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on

Dated: 04th NOV 2008 P.P.S.TOMAR

DGM(CORP. CONTRACTS)

PRESENTATION


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SCOPE OF PRESENTATION

INTRODUCTION

MEGA POWER PROJECT

DEEMED EXPORT BENEFITS

BENEFITS FOR MEGA POWER PROJECT

CONCLUSION


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MEGA POWER PROJECT

BACKGROUND

Ministry of Power, Govt. of India; D.O. No. C-286/95-IPC dated

10.11.1995

Regarding Setting up of Power Plants of Capacity 1000 MW or more

supplying Power to more than one State.


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MEGA POWER PROJECT

REQUIREMENTS FOR MEGA POWER PROJECT STATUS:

Power Plant with Inter State Distribution

Capacity

Thermal Power Plant

Having capacity of 1000 MW or more except

for North Eastern States and Jammu &

Kashmir where this limit is 700 MW

Hydro Power Plant

Respective limits for Hydro Power Plants are 500MW

and 350 MW

(As certified by an officer not below the rank of Joint Secretary to GOI in MOP)


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MEGA POWER PROJECT

ADDITIONAL REQUIREMENTS FOR CERTIFYING A POWER

PROJECT AS MEGA POWER PROJECT:

The beneficiary States should have constituted their

Regulatory Commissions with full powers to fix Tariffs.

The beneficiary States undertakes, in principle, to

privatise distribution in the cities having a population of more than one

million, within a period to be fixed by MOP.

The power purchasing state has agreed to provide

recourse to that states share of Central Plan allocation and other

devolutions towards discharge of any outstanding payment in

respect of purchase of power.


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FOREIGN TRADE POLICY

FOREIGN TRADE POLICY (2004-2009)

Ministry of Commerce, Government of India (GOI) has issued a Foreign

Trade Policy (FTP) & Handbook Of Procedure : 2004-2009

Annual Supplements are also incorporated by Ministry of Commerce.

Latest supplement has updated this policy on 11th

April, 2008 w.e.f. 1st

April, 2008


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DEEMED EXPORT

Those transactions in which the goods supplied do not leave the country

and the payment for such supplies is received in Indian rupees or in free

foreign exchange.

It is essential for the goods to be manufactured in India for being eligible

to be considered as Deemed Exports.

Though the Deemed Exports are not physical exports, they are eligible

for certain export related facilities and benefits.


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DEEMED EXPORT

Clause 8.2

There are ten categories [(a) to (j)]of supply of goods by main /sub-

contractors which are regarded as Deemed Exports, provided goods aremanufactured in India.

Clause 8.2 (g):

Supply of goods to Power Projects and Refineries

Benefits of Deemed Export are available to various categories of supply

including under 8.2 (g), only if the supply is made under procedure of

International Competitive Bidding (ICB).


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BENEFITS FOR DEEMED EXPORT

Clause No. 8.3 of FTP

(a) Advance Authorization/Advance Authorization for annual

requirement/DFIA

(b) Deemed Export Drawback

(c) Exemption from Terminal Excise Duty (TED) where supplies aremade against ICB. In other cases, refund of TED will be given.


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BENEFITS TO SUPPLIER

Clause No. 8.4

Supplier, in case of Power Project shall be eligible for benefits listed in

8.3(a) and (b), whichever is applicable.

In case of Mega Power Project, Supplier shall be eligible for benefits

listed in 8.3(a), (b) and (c), whichever is applicable.

Further supply of Capital Goods and spares upto 10% of FOR value of

Capital Goods to Power Projects shall be entitled for Deemed Export

Benefits provided the ICB procedure is followed.

Benefits of Deemed Exports are also available for Renovation/

Modernization.


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HOW BENEFITS ARE AVAILABLE :

Chapter-4 of Foreign Trade Policy (FTP)

Duty Exemption & Remission Scheme

Duty Exemption Schemes Duty Remission Scheme

Advance Authorization

Duty Free

Import Authorization

Duty Entitlement

Passbook Scheme

Duty Drawback Scheme




Duty Entitlement

Passbook Scheme

Duty Remission Scheme

Duty Entitlement

Passbook Scheme



Duty Entitlement

Passbook Scheme


Duty Free



Duty Entitlement

Passbook Scheme



Duty Exemption Schemes

Duty Free



Duty Entitlement

Passbook Scheme



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TERMINAL EXCISE DUTY EXEMPTION:

Benefit is provided for exemption of Central Excise paid on finishedgoods supplied to project.

The claim is filed on the basis of procedure prescribed by central

excise authority.


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DOMESTIC SUPPLIES

XY

X1 X3X2 Y1

FINAL PRODUCT

Y2 Y3

(DOMESTICALLY MANUFACTURED)

DOMESTIC INPUTS(Raw Material, Intermediate

Supplies, Sub-Assemblies etc)

IMPORTED INPUTS(Raw Material, Intermediate


EXCISE

DU

TY

CUS

TOM

DUTY

TERMINAL EXCISE DUTY

FROM

MAIN CONTRACTOROR

SUB-CONTRACTOR (S)

WHOSE NAME APPEARS IN

CONTRACT OR

SUBSEQUENTLY ADDED


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DOMESTIC SUPPLIES (DEEMED EXPORT BENEFITS)

XY

X1 X3X2 Y1

FINAL PRODUCT

Y2 Y3

(DOMESTICALLY MANUFACTURED)

DOMESTIC INPUTS(Raw Material, Intermediate


IMPORTED INPUTS(Raw Material, Intermediate


EXCISE

DU

TY

CUSTOM

DUTY

TERMINAL EXCISE DUTY

(Exempted in case of Mega)

FROM

MAIN CONTRACTOR

OR

SUB-CONTRACTOR (S)


CONTRACT OR

SUBSEQUENTLY ADDED

FROM

MAIN CONTRACTOR

OR

SUB-CONTRACTOR (S)


CONTRACT OR

SUBSEQUENTLY ADDED

Deemed ExportDrawback

(CENVAT credit is not availed)


Deemed ExportDrawback


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BENEFITS FOR MEGA POWER PROJECT

Nil Custom Duty under the Project Import (Chapter 9801)

Deemed Export Benefits

8.3(a) Advance Authorization

8.3(b) Deemed Export Drawback if CENVAT Credit is not

availed

8.3(c) Terminal Excise Duty Exemption

Price Preference to Domestic Bidder if Project is under CPSU

Income Tax Benefits


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Saving in case of Mega Power Project on Foreign Inputs


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CONCLUSION

Large Capacity Power Plants (Mega/ Ultra Mega Power Projects) are

needed in order to meet increasing demand of Power on the most viable

root.

Benefits are necessary to promote the Power Producers for setting up of

large capacity Power plants.

These benefits also promote the Domestic Manufacturers thereby putting

hands in countries industrial, infrastructural and economic growth.


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ADVANCE AUTHORIZATION:

Issued to allow duty free imports of inputs, which are incorporated in

final product.

It allows duty free import of mandatory spares up to 10% of CIF valueof authorization which are required to be supplied with resultant

product.

Advance authorization is issued against import content mentioned in

PAC (Project Authority Certificate). Payment against such supplies

shall be certified by Project Authority.

PAC

Payment Certificate

BACK
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DUTY FREE IMPORT AUTHORIZATION(DFIA):

This scheme is in force from 1st May, 2006.

DFIA is issued to allow duty free import of inputs, fuel oil,energy sources, catalyst, which are required for production of

export/ Deemed export product.

These authorization shall be issued only for products for

which Standard Input and Output Norms (SION) have been notified,however Advance Authorization can also be issued on basis of

Adhoc norms/Self declared norms.

BACK


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DUTY ENTITLEMENT PASSBOOK SCHEME:

BACK


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DEEMED EXPORT DRAWBACK:

This benefit is provided for refund of Central Excise Duty paid on

inputs/ components, provided CENVAT credit has not been availed by

applicant.

This benefit is provided for refund of Custom Duty paid on inputs/

components also.

Drawback is available subject to procedure laid down in Customs and

Central Excise Duty Drawback Rules, 1995.

The claim may be filed on the basis of proof of supplies effected or

payment received, however grant of deemed export drawback will be

limited to the extent of payment received.

Payment Certificate BACK
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BENEFITS TO SUPPLIER

Clause No. 8.4

Supplier shall be eligible for benefits listed in 8.3(a) and (b), whichever isapplicable.

In case of Mega Power Project, Supplier shall be eligible for benefits

listed in 8.3(a), (b) and (c), whichever is applicable.


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FOREIGN TRADE POLICY

MEGA

POWER PROJECT

NON-MEGA

POWER PROJECT

RENNOVATION &

MODERNIZATION

RELEVENT PROVISIONS

OF BENEFIT AVAILABLE

TO POWER PROJECT

ICB DCB ICB DCBICBDCB


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FOREIGN TRADE POLICY 1

FOR CIF CONTENT(QUOTED IN SH 1):

1. NIL CUSTOM DUTY UNDER MEGA STATUS

FOR EX-WORKS CONTENT(QUOTED IN SH. 2):

1. ADVANCE AUTHORIZATION

2. DEEMED EXPORT DRAWBACK

3. TERMINAL EXCISE DUTY EXEMPTED

BACK


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FOR CIF CONTENT(QUOTED IN SH 1): NA


CUSTOM DUTY EXEMPTED UNDER PROJECT IMPORT

BACK


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. CONCESSION CUSTOM DUTY


ADVANCE AUTHORIZATION

DEEMED EXPORT DRAWBACK

BACK


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CONCESSIONAL RATE OF CUSTOM DUTY

BACK


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1. CONCESSION CUSTOM DUTY


ADVANCE AUTHORIZATION

DEEMED EXPORT DRAWBACK

BACK


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CONCESSIONAL RATE OF CUSTOM DUTY

BACK


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MEGA POWER PROJECT

MEGA POWER PROJECTSs BENEFIT :

Nil Custom Duty (General Exemption no. 107, SL. No. 400, Chapter no. 98.01, condition no. 86)

condition no. 86

(i) The beneficiary States should have constituted theirRegulatory with Commissions full powers to fix tariffs.

(ii) To privatise distribution in the cities of powerpurchasing states having a population of more than onemillion, within a period to be fixed by MOP.

Continued.


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MEGA POWER PROJECT

MEGA POWER PROJECTSs BENEFIT :

(iii) The power purchasing state has agreed to providerecourse to that states share of central plant allocation

and other devolutions towards discharge of anyoutstanding payment in respect of purchase of power.

The contract shall be registered by PROMOTOR at some

port (since PROMOTOR is importer). A recommendatoryletter addressed to the commissioner of custom of the portwhere contract is being registered shall also be issued byCMD along with the certified list of imported goods.


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VARIOUS CATEGORIES OF SUPPLY UNDER DEEMED EXPORT

Clause 8.2

(a) Supply of goods against Advance License / Advance License for

annual requirement/DFRC under the Duty Exemption /Remission

Scheme;

(b) Supply of goods to Export Oriented Units or Software Technology

Parks (STPs) or Electronic Hardware Technology Parks (EHTPs)

or Bio Technology Parks (BTP);

(c) Supply of capital goods to holders of licenses under the Export

Promotion Capital Goods (EPCG) scheme;

CONCLUSION


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CONCLUSION

(d) Supply of goods to projects financed by multilateral or bilateralagencies/funds as notified by the Department of Economic Affairs,

Ministry of Finance under International Competitive Bidding in

accordance with the procedures of those agencies/ funds, where

the legal agreements provide for tender evaluation without

Including the customs duty;

(e) Supply of capital goods, including in unassembled/ disassembled

condition as well as plants, machinery, accessories, tools, dies

and such goods which are used for installation purposes till the

stage of commercial production and spares to the extent of 10% ofthe FOR value to fertilizer plants;

(f) Supply of goods to any project or purpose in respect of which the

Ministry of Finance, by a notification, permits the import of such

goods at zero customs duty;


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CONCLUSION

(g) Supply of goods to the power projects and refineries not covered in(f) above;

(h) Supply of marine freight containers by 100% EOU (Domestic

freight containers-manufacturers) provided the said containers are

exported out of India within 6 months or such further period aspermitted by the customs;

(i) Supply to projects funded by UN agencies; and

(j) Supply of goods to nuclear power projects through competitive

bidding as opposed to International Competitive Bidding.

Benefits of Deemed Export are available to categories of supply under 8.2

(d), (e), (f), (g), only if the supply is made under procedure of

International Competitive Bidding (ICB).

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