Page 24 - Chemexcil NEWS August - September 2017 for web
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production of goods, which will be necessary transfer/supply of goods from one unit of EOU/
under the GST regime. EHTP/STP/BTP to another has been made liable to
GST, as these constitute “supply” under the GST
Further, the Advance Release Order (ARO) facility law.
available for domestic procurement of inputs
under AA has been restricted only to certain Deemed Exports: The deemed exports scheme is
inputs (listed in the Fourth Schedule of Central an incentive for transactions where certain goods
Excise Act, 1944 (CE Act)) such as tobacco and are domestically supplied by the manufacturers
petroleum products.Therefore, AA cannot be used or exporters for payment received in INR or
for domestic procurement of other inputs. free foreign exchange. For deemed exports, AA
benefits have been continued, however, the duty
The Export Promotion Capital Goods (EPCG) exemptions under AA are restricted (as set out in
scheme encourages manufacturers / exporters point 2 above).
to import capital goods including spares for
pre-production, production and post-production Deemed Export Drawback benefits have been
activities at zero duty subject to an export restricted to refund of BCD only. Terminal Excise
obligation of 6 times of duty saved on capital Duty refund has been made available only for
goods imported under the EPCG scheme, to be goods covered under Schedule 4 of the CE Act
fulfilled in 6 years from the authorization issue subject to eligibility of the supply of such products
date.Under the GST regime, the exemption from as deemed exports. Therefore, the scope of the
import duties under EPCG does not extend to any scheme has also been reduced.
IGST payable and is restricted to BCD. Further, the
ARO facility for domestic procurement of capital Evidently, the changes in the FTP are substantial
goods has been discontinued. in as much as they restrict the purpose of the scrip
and authorization holders as regards duty payment
Schemes in the nature of Export Oriented Unit to a great extent. Effectively, the duty benefits
(EOU), Electronics Hardware Technology Park under FTP scheme are by and large applicable
(EHTP), Software Technology Park (STP) or Bio- only to customs duties and do not extend to levies
Technology Park (BTP) were introduced to aid in of GST. Existing scrip and authorisation holders
the establishment of units proposing to export a will have to immediately start paying GST in cash
broad spectrum of their goods and services with as opposed to debiting their scrips or enjoying
the exception of permissible sales in the Domestic an exemption, clearly resulting in cash flow
Tariff Area (DTA). These units enjoyed duty-free considerations, even while credit of such taxes
import of input used in their activities. paid would be available as credit for set-off (as in
the case of scrips presently held by importers as
In the GST regime, though exemption has been well).
given to the import of goods covered under GST
from customs duties, IGST and Compensation The revamp of the export promotion schemes has
Cess is payable on these imports. Further, GST in a manner raised certain pertinent questions
is payable on domestic procurement which was as regards the FTP. Do schemes like AA and
earlier exempted ab initio.Only procurement of EPCG continue to be attractive options given the
goods covered under Fourth Schedule of the CE export obligation that comes with it? Have these
Act will continue to enjoy the ab initio exemption amendments tilted the balance of convenience in
from central excise duty. favour of domestic supplies as opposed to export
supplies?
On DTA clearances of finished goods, GST will be
payable by EOUs, along with the requirement to Updation:
pay back the BCD on imported inputs. Further, the
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