bmr epc presentation excise customs day1
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8th Interactive workshop on
SUCCESSFUL EPC CONTRACTING IN INDIA
KEY EXCISE AND CUSTOMS DUTY ISSUES
Sujit Ghosh | Partner | BMR Legal
November 30, 2010 | Hotel ITC Grand | Mumbai
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DISCLAIMER
This presentation provides general information existing as at the
time of preparation. The presentation is meant for general
guidance and no responsibility for loss arising to any person acting
or refraining from acting as a result of any material contained in this
publication will be accepted by BMR Advisors. It is recommended
that professional advice be taken based on the specific facts and
circumstances. This presentation does not substitute the need to
refer to the original pronouncements
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CUSTOM DUTY
CONCESSIONS -
PROJECT IMPORT
SCHEME
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PROJECT IMPORT SCHEME
To facilitate setting up of/ substantial expansion of a unit of
industrial, infrastructure and other projects
A project falls qualifies as „substantial expansion‟ if the installed
capacity is increased by not less than 25 %
Seeks to achieve simplification of assessment by levy of a flat rate of duty
Imports classified under tariff heading 9801 of the Customs Tariff
Duty concessions can be availed by the
Project owner or Contractors
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PROJECT NOT COVERED UNDER THE SCHEME
Project imports scheme is not available to the following class of
projects:
Hotels;
Hospitals;
Photographic studios;
Photographic film processing laboratories;
Photocopying studios;
Laundries; and
Garages and workshops
The benefit is also not available to a single or composite machine
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KEY STEPS
Project Finalization &
Refund of Deposit
(Customs)
Classification of
Imported goods &
Clearance (Customs)
Plant Site Verification &
Installation Certificate
(Central Excise)
Letter of Recommendation
(Sponsoring Authority)
Project Registration
(Customs)
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PROJECT IMPORT
SCHEME –
AUXILIARY
EQUIPMENT
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PROJECT IMPORTS
Initial set-up or substantial expansion of following projects eligible
for project import and linked concessions:
Industrial plant
Power
Mining
Irrigation
Oil and gas exploration
Others
Eligible imports
All items of machinery (required for above) including prime movers,
instruments, apparatus, appliances, control gear, transmission
equipment, auxiliary equipment, equipment required for research and
development, equipment for testing and quality control, components,
raw materials for the manufacture of above items and spare parts not
exceeding 10% of the value of the goods specified above
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AUXILIARY EQUIPMENT
No statutory definition/ criterion exists for ‗auxiliary equipment
Legal meaning of the term ‗auxiliary‘
“aiding or supporting, subsidiary” – Black‘s law dictionary
“giving additional help; supplemental or subsidiary; an item not directly a
part of a specific component or system but required for its functional
operation” - Words and Phrases of Excise and Customs by S.B. Sarkar
“one that aids or helps; an assistant; a confederate
Assisting or supporting” – Advanced Law Lexicon
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ELIGIBILITY OF AUXILIARY EQUIPMENT FOR PI
SCHEME?
Qualification as ‗auxiliary equipment‘
Does generic meaning imply that equipment meant for any supporting
infrastructure for the plant being set up would qualify?
Benefits advanced under PI Scheme on a selective basis
SC in CCE V. Paradeep Phosphates [2006 (200) ELT 515] - Mobile Continuous
Ship Unloader required for initial setting up of a fertilizer plant is covered by the
expression ‗auxiliary equipment‘ and hence is classifiable under CTH 9801
SC in CIMMCO Ltd V. CCE [2002 (139) ELT A308] - Components and raw
material for manufacture of wagons used for transportation of coal from coal
mines to thermal plant not ‗auxiliary equipment‘
AAR in AES Chattisgarh Energy Pvt Ltd [2009 (246) ELT 801] – goods
required for setting up captive coal mine, dedicated coal transportation facility,
dedicated water intake and pumping system, all as part of integrated power
project, not eligible; dedicated power evacuation system eligible
Tribunal in K M Sugar Mills V. CCE [2000 (119) ELT 170] - Empty gas cylinders
being auxiliary equipment for manufacture of gas directly connected with initial
setting up of plant hence entitled to benefit of project import under heading 9801
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ELIGIBILITY OF AUXILIARY EQUIPMENT FOR PI
SCHEME? (CONT)
Treatment of construction equipments as auxiliary equipment
Whether ownership of equipments so imported necessarily needs to be
passed on to the ‗Project Authority‘ for falling within ‗realm‘ of ‗auxiliary
equipments‘?
Diversion of auxiliary equipment possible, if to be imported under the PI
scheme?
SC in CC V. Toyo Engineering India Ltd [2006 (201) ELT 513] concluded in
favour of the taxpayer holding that mere possibility of its being used
subsequently for other project would not be a bar from availing facility of
project import
Also held that it is not essential that title in the imported equipment has to
transfer to the project owner
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RELEVANCE IN PROJECT PLANNING
Shifting focus, beyond machinery/ equipments that actually form part
of the plant/ main plant, for PI benefits
Larger relevance for rail, road, bridge projects
Contractor‘s ability to import high end equipment in India at
concessional rate of duty and servicing multiple projects thereafter
Given varying positions, prior or advance ruling may
be sought in complicated cases, for upfront clarity
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BENEFIT OF
PROJECT IMPORTS
FOR CIVIL
MATERIALS
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PROJECT IMPORTS FOR CIVIL MATERIALS
Projects like mega power projects, drinking water supply
projects, coal mining projects and fertilizer projects entitled to
customs duty exemption/concession
Covers all items of machinery including
Prime movers, instruments, apparatus and appliances,
Control gear and transmission equipment,
Auxiliary equipment (including those required for R & D testing
and quality control)
All components (whether finished or not) or raw materials for the
manufacture of the aforesaid items and their components
required for setting up & substantial expansion of the project
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Availability of exemption for steel and cement used for civil
construction?
Coverage of 9801 – machinery, equipment and raw materials
and components for their manufacture
Definitions under Black‘s Law Dictionary:
- „Machinery‟ - “A device or apparatus consisting of fixed and moving
parts that work together to perform some function – Also termed as
apparatus; device”
- „Equipment‟ - ““The article or implements used for a specific
purpose or activity” ”
The Supreme Court, in the case of Commissioner of Income Tax
v. Mir Mohd. Ali (AIR 1964 SC 1693) relied upon the following
definition of ‗machinery‘:
PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)
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―The word „machinery‟ when used in ordinary language prima facie,
means some mechanical contrivances which by themselves or in
combination with one or more other mechanical contrivances, by the
combined movement and interdependent operation of their
respective parts generate power, or evoke, modify, apply or direct
natural forces with the object in each case of effecting so definite or
specific a result”
Civil material like cement and steel may not qualify as machinery
or equipments
The phrase - ‗Components or raw material‘ also used in 9801
Components or raw material qualify only when the same is used
in the manufacture of machinery and equipments – not
applicable for Cement and Steel to be used for civil construction
Thus, customs duty exemption/concessions may not be
available for Cement and Steel to be used for civil construction
PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)
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Pertinent to note how this issue manifests itself under Excise
for Mega and Ultra-Mega Power Projects (―UMPPs‖)
Excise exemption for a Mega and Ultra Mega Power Project is
subject to customs duty exemption
As discussed, customs duty exemption doubtful for steel and
cement for civil works
Accordingly, even excise exemption for steel and cement for civil
works jeopardized
It is pertinent to note that for UMPPs, format of certification from
Chief Engineer in the Central Electricity Authority specifically
includes Cement and Steel for civil works – greater clarity
required
PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)
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Possible to say that a civil structure is an integral part of plant and
therefore eligible for PI benefits?
What if sponsoring authority approves essentiality of civil materials for
completion of the respective plant?
Though not in context of civil materials, SC in CCE V. Paradeep
Phosphates [2006 (200) ELT 515] approved the principle that once goods
approved as essential requirement for completion of the plant by the
sponsoring ministry, the PI benefits would be available
Eligibility for importing micro-silica (sand), under the PI Scheme, for construction
of spillway structure of the dam – prima facie merits seen in the case and matter
remanded de novo – Tehri Hydo Development Corpn Ltd V. CCE [ 2007 (212)
ELT 366]
Test of functionality to be proved - SC in CIT V. Taj Mahal Hotel [1971 (82) ITR
44] – reasonable level of complexity
Difficulty in importing civil materials against advance licence also, as
arguably not used in manufacture of goods
PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)
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RECENT
EXTENSION OF
CONCESSIONS –
BROWNFIELD
EXPANSION OF
MEGA POWER
PROJECTS
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BROWNFIELD EXPANSION OF MPPs
A concessional basic customs duty of 2.5 percent to be applicable
on imports for brown field expansion of existing mega projects under
the PI scheme.
All other benefits under mega power policy available to greenfield
projects would also be available to an expansion unit provided the
size of expansion units is not less than that provided in the earlier
phase
No excise exemption for indigenous supplies to the project but
deemed export benefits available
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The expression ‗brown-field expansion‘ not defined either through
the Mega Power Policy or under the customs law resulting in lack of
clarity on following issues:
What qualifies as expansion? Essential for the new facility to be dependent
on existing capacity or can it be a standalone unit and still qualify as a
brown-field expansion?
Mere co-location sufficient? Very commonly seen since due to availability of
large tracts of land
As per MPP, size of expansion units not to be less than the size of existing
units. PI Scheme also states that project will qualify as expansion only if
capacity enhancement more than 25 percent – both conditions to be
fulfilled?
Treatment of brown-field project of 1000 MW or more ?
BROWNFIELD EXPANSION – ISSUES
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‗Deemed Exports‘
goods supplied do not leave the country; and
goods must be manufactured in India
payment received either in INR or in free foreign exchange
‗Deemed Exports‘ eligible for certain export related facilities
and benefits
Ten categories of supply of goods by main /sub- contractors
which qualify as ‗Deemed Exports‘
(a) Supply of goods against Advance Authorization
(b) Supply of goods to EOUs/ STPs/ EHTPs/ BTPs
(c) Supply of capital goods to holder of EPCG Authorization
DEEMED EXPORTS – CONCEPT
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(d) Supply of goods to projects financed by multilateral or bilateral
agencies/ funds – typically covers infrastructural projects
(e) Supply of capital goods, … to fertilizer plants
(f) Supply of goods to any project or purpose in respect of which
the MOF, by a notification , permits import of such goods at zero
customs duty – covers mega power projects and UMPPs
(g) Supply of goods to power projects and refineries not covered by
above category – covers non-mega power and MPP
expansion projects
(h) Supply of marine freight containers by 100% EOUs
(i) Supply to projects funded by UN Agencies
(j) Supply of goods to Nuclear Power Projects through competitive
bidding as opposed to ICB
DEEMED EXPORTS – CONCEPT (CONT)
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Essential for the goods supplied to be manufactured in India
Benefits of deemed exports under paras (d), (e), (f) and (g)
only if the supply is made under procedure of ICB
Exception for Mega Power Projects
Following lines added
―However, in regard to mega power projects, the requirement of
ICB would not be mandatory, if the requisite quantum of power
has been tied up through tariff based competitive bidding or if
the project has been awarded through tariff based competitive
bidding”
Deemed exports governed by chapters 8 of the Foreign
Trade Policy (―FTP‖) and the corresponding Handbook of
Procedures (―HoP‖)
DEEMED EXPORTS – CONCEPT (CONT)
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DEEMED EXPORTS – BENEFITS
Advance Authorization/
Advance Authorisation
for annual requirement/
Duty free import
Authorisation (“DFIA”)
Deemed Export Drawback Exemption / Refund from
terminal excise duty
Benefits under Deemed Exports – Summing up
• Pre-export benefit
• Allows duty free import
of inputs for manufacture
of the goods to be
exported
• Fuel, oil, energy,
catalysts and mandatory
spares upto 10%,
• Enables draw back of
excise, customs and
service tax paid on inputs
used in manufacture of
goods meant for deemed
exports
• Benefit can be claimed
only if CENVAT
credit/rebate has not
been availed by the
applicant
• Enables manufacturers to
supply goods free of output
excise duty
• Supplies should be made
against ICB
• In other cases, refund of
terminal excise duty will
be given
• Benefit can be claimed
only if CENVAT
credit/rebate has not been
availed by the applicant
Benefit on output legBenefit on input leg – mutually exclusive
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Thus, for deemed exports, the OEM can claim benefits on both input
as well as output side
The above benefits are available to the OEM as well as his sub-
contractors subject to conditions under para 8.6.2 of the FTP as
under:
being mentioned specifically as a sub-contractor (either initially or
subsequently) in the contract between project owner and the EPC
contactor;
the sub-contractor ships the goods directly to the project site; and
Project authority certificate and payment certificate is issued by
project owner to the main contractor and by the main contractor to
the sub-contractor
Thus the deemed export benefits can flow down through the
supply chain and proper planning through out the supply chain
would significantly reduce the costs of the project
DEEMED EXPORTS BENEFITS TO SUB – CONTRACTOR
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HC in Dee Development Engineers Ltd V. UOI [2010-TIOL-491-
HC], was appraising the issue to extending benefits to sub-contractor
for goods supplied to a project funded by notified agencies
Facts
The eligible project awarded supply contract to M/s Thermax
Babcock & Wilcox Ltd, Pune and issued necessary certificate in its
favour so as to enable availment of duty benefits
Thermax Babcock & Wilcox Ltd in turn sub-contracted part of
supplies to the Assessee
Assessee supplied the goods directly to the project site under excise
exemption on grounds that valid certificate in favour of Thermax
Babcock & Wilcox Ltd existed at material times, who has placed
supply orders on the Assessee
DEEMED EXPORTS BENEFITS TO SUB – CONTRACTOR
(CONT)
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Revenue‟s case
Exemption benefits extends to only those parties in whose favour a
valid certificate has been issued and not otherwise
HC Decision
The court held that:
“as no certificate was issued by the Project Implementing Authority approved
by the Government of India in favour of the assessee, therefore, it
(assessee) cannot claim exemption from duty on the basis of certificate
(Annexure A2) issued in favour of the supplier M/s Thermax Babcock &
Wilcox Limited, Pune”
Comments
Evidently, the denial of benefits by the court were preceded by lack
of planning in the whole arrangement
DEEMED EXPORTS BENEFITS TO SUB – CONTRACTOR
(CONT)
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PROCEDURAL ISSUES IN CERTAIN CASES
Period of limitation for claiming duty drawback or TED refund in case
of supplies under para 8.2 (d), (e), (f), (g), (h), (i) and (j)
Claims should be filed within a period of twelve months from date of
receipt of supplies by project authority or from date of receipt of the
payment as per the option of applicant, either against a particular
project or all the projects
No clarity of construction of the expression ‗a particular project or all the
projects‘
Claims may also be filed where part payments have been received.
100 percent TED refund may be allowed after 100 percent supplies
have been made physically and payment received at least up to 90
percent
Implication whether refund would not be forthcoming before completion
of project and 90 percent payment?
Potential impact on reserve payments in some cases
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CONTROVERSIES SURROUNDING ICB
Many projects brought into existence through EPC contracts have no output excise/ service tax liability – like power projects
Hence, excise duty on the procurement side becomes a cost
Notification 6/ 2006 – CE, vide entry 91, provides for an exemption from excise duty to ―goods supplied against International Competitive Bidding (ICB)‖
Above exemption subject to Customs Duty exemption
The phrase ―goods supplied under ICB‖ however is not defined – ie ICB to be undertaken at what stage – IPP or Concession/ EPC/ OEM? – reasonable clarity that at IPP\EPC\PPA level should suffice
Resultant ambiguities best exemplified by power projects till recently – issue resolved for Mega Power projects vide introduction of entry 91B in Budget 2010?
―Goods supplied to mega power projects from which the supply of power has been tied up through tariff based competitive bidding or a mega power project awarded to a developer on the basis of such bidding‖
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MEGA POWER PROJECT – ICB WHETHER STILL
NEEDED?
Application for MPP status typically disposed off in two stages ie the
―in-principle‖ approval and the ―final clearance‖
All notified/ prescribed benefits to MPPs available only after final
clearance
Alternative for the interim period?
Advance Authorization could be used in interim period to minimize the
temporary outflows on customs and excise duty on procurements by the
contractor (subject to ICB)
Such benefit available irrespective of project having been accorded MPP
status
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Key conditions (amongst others) for grant of the Mega Power Project status? Either project should have been awarded on basis of competitive bidding; or
supply of power has been tied up through tariff based competitive bidding
Hence most times, ICB may not be critical
Exceptions to above – State Utilities Typically the IPP or the project award stage does not arise as generation utility of
the state responsible to undertake the project
As per the Tariff Policy, state utilities need not tie up sale of power on a competitive bidding basis
Given the above, a state utility may undertake a project without following both the attendant conditions – fate of deemed export benefits (especially excise duty exemption)? If ICB followed to award the EPC contract, for corresponding supplies/ works,
benefits will still be available
MEGA POWER PROJECT – ICB WHETHER STILL NEEDED?
(CONT)
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DEEMED V. PHYSICAL EXPORTS – CENVAT
IMPLICATIONS
Reasonable degree of debate on whether deemed export supplies
trigger restrictive implications under Rule 6 of the Cenvat Credit
Rules, 2004 (Credit Rules) in hands of the local manufacturer-
supplier
Ie cenvatability of corresponding input credits (excise duty/ service tax)
in such cases?
The Revenue contentions
Distinction between physical and deemed exports
Benefits (by way of cenvat credit) advanced in case of physical exports
cannot be made available to deemed exports
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DEEMED V. PHYSICAL EXPORTS – CENVAT
IMPLICATIONS (CONT)
Recent Development
Credit Rule 6(6) amended to include the following:
all goods which are exempt from the duties of customs leviable under the
First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the
additional duty leviable under sub-section (1) of section 3 of the said
Customs Tariff Act when imported into India and are supplied, —
(a) against International Competitive Bidding; or
(b) to a power project from which power supply has been tied up through
tariff based competitive bidding; or
(c) to a power project awarded to a developer through tariff based
competitive bidding,
in terms of notification No. 6/2006-Central Excise
Implication
Legislative intent to provided tax benefits to deemed exports ratified
Welcome amendment – amicable resolution of the dispute!!
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Para 8.3 (c) of FTP provides as under:
“Exemption from terminal excise duty where supplies are made against ICB.
In other cases, refund of terminal excise duty will be given”
“In other cases” – connotation?
Cases in which ICB has not been followed; and / or
Cases in which no central excise exemption notification (for eg supply to
Advance Authorization or EPCG authorization holder)
Doctrine of unjust enrichment applicable [Sahakari Khand Udyog
Mandal Ltd vs CCE, 2005 - TIOL- 48 – SC – LB]
duty payments to be reflected as ‗Receivables‘; and
Ability to satisfactorily prove that the amounts being claimed as refund
have not been passed on to the ultimate consumers
TED EXEMPTION OR REFUND?
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Refund of Excise duty technically unavailable for non-mega power
projects – unlike mega power projects and UMPPs
Para 8.4.4 (iv) reads as under:
“Supply of Capital goods and spares upto 10% of FOR value of capital goods to
power projects in terms of paragraph 8.2(g) shall be entitled for deemed export
benefits ….. Supplier shall be eligible for benefits listed in paragraph 8.3(a) and (b) of
FTP, whichever is applicable.
However, supply of goods required for setting up of any mega power projects
…., shall be eligible for deemed exports benefits as mentioned in paragraph
8.3(a), (b) and (c) of FTP, whichever is applicable
Further, supply of goods required for the expansion of existing mega power
project ….. shall also be eligible for deemed export benefits as mentioned in
paragraph 8.3 ( a), (b) and (c) of FTP, whichever is applicable.,….”
Attempts at refund still made basis paragraph 8.4.4 (i) of FTP read
with 8.3.1 (iv) of the HOP – interpretative issue
TED EXEMPTION OR REFUND? (CONT)
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Paragraph 8.4.4 (i) of FTP
“In respect of supplies made under paragraphs 8.2(d), (f) and (g) of FTP, supplier
shall be entitled to benefits listed in paragraphs 8.3(a), (b) and (c), whichever is applicable”
Thus as per the above paragraph, all the deemed export benefits will be available for supplies to mega as well as non-mega power plants – contradiction with Para 8.4.4 (iv)
Paragraph 8.3.1 (iv) of HOP
In respect of supplies under categories mentioned in paragraphs 8.2(d), (e), (f), (g),(h), (i) and (j) of FTP, claim may be filed either on the basis of proof of supplies effected or payment received……100% TED refund may be allowed after 100% supplies have been made physically and payment received at least upto 90%.
However, paragraph 8.4.4 (iv) being more specific to power projects appears to be the more appropriate paragraph – in which paragraph excise exemption / refund is not available for non-mega power projects
TED EXEMPTION OR REFUND? (CONT)
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Nil input and output indirect tax cost for a deemed exporter who is
eligible for all three deemed export benefits
Viz. advance authorization or deemed export drawback on the input side
and excise duty exemption or refund on the output side)
For those ineligible for excise duty exemption or refund on the output
side, output excise duty becomes a cost
‗Manufacture‘ in India – key requirement for deemed export benefits
‗Manufacture‘ under FTP wider than under Central Excise laws
Certain activities may amount to ‗Manufacture‘ under FTP (and enjoy
deemed export benefits) but not amount to ‗Manufacture of excisable
goods‘ under Central Excise laws (and not suffer Excise duty)
ONSITE ACTIVITIES – „MANUFACTURE‟?
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‗Manufacture‘ under FTP:
“Manufacture” means to make, produce, fabricate, assemble, process or
bring into existence, by hand or by machine, a new product having a
distinctive name, character or use and shall include processes such as
refrigeration, re-packing, polishing, labelling, Re-conditioning repair,
remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for
the purpose of FTP, shall also include agriculture, aquaculture, animal
husbandry, floriculture, horticulture, pisciculture, poultry, sericulture,
viticulture and mining”
Bringing into existence immoveable property through onsite
fabrication or assembly = ‗manufacture‘ under FTP?
Circular F. No. Misc.8/AM-2001/DBK Cell, dated December 5, 2000
issued by the Directorate General of Foreign Trade (―DGFT‖) -
pertinent
ONSITE ACTIVITIES – „MANUFACTURE‟? (CONT)
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The circular: relevant excerpt
“It is noted that it is not possible for a single contractor to manufacture
himself all the items required for completion of such projects and hence
certain items…have necessarily to be procured from other sources. These
items are often directly supplied to the project for assembly, commissioning,
erection, testing etc at site. It is, therefore, clarified that for all such directly
supplied items whether imported or indigenous as are used in the project,
the condition of „manufacture in India‟, a pre-requisite for grant of deemed
export benefits, is satisfied in view of the fact that the aforesaid activities
being undertaken at the project site constitute „manufacture‟…”
Bringing into existence a project (a power project, for example) or
part thereof constitutes ‗manufacture‘ under FTP?
If yes, handing over the project to owner = deemed export?
ONSITE ACTIVITIES – „MANUFACTURE‟? (CONT)
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If yes, entitled for deemed export benefits on the input side and no
excise duty on the output side?
May be explored by those ineligible for excise duty exemption or
refund on the output side
Technical issues:
All deemed export categories require ‗supply of goods‘
Such interpretation will equalize indirect tax benefits for mega and non-
mega power projects – against policy framework
ONSITE ACTIVITIES – „MANUFACTURE‟? (CONT)
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As discussed earlier, for those ineligible for excise duty exemption or
refund on the output side, output excise duty becomes a cost
Broad definition of ‗Manufacture‘ under FTP:
“Manufacture” means to make, produce, fabricate, assemble, process or
bring into existence, by hand or by machine, a new product having a
distinctive name, character or use and shall include processes such as
refrigeration, re-packing, polishing, labelling, Re-conditioning repair, remaking,
refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose
of FTP, shall also include agriculture, aquaculture, animal husbandry,
floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and
mining”
Minor processing may amount to ‗Manufacture‘ under FTP but not
under Central Excise laws
MINOR PROCESSING – „MANUFACTURE‟?
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Importing equipments and polishing or labeling or repacking them
constitutes ‗manufacture‘ under FTP?
If yes, supply of such polished/ labeled/ repacked equipments to
owner = deemed export?
If yes, entitled for deemed export benefits on the input side and no
excise duty on the output side?
May be explored by those ineligible for excise duty exemption or
refund on the output side
Technical issues:
‗manufacture‘ = new, marketable product/good must emerge
Such interpretation will equalize indirect tax benefits for mega and non-
mega power projects – against policy framework
MINOR PROCESSING – „MANUFACTURE‟? (CONT)
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PROJECT IMPORTS
& DEEMED EXPORT
BENEFITS TO
POWER PROJECTS
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NON-MEGA POWER PROJECT
Benefit Initial Set Up Expansion
Project Import linked customs
duty concession*
Excise Duty Exemption
Advance Authorization* #
Deemed Export Drawback#
Terminal Excise Duty Refund# ^
* In-principle availability indicated, may not be available for certain supplies
# ICB pre-condition for advancement of benefit
^ Also, refer the earlier discussions in this regard
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MEGA POWER PROJECT
Benefit Initial Set Up Expansion
Project Import linked customs
duty exemption/ Concession*
Excise Duty Exemption
Advance Authorization* #
Deemed Export Drawback#
Terminal Excise Duty Refund#
* In-principle availability indicated, may not be available for certain supplies
# ICB pre-condition for advancement of benefit or if supply of power, there from, tied or
project itself awarded on a tariff based competitive bidding (only in case of initial set up)
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ULTRA MEGA POWER PROJECT
Benefit Initial Set Up Expansion
Project Import linked customs
duty exemption/ Concession*
Excise Duty Exemption^
Advance Authorization* #
Deemed Export Drawback#
Terminal Excise Duty Refund#
* In-principle availability indicated, may not be available for certain supplies
^ If supply of power tied, there from, through a tariff based competitive bidding
# ICB pre-condition for advancement of benefit or supply of power tied, there from,
through a tariff based competitive bidding (only in case of initial set up)
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PROJECT IMPORT SCHEME
9801 00
All items of machinery including prime movers, Instruments,
Apparatus, Appliances, Control gear, Transmission equipment,
Auxiliary equipment, Equipment required for research and
development, Equipment for testing and quality control,
Components, raw materials for the manufacture of above items
and Spare parts not exceeding 10% of the value of the goods
specified above
Required for initial setting up of a plant or substantial
expansion (installed capacity increases by at least 25%) of a
unit of an existing unit , of a specified Industrial plant, irrigation
project, power project, mining project, project for oil & mineral
exploration or such other projects which the Central Government
may notify
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--- Machinery :
9801 00 11 ---- For industrial plant project
9801 00 12 ---- For irrigation plant
9801 00 13 ---- For power project
9801 00 14 ---- For mining project
9801 00 15 ---- Project for exploration of oil or other minerals
9801 00 19 ---- For other projects
9801 00 20 --- Components (whether or not finished or not) or
raw materials for the manufacture of aforesaid
items required for the initial setting up of a unit or
the substantial expansion of a unit
9801 00 30 --- Spare parts and other raw materials (including
semi-finished materials or consumable stores for
the maintenance of plant or project
CUSTOMS TARIFF CLASSIFICATION