Concession to start these units, incentives and exemptions increase

employment potential. It should help in mobilizing economic surplus. Capital

formation and economic development are priorities for the developmental needs for

countries like India.

For India to become a major player in world trade, an encompassing,

comprehensive view needs to be taken for the overall development of the country’s

foreign trade. While increase in exports is of vital importance, we have also to

facilitate those imports which are required to stimulate our economy. Coherence and

consistency among trade and other economic policies is important for maximizing the

contribution of such policies to development. Thus, while incorporating the existing

practice of enunciating an annual Exim Policy, it is necessary to go much beyond and

take an integrated approach to the developmental requirements of India’s foreign

trade. The dynamics of a liberalized trading system sometimes results in injury caused

to domestic industry on account of dumping. When this happens, effective measures

to redress such injury will be taken. . Legislative measures help in achieving these

economic objectives.