20:20 Financial Health Check Up – 20 Financial Self Health check ups - simple mechanism with formulas

Dear friends

Wish you and your family very Happy New year 2020 !!!

We have master health check up schemes to check our health yearly once. I thought there is a need for financial health check up also yearly once. In medical health we have BP, Sugar tests etc with “ normal “ level indicators. Likewise I have identified a simple & easy system to measure our Financial Health with indicators which a layman can also apply easily. If You are pass on all the indicators then  you are financially secured & if you are not pass even in minimum indicators, don’t worry and get it stabilized during 2020.

1. 50:20:30

We do not know how much we can spend and how much minimum amount we need to save out of our monthly income.

50% can be spent on household expenses such as rent, electricity, groceries etc

Minimum 20% must be saved/invested for future in Mutual Fund SIP, Gold ETF, PPF,RD & FD etc  Balance 30% shall be utilized for conveyance, garments, entertainment, hotel expenses etc.,

2. Insurance

An earning person should be sufficiently covered for his life. If a sole earning member is no more then his dependents will be suffering financially to meet out their day to day expenses and will be in debt risk of home loan, car loan etc  Hence, earning member of a family should be covered minimum 35 times of his annual income. For example If a person is earning Rs.10,00,000 per annum then Rs.10,00,000 x 35 = Rs.3,50,00,000. I strongly suggest to have only Term Policy because you can be covered for higher amount at lesser premium. That too you need to take this policy at early stage of life atleast before age of 30.

3. 20 Times Annual Income for Retirement Life

After the age of 40 only many of us will think about retirement life. If you want to live your retirement life peacefully with same present life style without anyone’s financial support then 20 times of your present Annual income should be made available as corpus money. Hence plan early and start save under National Pension Scheme, MF retirement schemes etc

4. EMI’s should be within 40%

We used to buy right from Air Conditioner to Home everything under EMI. Make sure total EMI’s are maximum 40% of your monthly income. Whenever you want to pre close loans make sure to close higher interest loans first. 

5.20/4/10 Car Formula

If you want to buy car then apply this formula.  20 is 20% of car price you should keep as cash reserve towards down payment. 4 is “with in maximum of 4 years close your car loan EMI”. 10 is “ your car loan EMI, fuel expenses should be maximum 10% of your monthly income”

6.How much risky investment ?

Most of us want to invest in Equity shares directly because it’s return is huge at the same time risk also high. But do not know how much we can allocate out of available sources. Simply deduct your age from 100. If your age is 35 then you can invest 65% of funds in equity shares.

7.How much we can use out of Retirement funds in case of emergency ?

Out of Corpus money created for retirement you can use maximum of 4% in case of emergency “in a year”. Otherwise you may fall short after retirement.

8.20/5 Formula for Home Loan

Here 20 is 20% funds you should keep as Initial Down payment. Your total payable EMI amount should be maximum of 5 times of your annual income. For example Annual Income is 15 lakhs hence for 5 years it is 75 lakhs. You are planning to buy house costing 80 lakhs. 20% of 80 lakhs is Rs.16 Lakhs which you need to keep for initial down payment. 80% of 80 Lakhs is Rs.64 Lakhs. Here 64 lakhs is well within 5 years Annual Income.

9.Investment return Doubling Formula “ 72 “

Do you want to know after how many years your investment will be become double ? If you invest @ 8% interest per annum then 72/8=9. I.e after 9 years your investment will be become double.

10.Investment return triple Formula “114”

Do you want to know after how many years your investment will be become triple ? If you invest @ 8% interest per annum then 114/8=14.4  I.e after 14 years  4 months your investment will be become triple.

11.How to find Future value of Money ?

“70” Formula – A price of a product is not constant and it is keep on increasing. Example : Gold.  We need to find out Inflation rate first which is published periodically by RBI. If you take current Inflation rate as 5.5% then 70/5.5= 12.7 i.e after 12 years 7 months your money value will become half i.e If you have Rs.10,000 today after 12.7 years its value will be Rs.5000 only. The reason to find out this, is to calculate how much you should save after adjusting  inflation rate.

 12.What is your Networth ?

Normally a business Organisation is valued by its Networth. Likewise For an Individual also Net worth can be measured. Your age should be multiplied by annual income divided by “10” For example Your age is 30 and Annual Income is 10 lakhs then 30x10/10 = 30 Lakhs must be the Networth. Networth is the total of your bank & cash balance, shares, MF & FD savings and gold etc., When calculate Networth as a thumb rule ancestral property and house property should not be considered.

13.Portfolio Restructuring Formula 5/25

For example if you keep 10 Lakhs in portfolio consisting 70% Equity shares 10% Gold & 20% in Debt funds. When there is valuation change of 5% in equity shares you need to restructure it. Because major 70% is the allocation for equity shares. But In the case of gold the overall allocation is only 10% hence 5% change itself is 50% of it . Hence we should restructure it when there is change of 25% value itself out of total money invested in gold.

14.Emergency Fund

Your Minimum Monthly expenses +EMI  X  6times you need to keep as emergency fund then only you can manage without taking loans. Your Monthly fund requirement is 50K then 6 times of it i.e Rs.3 Lakhs must be kept as Emergency fund in FD, Liquid MF etc

15.Bonus 10:90 Formula

Whenever you get Bonus you can utilize only 10% of if for your expenses. Balance 90% must be used to payback higher interest loans. If there is no loan then must be invested for future requirements.

16.60:40 Asset Allocation

Whenever you invest allocate 60% in Liquid assets ( convertible to cash quickly ) and only 40% in Illiquid assets

17.Credit Card Formula “30”

Whatever be your Credit card limit, use only 30% of it. This will help you to keep good credit score and will be a standard discipline in utilization of card.

18.Maximum of 2 Credit cards

Do not accept Credit cards even some says it is free. Each card you need to pay annual charges and multiple cards may hit your CIBIL score. Maximum 2 Credit cards only suggested to an individual person.

19.How much should you Owe ?

You should take loan maximum of 50% of your total assets. That also when you are approaching retirement age, you need to make Loan Zero and assets must be debt free.

20.How to invest Retirement Funds ?

Out of retirement funds, 70% should be invested in risk free standard return investments and balance 30% only can be invested in high risk/high reward investments.

Apply these formulas during 2020 and have a wealthy future.

Thank You.

Courtesy : Vikatan

HOW TO CRACK CBLR 2018 RULE 6 EXAMS ??

**Remarks updated on : 05.09.2020

Once CBLR'18 - 2021 online exam announcement is received from NACIN, We shall post important Q&A & tips free of cost on regular basis through EXIMBLOGS telegram channel. Hence subscribe to EXIMBLOGS channel now itself. Search eximblogs in telegram mobile app (or) visit www.eximblogs.com and click on the telegram app icon given in the top right hand side social media links.

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Refer below our previous post for 2020 online exam :

TIPS TO CLEAR CUSTOMS BROKER LICENSING REGULATIONS 2018 RULE 6 EXAM

Dear friends,

As you are aware CBLR18 Rule 6 March 2020 exam will be conducted online with negative marks for wrong answers. In objective type exams exact answer is must hence Rule 6 exam preparation strategy is completely changed and candidates needs to have in depth knowledge of Customs Act 1962 and all important regulations. Because of negative mark system a candidate has to answer at least 105 questions correctly. Because 105 Q x 3 marks = 315 less 45x-1 marks 45 = Minimum passing marks  = 270 hence you need to target at least 115 correct answers for safer side.

Unlike G card exams, apart from usual customs clearance procedures candidates will be tested for their in depth knowledge in Customs Act, Customs Tariff Act, GST, CBLR’18, Important customs regulations and rules, Inco terms 2020, LC procedures, allied Acts such as FSSAI, BIS etc.,

Now let us see how to crack CBLR’18 Rule 6 exam ??

Based on past experience, I suggest the following shall be the best strategy to crack Rule 6 exam;

A.    Candidates should know Customs Act 1962 thoroughly right from its year of enactment.

Example:

1.When Customs Act enacted & what is its Act number? Ans: 1962  & Act 52 of 1962

2.How many chapters are there in Customs Act & How many sections ? Ans: 17 chapters And 161 sections

B.    Candidates must by heart all important section numbers and its section title.

Example:

1.Which section deals with Prohibition of import and export of goods ? Ans: Sec11

2.Which section deals with power to grant exemption from duty ? Ans : Sec 25

C.   Especially following sections candidate will be expected to strong enough ;

Sections 2, 7,  11, 12,13, 14, 15, 16, 17, 18, 20, 21,22, 23, 25,26A,  27,28, 28AA,  28J, 30, 45, 46, 47, 48, 49, 50, 51, 53, 54 59, 60, 61, 65, 69, 74, 75, 77,84, 85, 92, 104, 105, 106A, 107, 110, 110A, 111,112,113,114,114A, 115,122, 127B, 128, 129, 130, 130E, 135, 142, 144, 147, 156, 157 

D.   Candidates should know the following areas in detail practically;

CBLR’18 regulations ( Obligations of Customs Broker is very important )  2.import/export documentation 3.Warehousing 4.Duty assessment and valuation including Customs Valuation Rules 2007 ( import/export ) 5. Refund of Duty 6.Transit, transshipment & coastal trade 7.Duty Draw back and Export promotion schemes 8.Baggage, import and export by Post and Courier 9.Adjudication, confiscation and penalty 10. Post clearance audit and Risk Management system 11. Free trade agreements, COO requirements and duty exemptions

E.    Do not miss latest and important basic points related to Indirect tax !!!

For example IGST applicability on imports, when BE late filing charges introduced ? within how many days from IGM Inward date we need to file BE ?  How much late filing charges imposed and it’s slab ? what is SVB and its important notifications governing SVB procedures ? SIIB role etc.,

F.    By heart important notification numbers !!!

Example : Reimport notifications 45 & 46 of 2017 and its differences

G.   Customs Tariff Act 1975

Even though it is practically impossible to memorize all the tariff items, by heart chapter number and its chapter heads. Don not miss to study chapter 77 is reserved for future use  !!!! Study General interpretation Rules and understand it.

All the best

Prepared By

Rajesh Audithyan M.com, MBA, ACS, LL.B,

Mob:9380229514

CBLR13 Rule 6 qualified

EXIM BLOGS, Chennai

Visit https://eximblogs.blogspot.com/ for more & free informations

And subscribe in https://www.eximblogs.com/ for regular updates

Date of Issue : 20.10.2019

Do you know ? IGST 0.1% only applicable on purchase when the buyer intend to export !! Very important GST notification unknown to many Merchant exporters and Customs Brokers !!!

When compared to past 41 months Indian export data, August 2019 is the worst month since Exports from India is reduced to 6%. Another side Exporters are facing cash crunch due to delay and confusions in IGST refund. Even though various IGST refund week programmes are conducted still Exporters are not getting refund on time to invest back in Exports.

Let us see one important mechanism with which merchant exporters can control cash outflow by way of GST. Illustration : A Chennai based exporter buys turmeric from a Erode based seller and plans to export it as it is. Now he has to buy the product @ 5% GST then apply for IGST refund. But he can pay only 0.1% GST under notification 41/2017 and even get it back after completion of export process.  

Following are the key points ;

·     Notification No 41/2017 Integrated Tax (Rate) dated 23rd October, 2017

·    Applicable for transaction between GST registered seller and registered merchant exporter only

·  Merchant exporter must be registered with an Export Promotion Council or a Commodity Board recognised by the Department of Commerce

·  Product has to be delivered to Port/ICD/CFS/dock directly OR directly to a registered warehouse from where the said goods shall be move for exports customs clearance

·  Merchant exporter can bring export cargoes from various suppliers to his registered warehouse to aggregate goods before export

·        Procurements under this Notification has to be exported within 90 days

·  After export process Merchant exporter has to give copy of Shipping bill to supplier for his GST compliance. Here very importantly he shall give a copy after blocking his overseas buyer name address and price in marker pen to keep his commercials confidential.

SVB LOAD - PRESUMPTION OF 8% PROFIT MARGIN - ARCELOR MITTAL CASE IS NOT A BENCHMARK FOR ALL RELATED PARTY VALUATIONS

Dear Friends

As we are aware, whenever the importer is related to Foreign supplier, the question of SVB load will arise. In below recent case, which is decided during this week by Hon’ble CESTAT, Mumbai we can understand ;

1.       Eventhough Foreign supplier has only 39% share holing in Indian Entity (two employees of the suppliers are Directors in Indian entity ) and the importers are partners of the Joint Venture as per the agreement both are related. The argument of “ Indian importer has 61% share holing and both are not related “ is rejected by CESTAT i.e it is upheld that they are Related Parties.

2.       Arcelor Mittal case can’t be a base for all related party SVB loading. Arcelor is a renowned seller of steel and not capital goods and therefore it is inappropriate and arbitrary to adopt 8% of profit margin for capital goods import.

3.       It was not established that the Foreign supplier company had posted higher profit percentage. Without providing any such data simple rejection of the declared profit margin is not acceptable. Moreover department has not adduced any evidence of any contemporaneous imports so as to indicate under valuation by Importers.

4.       Loading of value by 1% in respect of imported capital goods i.e. slitting line, which is already included in the value declared is sufficient

5.       Google India Pvt. Ltd. Vs. Commissioner of Customs SVB Chennai 2015 (315) (ELT) 449 (Tri-Chennai) declared profit margin of 1% is acceptable and Customs presumption of general profit percentage 8% as observed in Arcelor Mittal case can not be applied to all the cases.

M/S. MAHINDRA STEEL SERVICE CENTRE LTD VERSUS CC (IMPORT) MUMBAI

CUSTOM APPEAL NO. 86540/2013

Dated: - 14 August 2019

1.The Appellants M/s, Mahindra Steel Service Centre Ltd, imported goods from M/s. Metal One Corporation, Japan. The Original Authority, Joint Commissioner of Custom, SVB, enquiry into the valuation and has come to the conclusion that the buyer and seller are related and therefore the transaction value requires to be rejected and assessable value requires to be loaded by 7% in terms of Rule 8 of Customs Valuation Rules, 2007. Appeal filed by the Appellant was rejected by Commissioner Appeals vide Order dated 13.12.2012.

2. Learned Counsel for the Appellants submits that the foreign exporter nearly holds 39% stake in the Appellants; majority stake of 61% is held by Mahindra & Mahindra. Therefore, in terms of Rule 2(2) of custom Valuation Rules 2007, the Appellant and foreign supplier are not related. Learned Counsel further submits that the supplier has procured capital goods manufactured by M/s. Nittetsu Denji Techno Company Ltd Japan and supply to the Appellants including 1% margin; in terms of Rule 11 of Customs Valuation Rules 2007 manufacturers invoice is of great importance; the foreign suppliers is only facilitating the export from Japan and are earning a margin of 1% on the same. As per the ratio of tribunal decision in Google India Pvt. Ltd. Vs. Commissioner of Customs SVB Chennai 2015 (315) (ELT) 449 (Tri-Chennai) declared profit margin of 1% is acceptable, whereas the original authority has presumed that general profit percentage would be 8% as observed in Arcelor Mittal case. Learned Counsel submits that no details of import has been furnished; Arcelor Mittal is a renowned seller of steel and not capital goods and therefore it is inappropriate and arbitrary to adopt 8% of profit margin. The Learned Counsel further submits that he bonafide of the Appellants are established by the fact that department accepted the value of steel coils imported by them from the same exporter, Metal One, as the price of steel coils is same as that of the coils sold to unrelated parties, therefore, the transaction value needs to be accepted.

3. Learned AR for the department has reiterated the findings of OIO and OIA.

4. Heard both sides and perused the records of the case. We find that the lower authority has held that the foreign supplier and the Appellant are related parties in view of Rule 2(2) (ii), which states that persons shall be deemed to be related only if “they are legally recognised partners in business”. We find that the foreign suppliers and the Appellants are partners of the Joint Venture; as per the agreement the importers and suppliers are partners in business; two employees of the suppliers, that is Metal One Corporation, are nominated as directors of MSSCL. Therefore, we find that as found by the original authority the foreign suppliers and the Appellants are related.

4.1 However, we find that the adjudicating authority and the Appellant authority have sought to load the value of imported goods at a flat 8% of profit margin. The original authority has stated to rely on Arcelor Mittal. However, no details have been furnished. As submitted by the Appellants we find that the goods dealt by Arcelor Mittal and the supplier of the Appellants are not same. Under the circumstances loading of 8% is arbitrary. It is on records that for one year the profit margin of the supplier of the Appellants was recorded to be 2.4%. We find that the reasons given by the Original Authority for not accepting the same are not satisfactory, as it was not established to the supplier company and had posted higher profit percentage, if any. Without providing any such data simple rejection of the declared profit margin is not acceptable. Moreover department has not adduced any evidence of any contemporaneous imports so as to indicate under valuation by Appellants.

4.2 We find that Tribunal in the case of Google India Pvt. Ltd. (supra) held that nominal profit element was required to be added and not 10% profit margin. Moreover department has not adduced any evidence of any contemporaneous imports so as to indicate under valuation by Appellants. We find that Tribunal has observed as follows (para 13):

These goods are procured by the supplier from various sources and centralized at USA and resupplied to their affiliated companies including the appellant as per the specific requirement. It is not the case of the Revenue that M/s. Google Inc. USA supplied these goods to any third parties other than their own affiliated companies at higher price. Therefore, it is evident that in order to maintain the standard and quality of the equipments, and also the uniformity of the prices and to maintain continuous availability of goods, the procurement is centralized by the supplier by maintaining a centralized procurement, warehousing, quality, inspection etc. and thereafter supply to their various affiliated companies, including the appellant. Therefore, it is evident that the goods supplied to the appellant is not for making any profit. The lower authority has ordered for loading of 10% on notional basis which is purely based on the trade practice. We find that in terms of the Valuation Rules, notional profit element shall be added to the invoice price for arriving at the transaction value. Therefore, taking into consideration the above facts, we find that the loading of 10% profit margin on the invoice value appears to be on the higher side. We are of the considered view that since the appellant is a STPA unit and also taking into the fact that the imports made by the appellant from the supplier i.e. Google Inc. is only for the purpose of development of software and export and also taking into consideration the principal supplier has not sold these goods to any third party but supplied to their affiliated companies only, loading of a nominal profit of 1% (one percent) on the declared value would be suffice.

We find that the circumstances of both the cases are similar and the ratio is applicable. Therefore, we find that loading of value by 1% in respect of imported capital goods i.e. slitting line, which is already included in the value declared is sufficient. The impugned order requires to be modified to that extent.

5. In view of the above, the appeal is allowed and impugned order is modified to the extent as discussed above.

IS IT POSSIBLE TO GIVE LESSER BANK GURANTEE TO CUSTOMS ??

Dear Friends

As we aware execution of Bond and Bank Guarantee (BG) for the purpose of permitting clearance of imported goods under Advance License/EPCG Schemes is mandatory. But there are concessions for certain category of status holders.

Especially a registered member of an Export Promotion Council shall produce a certificate of proof of export performance along with certificate of status of applicant as “Manufacturer Exporter” from the concerned Export Promotion Council can make use of this concession.

Alternatively, the exporter shall produce a certificate of proof of export performance by a practicing Chartered Accountant alongwith certificate of status of applicant as “Manufacturer Exporter” duly authenticated by a practicing Chartered Engineer to the satisfaction of the Assistant Commissioner or Deputy Commissioner.

The Chartered Accountant issuing the certificate will mention his GST code and other registration details in the certificate and such certificates shall certify: • the proof of export performance; during the current financial year and preceding financial year; and • the proof of payment of GST as the case may be, during the current financial year or preceding financial year. In addition to above, Manufacturer Exporter shall submit one of the following documents:

(a) Installation certificate pertaining to earlier imported or domestically procured capital goods, by the Manufacturer exporters, issued by Jurisdictional Superintendent of Central Excise certifying manufacturing activity; or

(b)Installation certificate pertaining to earlier imported or domestically procured capital goods, issued by a Chartered Engineer certifying manufacturing activity. In such cases, Manufacturing Premises shall be post verified by the Jurisdictional Superintendent of Central Excise and Monitoring Cell shall ensure that such verification report is received; or

c) EODC or Redemption letter issued by DGFT (alongwith copy of License) during the current financial year or preceding financial year in respect of earlier Licence issued under Advance Authorisation or EPCG Scheme

In Simple terms, a Manufacturer Exporter can produce RCMC certificate copy and performance certificate from respective Export Promotion Council and can give only 15% Bank Gurantee based on below circular 17/2009    

________________________________________

Circular - Customs

Norms for execution of Bank Guarantee under specified export promotion schemes- Modifications in Circular No.58/04-Cus dt.21.10.04-reg.

Circular No. 17/2009-Cus.

F.NO.605/61/2007-DBK

Government of India

Ministry of Finance

Department of Revenue

-----------

New Delhi, the  25th  May , 2009.

Sub: Norms for execution of Bank Guarantee under specified export promotion schemes- Modifications in Circular No.58/04-Cus dt.21.10.04-reg.

I am directed to invite your attention to Circular No.58/2004-Cus. dated 21.10.2004 (herein after referred to as 'the said circular') vide which revised norms for execution of Bond / Bank Guarantee (BG) in respect of imports made under the Advance Licence and EPCG Schemes were notified and to say that, representations suggesting the following amendments in the said circular have been received,-

(i) to consider the service exports at par with the physical exports and to extend the benefit   of exemption from  BG to the service providers who fulfill the criteria  laid down in the circular  ;

(ii) to extend the  benefits of the said circular to the imports under DFIA scheme;

(iii) to consider the cumulative turnover of all the units of a manufacturer for the purpose of eligibility for exemption under the circular if all the units are operated under the same  Importer Exporter Code (IE-Code).

2 The above representations have been examined by the Board.  As regards extending benefits provided under para 3.1 of the circular to the service exporters on par with the exporters who are doing physical exports, it is observed that the service providers with foreign exchange earnings of ₹ 50 lakhs or more during the preceding financial year and having a clean track record have already been allowed the facility of 15% BG vide Circular No.30/2005-Cus. dated 12.7.2005. Further, the service providers in the port handling sector who have been appointed as Custodians have been allowed to furnish BG @ 25% vide Circular No.49/2005-Cus. dated 29.11.2005.  It has now been decided to extend the facility of nil / reduced rate of bank guarantee as provided under para 3.1 (a), (d),(e) & (f) of the  said  circular to all the service providers who meet the criteria prescribed in the said paragraph and other criteria of the said circular as amended.

2.1. In view of the modifications proposed at para-2 above, the table in para-3.1 of the circular No.58/2004-Cus shall be replaced with the following table and the note.

 (a) All exporters who have an export  turnover of ₹ 5 crores of goods exported physically or of services in current or preceding financial year and having a good track record of three years of exports     Nil

(b) Public Sector Undertaking    Nil

(c) Star Export House 1[Status Holders recognized under the provisions of the Foreign Trade Policy]           Nil

(d)  Manufacturer exporters / Service Providers registered with Central Excise or the Service Tax authorities, as the case may be, who have been exporting during the previous two financial years and have minimum export of ₹ 1 crore or more during the preceding financial year.            Nil

(e) Manufacturer exporter / Service Provider registered with Central Excise or the Service Tax authorities, who has paid central excise duty/ Service Tax of ₹ 1 crore or more, as the case may be, during the preceding financial year.          Nil

(f) (1) Manufacturer exporters who are not covered under (a),  (b),(c),(d) & (e) above. 15%

     (2) Units in Agri Export Zones (AEZs), 15%

     (3) Established Service Providers who have free foreign Exchange earnings of ₹ 50 lakhs or more during the preceding financial  year and have a clean track record.       15%

(g)  service providers in the port handling sector who are appointed as  Custodians by the  jurisdictional Customs / Central Excise authorities   25%

(h)   Others   100%

Note: The exemption provided at para (g) above shall be applicable only in respect of import of capital goods under EPCG scheme.

3. As regards extending the benefits of the above mentioned circular to the imports under the DFIA scheme, it is observed that the DFIA scheme is akin to the Advance Authorization scheme; both the schemes are operated more or less with the same set of provisions under the Foreign Trade Policy / Hand Book of Procedures. Since the Advance authorization scheme is already covered by the said circular, it has been decided that the benefits of the said circular may also be extended to the imports under DFIA scheme provided they have fulfilled the other criteria of the said circular as amended.

4. As regards considering the combined export performance / duty payment of all the units of a manufacturer operating under single Importer exporter code (IE code) for the purposes of deciding the eligibility of the said importer for benefits under the said circular, it has been felt that the exporter operating under one IE code and having different units is basically one legal entity. Accordingly it has been decided that the combined export performance / duty payment of all the units of a manufacturer exporter operating under a single IE-Code shall be considered for extending the benefits of the said circular provided all such individual units are separately registered with the Central Excise department and they have fulfilled the other criteria of the said circular.

5. These instructions may be brought to the notice of the trade / exporters by issuing suitable Trade / Public Notices.  Suitable Standing orders/instructions may be issued for the guidance of the assessing officers.  Difficulties faced, if any, in implementation of the Circular may please be brought to the notice of the Board at an early date.

Receipt of this Circular may kindly be acknowledged.

Yours faithfully,

(P.V.K. Rajasekhar)

OSD(Drawback

********************

Notes :

1. Inserted vide M.F. (D.R.) Circular No. 32/2009-Cus., dated 25-11-2009

IMPORTANT CUSTOMS CASE LAWS - Second Hand server is not second hand Computer and should be treated as Capital goods & subsequent important amendment in FTP 15-20

As declared by Karnataka High Court during 2010, Second Hand server is not second hand Computer and should be treated as Capital goods and declared DGFT Circular No. 16/2003 dated 29-9-2003 is not applicable to Second Hand Servers hence does not require a Licence.

But refer below recent FTP circular where ' All electronics and IT Goods " are required prior DGFT Authorisation and brought under policy condition "Restricted "

Notification - DGFT - Foreign Trade Policy

Government of India

Ministry of Commerce & Industry

Department of Commerce

Directorate General of Foreign Trade

Udyog Bhawan

Notification No. 5/2015-2020

New Delhi Dated 7 May, 2019

Subject: Import policy for Electronics and IT Goods under Schedule - I (Import Policy) of ITC (HS), 2017.
S.O. 1701 (E):  - In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby amends Note No 2(c) under the General Notes Regarding Import Policy and inserts Policy Condition No 2 under Chapter 84 and as Policy Condition No. 5 under Chapter 85 of ITC (HS) 2017 as under:

Existing General Note No 2 (c)

Amended General Note No.2 (c)

(c) Import policy for electronics and IT Goods: The import of Notified Goods under the "Electronics and Information Technology Goods (requirement of Compulsory Registration) Order, 2012, as amended from time to time, will be allowed subject to registration with the Bureau of Indian Standards (BIS), or on specific exemption letter from Ministry of Electronics and Information Technology (MeitY) for a particular consignment, as per provisions of Gazette Notification SO No. 3022 dated 11.09.2013. Accordingly, import of unregistered/ non- compliant notified products as in CRO, 2012, as amended is "prohibited'   Import consignments without valid registration with BIS shall be re-exported by the importer failing which Customs shall deform the goods and dispose them as scrap under intimation to MeitY.

(c) Import policy for Electronics and IT Goods: The import of Goods (new as well as second hand, whether or not refurbished, repaired reconditioned) notified under the "Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time, is prohibited unless they are registered with the Bureau of Indian Standards (BIS) and comply to the 'Labelling Requirements' published by BIS, as amended from time to time', or on specific exemption letter from Ministry of Electronics and Information Technology (MeitY) for a particular consignment, as per provisions of Gazette Notification SO No. 3022 dated 11.09.2013. The importer shall re-export such prohibited Goods reaching Customs Ports else the Customs Authorities shall deform the goods beyond use and dispose of the goods as scrap under intimation to MeitY.

Policy Condition: As under Chapter 84 and 85 of ITC (HS) 2017:
The import of Goods (new as well as second hand, whether or not refurbished, repaired or reconditioned) notified under the "Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time, is prohibited unless they are registered with the Bureau of Indian Standards (BIS) and comply to the 'Labelling Requirements' published by BIS, as amended from time to time', or on specific exemption letter from Ministry of Electronics and Information Technology (MeitY) for a particular consignment, as per provisions of Gazette Notification SO No. 3022 dated 11.09.2013.
The importer shall re-export such prohibited Goods reaching Customs Ports else the Customs Authorities shall deform the goods beyond use and dispose of the goods as scrap under intimation to MeitY.
2.  Further, Para 2.31 (l) (a) of Foreign Trade Policy, 2015-20 is revised as under:-

S.No.	Categories of Second Hand Goods	Import Policy	Conditions, if any
	Second Hand Capital Goods
(a)	i.  Desktop Computers ii.  refurbished/ re-conditioned spares of re-furbished parts of Personal Computers/ Laptops iii. Air Conditioners iv. Diesel generating sets	Restricted	Importable against Authorization
(b)	All electronics and IT Goods notified under the Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012 as amended from time to time.	Restricted.	(i) Importable against Authorization subject to conditions laid down under "Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time. (ii) Import of unregistered / non-compliant notified products as in CRO, 2012, as amended from time to time is prohibited

3.  Effect of this Notification: Import Policy and Policy condition for import of Electronics and IT Goods is laid down.
This issues with the approval of Minister of Commerce and Industry.

(Alok Vardhan Chaturvedi)

Director General of Foreign Trade &

Ex-officio Add. Secy.

Government of India

E-mail : dgft@nic.in

(Issued from F. No. 01/89/180/39/AM-13/PC-2(A)/e-2261)

Note: The principal notification No. 36/2015-2020, dated the 17th January, 2017 was published in the Gazette of India, Extraordinary vide number S.O. 172 (E), dated the 17th January, 2017 and amended vide notification No. 50/2015-2020, dated the 8^th January, 2019 was published in the Gazette of India, Extraordinary vide number S.O. 128(E) dated the 8^th January, 2019.

KARNATAKA HIGH COURT

Other Citation: 2010 (259) E.L.T. 212 (Kar.)

COMMR. OF CUS., BANGALORE VERSUS MICROSOFT CORPORATION INDIA PVT. LTD.

17 of 2008

Dated: - 26 August 2010

EPCG scheme - Circular prohibits import of second hand goods – second hand computer – Held that: - it is clear that the goods imported, that is, personal computers (PCs/Laptops) are the items, which are covered under Annexure- E, the Circular. Therefore, the Tribunal was justified in holding that the Circular do not apply to the servers of me description, which is involved In this case. - no doubt, servers are also computers but servers are computers, which are meant for specific application in a network. They are entirely different from the personal computers and laptop computers, which are actually stand-alone equipments - there is no reason to exclude them from the scope of Capital Goods.

Judgment / Order

N. Kumar and H.S. Kempanna, JJ.

REPRESENTED BY :        Shri Y. Hariprasad, Advocate, for the Appellant.

[Judgment per : N. Kumar, J.]. -

This appeal is by the revenue against the finding recorded by the Tribunal [2008 (224) E.L.T. 322 (Tribunal)] that a Server though a Computer is not prohibited from importing as it does not fall within the meaning of second hand personal computers (Personal Computers/Laptops).

2 The Joint Director General of Foreign Trade issued a Circular No. 16/2003 dated 29-9-2003 to the effect that second hand "personal computers'" (PCs)/Laptops cannot also be permitted for import under EPCG scheme under the provisions of para 5.1 of the Exim Policy, even for service providers. In the instant case, the respondent imported goods described as HP server for testing (data processing equipment) against invoice placed by M/s. Microsoft Corporation, U.S.A. The Department got the equipment inspected by a Chartered Engineer. He opined that the item imported is a model "hp workstation ZX6000" and server appears to have been used for around 3 years and has a residual life of around 10 years.

As the aforesaid Circular prohibits import of second hand goods of the nature mentioned above, the adjudicating authority treated the server as a Computer and as admittedly, it was a second hand computer, he held that, the assessee has violated the Exim Policy under Section 111(d) and 111(m) of the Customs Act and gave an option to redeem the goods on payment of fine of Rs. 50,000/- and imposed penalty of Rs. 20,000/-. In Appeal, the Commissioner of Customs (Appeals) held that, the said server though a computer, is not covered under the said Circular. However, as the assessee did not declare the goods and he gave a mis-declaration, he reduced the fine from Rs. 20,000/- to Rs. 10,000/- The revenue aggrieved by the said order preferred an appeal before the Tribunal. The Tribunal held that, "no doubt, servers are also computers but servers are computers, which are meant for specific application in a network. They are entirely different from the personal computers and laptop computers, which are actually stand-alone equipments. Moreover, in commercial parlance, "servers' are described as 'servers' only and it is also pertinent to note that they don't have the keyboard and monitors. Normally, the servers will be the larger machines having very high memory. The processing speed also will be very high and there are various types of servers for various applications. There is no reason to exclude them from the scope of 'Capital Goods'. So, they are not stand-alone computer, Therefore, the Tribunal dismissed the appeal, and aggrieved by the same, the revenue is before us.

3.We have heard the learned counsel for the appellant.

4. From the aforesaid facts, it is clear that the goods imported, that is, personal computers (PCs/Laptops) are the items, which are covered under Annexure- E, the Circular. Therefore, the Tribunal was justified in holding that the Circular do not apply to the servers of me description, which is involved In this case. In that view of the matter, we do not see any error committed by the Tribunal. No merits. Accordingly, the appeal is dismissed.

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Citations: in 2010 (8) TMI 426 - KARNATAKA HIGH COURT

1.   COMMR. OF CUS., BANGALORE Versus MICROSOFT CORPN. INDIA PVT. LTD. - 2007 (11) TMI 203 - CESTAT, BANGALORE

Pl ref my earlier post dated 17.04.19 - Now EP copy & Landing certificate not required and SEZ/EOU/FTWZ also eligible for TMA incentive scheme

PROJECT IMPORT CUSTOMS PROCESS MADE EASY RIGHT FROM PROJECT REGISTRATION TO FINALISATION

GST ON OCEAN FREIGHT IS UNCONSTITUTIONAL

Latest Update  23.01.20 - MOHIT MINERAL CASE GUJ HIGH COURT DECLARED GST ON OCEAN FREIGHT IS UNCONSTITUTIONAL 

Refer old posts as given below :

IMPORTANT UPDATE ON 01.07.2019 - No Stay on IGST Levy on Ocean Freights: Gujarat HC Order grants specific Relief to Petitioner Only

Read more at: https://www.taxscan.in/stay-igst-levy-ocean-freights-gujarat-hc/35767/

Good News to Importers – Gujarat High Court stays IGST levy under Reverse Charge on Import Ocean Freight MSG DT 20.05.19

Right from Service Tax era, there is a liability of tax in the hands of importers under reverse charge on Import ocean freight. For example, if an importer enters into CIF terms with shipper, the ocean freight is paid at origin itself but importer has to pay 5% IGST on prepaid Ocean freight under Reverse Charge mechanism. 

At the same time, on CIF assessable value, which includes Ocean freight, again he has to pay IGST at the time of Customs clearance. Hence obviously an importer suffers tax twice on Ocean Freight.

M/S.MOHIT MINERALS PVT LTD has challenged IGST on import ocean freight under RCM before Gujarat High Court and a similar petition filed by M/s.Ghanshyamlal and Company.

Hon’ble Gujarat HC has granted stay on Import Ocean Freight IGST and issued notice to Tax Authorities & next hearing will be on June 19^th. 

   

Looks it is a good development and hope it should come as a relief to importers at large.

Whether Customs Officer is authorized to stop Export on the basis of an Expired E way Bill ??

Facts of the Case:
E- way bill was expired before the goods could reach the port of export and now the custom authorities are not admit the goods for export.

Law Applicable:
i) As per Rule 138 CGST rules;
"Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees shall, before commencement of such movement, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01 "

(ii) As per section of 51(1) of Custom Act;"Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation"

Interpretation: E-way bill is the requirement laid down by the GST laws and is regulated by proper officers of GST. Export is matter governed by Custom laws and section 50 therein dictates the export procedures. If all the procedures of customs are complied with then export should not be withheld. Moreover the board has time and again issued guidelines that the export should not be withheld/delayed if the procedures of customs are complied with and duty (if any) has been paid in full.

Conclusion: Custom authorities are not within their rights to stop export on the basis of an expired E- way bill. However the relevant penalty provisions shall be attracted in case of violaltions of E- way bill provisions.

Content Courtesy  : CA Nagesh Bajaj

Indian Speedy Customs Clearance Initiative- RMS facilitated BE need not be presented to OOC Officer for Signature

Case study of mandatory BIS requirement for imports – Importers needs to be aware of this case

Most of the Indian import traders, who import finished products such as electrical appliances, LED products and IT products etc., are keep on checking with Customs Brokers & consultants that whether their import item will come under Compulsory BIS ( Bureau Indian Standards ) norms are not ?  i.e that particular import item needs prior BIS registration or not ?

Import of mandatory BIS item without proper BIS certification leads to very costly consequences such as detention, demurrage and confiscation etc.,

Below is a land mark case where an importer has dismantled an Electric product and classify it as parts. Under different Bill of Entries they tried to import parts of Electric Iron.

M/S. GLOBAL ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (NS-V)

In above case, on 15.04.2019 CESTAT MUMBAI ordered re export of import goods but without penalty under section 112 of Customs Act

‘parts of electric iron’ - case of Revenue is that the appellant imported ‘Euroline’ brand of ‘electric iron’, comprising the main component and certain other parts, excluding ‘power supply’ and ‘base’, in the impugned transaction and the excluded parts were imported separately with intent to evade compliance with the norms of the Bureau of Indian Standards. It is held that “ It is on record that the impugned goods, upon examination and not by the mere reliance on legal fiction in the interpretative rules, were found to be the most vital component of ‘electric iron’ and that the goods were so packed as to easily integrate the other two parts which, admittedly, had been imported separately but concurrently, to support the finding that the goods are, indeed, ‘electric iron.’

undoubtedly, the prescriptions of Bureau of Indian Standards,applies to the finished product and not to the parts but the most essential component that is impugned in this dispute, if allowed to remain non-compliant, would not be conducive to public safety.

As the imported goods, though required to be, are not compliant with the standards, they fail to overcome the bar of prohibition at the threshold  hence ordered to re export.

Are you an Indian Agro product exporter and worried about air/ocean freight cost ? Enjoy Cash benefit under TMA scheme till 31.03.2020 !!! Do not leave this opportunity to reimburse part of your prepaid air/ocean freight !!!

( pl ref my amendment post dated 26.06.2019 where requirement EP copy and Landing certificate requirement is dispensed with and SEZ/EOU/FTWZ also eligible under scheme)

Dear Friends,

As you aware, Normally Exporters always used to do lot of homework on customs clearance and Ocean /  air freight cost to work out and offer competitive CIF price. Especially in the case of Agro products exporters the scenario is too worst since they are not in position to bargain and negotiate better Freight due to lack of time and last minute rush to complete shipment. 

Now Indian Government has come out with a new scheme to support specified Agro products exporters by way of reimbursing a specified amount as a support under Transport and Marketing Assistance (TMA) recently. Most of the small and medium Agro products exporters are not aware of it. Refer below Notification and make use of it !!!

Government of India
Ministry of Commerce & Industry

05-March-2019

Transport and Marketing Assistance (TMA) for Specified Agriculture Products Notified 

Department of Commerce of the Ministry of Commerce & Industry has notified a scheme for Transport and Marketing Assistance (TMA) for Specified Agriculture Products.

2.      Introduction and Objective 

        i.            The “Transport and Marketing Assistance” (TMA) for specified agriculture products scheme aims to provide assistance for the international component of freight and marketing of agricultural produce which is likely to mitigate disadvantage of higher cost of transportation of export of specified agriculture products due to trans-shipment and to promote brand recognition for Indian agricultural products in the specified overseas markets.

     ii.            The scheme would be suitably included in the Foreign Trade Policy (2015-20).

3.         Coverage 

a.      All exporters, duly registered with relevant Export Promotion Council as per Foreign Trade Policy, of eligible agriculture products shall be covered under this scheme. 

b.      The assistance, at notified rates, will be available for export of eligible agriculture products to the permissible countries, as specified from time to time.

4.         Applicability: The Scheme would be applicable for a period as specified from time to time.  Presently the Scheme would be available for exports effected from 1.3.2019 to 31.03.2020

5.         Eligibility of Products: The assistance will be provided on export of all agriculture products covered in HSN chapter 1 to 24 including marine and plantation products except those mentioned in Annexure (1). 

6.         Pattern of Assistance 

(a)        Assistance under TMA would be provided in cash through direct bank transfer as part reimbursement of freight paid. FOB supplies where no freight is paid by Indian exporters are not covered under this scheme. 

(b)        The level of assistance would be different for different regions as notified from time to time for export of eligible products. List of export destinations/countries in each region eligible for assistance under TMA are mentioned in Annexure (2). 

(c)        The assistance shall be admissible only if payments for the exports are received in Free Foreign Exchange through normal banking channels. 

(d)       The scheme shall be admissible for the exports made through EDI ports only. 

(e)        The scheme covers freight and marketing assistance for export by air as well as by sea (both normal and reefer cargo).           

(f)        For export of products by sea, TMA will be based on the freight paid for a full Twenty-feet Equivalent Unit (TEU) containers. The assistance will not be available for (i) Less than Container Load (LCL) and (ii) a container having both eligible and ineligible category of cargo. Further, no TMA is available where the cargo is shipped in bulk/break bulk mode. A forty feet container will be treated as two TEUs. 

(g)        Assistance for products exported by air would be based on per ton freight charges on net weight of the export cargo, calculated on the full ton basis, ignoring any fraction thereof. 

(h)        The assistance will be provided at the rates as notified in Annexure 3.

7.         Categories of export ineligible for TMA 

The following exports categories / sectors shall be ineligible under this scheme: 

        i.            Products exported from SEZs/ EOUs/ EHTPs/ STPs/ BTPs/ FTWZs

     ii.            SEZ/EOU/EHTPs/STPs/BTPs/FTWZs products exported through DTA units

   iii.            Export of imported goods covered under paragraph 2.46 of the FTP;

   iv.            Exports through trans-shipment, i.e. exports that are originating in third country but trans- shipped through India;

      v.            Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS), unless specifically notified.

   vi.            Export products which are subject to Minimum Export Price or export duty, unless specifically notified.

 vii.            Export of goods through courier or foreign post offices using e-Commerce

8.         Procedure for Availing Assistance under the Scheme 

TMA would be reimbursed through the Regional Authorities of DGFT as per the procedure laid down in Chapter 7(A) of Handbook of Procedures (2015-2020). 

9.         Mechanism for Scrutiny of the claims, audit, recovery and penal action. 

DGFT will lay down procedure for scrutiny of the claims, audit of the payments made, recovery of the ineligible/excess paid assistance, interest on such recoveries.  The defaulters shall be liable for penal action under the provisions of Foreign Trade (Development & Regulation) Act, 1992, Rules and orders made thereunder.

Annexure (1)

List of agriculture products not eligible under TMA

The assistance will be provided for all agriculture products covered under HSN chapter 1 to 24, with the following exceptions:

Chapter	HS Codes	Description
Chapters 1, 2 & 5	All HS Codes	- Live animals - Meat and Edible Meat Offal - Products of Animal Origin, not elsewhere specified or included
Chapter 3	030617	- Other shrimps and prawns :
Chapter 4	0401	-Milk and cream, not concentrated nor containing added sugar or other sweetening matter
	0402	- Milk and cream, concentrated or containing added sugar or other sweetening matter
	0403	- Buttermilk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa
	0404	- Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included
	0405	- Butter and other fats and oils derived from milk; dairy spreads
	0406	- Cheese and curd
Chapter 7	0703	- Onions, shallots, garlic, leeks and other alliaceous vegetables, fresh or chilled
Chapter 10	1001, 1006	-Wheat And Meslin -Rice
Chapters 13 & 14	All HS Codes	- Lac; Gums, Resins and other Vegetable Saps and Extracts - Vegetable Plaiting Materials; Vegetable Products not elsewhere specified or included
Chapter 17	1701, 1703	-Cane Or Beet Sugar And Chemically Pure Sucrose, In Solid Form - Raw Sugar Not Containing Added Flavouring Or Colouring Matter ; -Molasses resulting from the extraction or refining of sugar
Chapters 22 and 24	All HS Codes	- Beverages, Spirits and Vinegar - Tobacco and Manufactured Tobacco Substitutes

 Annexure (2)

List of Export destinations/countries in each region under TMA 

List of Regions and Export destinations/countries in each region eligible for assistance under TMA are as under: 

Region	Country Name
West Africa	Benin, Mali, Burkina Faso, Mauritania, Ivory Coast, Niger, Cape Verde, Nigeria
EU	Albania, Andorra, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, Vatican City
Gulf	Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates
North America	Antigua and Barbuda, Bahamas, Barbados, Belize, Canada, Costa Rica, Cuba, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, United States of America
ASEAN	Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam
Russia & CIS	Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan
Far East	Japan, North Korea, South Korea
Oceana	Australia, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu
China	PRC China, Hong Kong, Taiwan
South America	Argentina, Bolivia,      Brazil, Chile, Colombia, Ecuador,      Guyana, Peru, Paraguay, Suriname, Uruguay, Venezuela

Annexure (3)

Differential rate of assistance under TMA (Amount in Indian Rupees) 

Region	Amount Per TEU (Normal)	Amount Per TEU (Reefer)	By Air Amount per tonne
West Africa	11200	19600	840
EU	9800	21000	1120
Gulf	8400	14000	700
North America	21000	28700	2800
ASEAN	5600	12600	700
Russia & CIS	12600	22400	700
Far East	8400	12250	840
Oceana	16800	24500	2800
China	0	12600	840
South America	23800	31500	3500

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