17th September, 2004.
Notification No. 97/2004 - Customs
In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central
Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table
annexed hereto, from,-
(i)
so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51
of 1975) as is in excess of the amount calculated at the rate of five per cent ad- valorem , and
(ii)
the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act, when specifically claimed by
the importer.
2. The exemption under this notification shall be subject to the following conditions, namely : -
(1) that the goods imported are covered by a valid licence issued under the Export Promotion Capital Goods Scheme in
terms of Chapter 5 of the Foreign Trade Policy permitting import of goods at the rate of five percent duty and the said licence is
produced for debit by the proper officer of customs at the time of clearance:
Provided that for import of spare parts specified at S.No.4 of the said Table, the validity period of the licence shall be deemed
to be the period permitted for fulfillment of the export obligation in full;
(2) that the importer executes a bond in such form and for such sum and with such surety or security as may be specified
by the Deputy Commissioner of Customs or Assistant Commissioner of Customs binding himself to fulfil export obligation on
FOB basis equivalent to eight times the duty saved on the goods imported as may be specified on the licence, or for such
higher sum as may be fixed by the Licensing Authority, within a period of eight years from the date of issue of licence, in the
following proportions, namely :-
S.No.Period from the date of issue of licenceProportion of total export obligation
(1)(2) (3)
1.Block of 1
st
to 6
th
year 50%
2.Block of 7
th
to 8
th
year 50%:
Provided that where the duty saved is not less than Rs.100 crores, or where the licence is issued to units in the agri export zone
as may be notified by the licensing authority, the export obligation shall be fulfilled within a period of twelve years from the date
of issue of licence in the following proportions, namely :-
S.No.Period from the date of licenceProportion of total export obligation
(1)(2) (3)
1.Block of 1
st
to 10
th
year 50%
2.Block of 11
th
to 12
th
year 50%:
Provided further that where a sick unit is notified by the Board for Industrial and Financial Reconstruction or where a
rehabilitation scheme is announced by the concerned State Government in respect of sick unit for its revival, the export
obligation may be fulfilled in terms of Paragraph 5.5.1of the Foreign Trade Policy:
Provided also that where the capital goods are imported for technological upgradation , the export obligation shall be fixed
equivalent to six times the duty saved on the goods imported as may be specified on the licence, or for such higher sum as
may be fixed by the Licensing Authority, within a period of eight years from the date of issue of licence;
Provided also that export obligation of a particular block may be set off against the excess exports made in the said preceding
block;
(3) that if the importer does not claim exemption from the additional duty leviable under section 3 of the Customs Tariff Act,
1975 (51 of 1975), he shall be deemed not to have availed of the exemption from the duty specified in the First Schedule to the
said Customs Tariff Act for the purpose of calculation of the duty saved amount for calculation of export obligation;
(4) that the importer produces within 30 days from the expiry of each block from the date of issue of licence or within such
extended period as the Deputy Commissioner of Customs or Assistant Commissioner of Customs may allow, evidence to the
satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs showing the extent of export
obligation fulfilled, and where the export obligation of any particular block is not fulfilled in terms of the preceding condition, the
importer shall within three months from the expiry of the said block pay duties of customs of an equal amount equal to that
portion of duties leviable on the goods, but for the exemption contained herein which bears the same proportion as the
unfulfilled portion of the export obligation bears to the total export obligation together with interest at the rate of 15per cent per
annum from the date of clearance of the goods;
(5) that the capital goods imported, assembled or manufactured are installed in the importer's factory or premises and a
certificate from the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the
case may be, is produced confirming installation and use of capital goods in the importer's factory or premises, within six
months from the date of completion of imports or within such extended period as the Deputy Commissioner of Customs or
Assistant Commissioner of Customs, as the case may be, may allow :
Provided that if the importer is a service provider, he may produce said certificate of installation and usage issued by an
independent chartered engineer:
Provided further that in the case of , -
(i) manufacturer exporter and merchant exporter having supporting manufacturer(s) or vendor(s);
(ii) import of irrigation equipment for use in contract farming for export of agricultural products; and
(iii) importer rendering services,
the capital goods may be installed at the factory or premises of such other person whose name and address are endorsed on
the licence referred to in condition (1) and where the bond for full difference of duty, if necessary, in terms of condition (2), with
or without a bank guarantee, as the case may be, is executed by the importer and such other person binding themselves jointly
and severally to fulfil the export obligation and all other conditions of this notification and to pay duty with interest at the rate of
15 per cent per annum in case of default;
Provided also that agro units located in Agri Export Zones or service providers in Agri export Zones may move the capital
goods within the Agri Export Zones under intimation to the jurisdictional Deputy Commissioner of Central Excise or Assistant
Commissioner of Central Excise, as the case may be, subject to the condition that the importer shall maintain accurate record
of such movement.
(6) that the imports and exports undertaken through seaports at Mumbai, Kolkata , Cochin, Magdalla , Kakinada , Kandla
Mangalore, Marmagoa , Chennai, Nhava Sheva , Paradeep , Pipavav , Sikka , Tuticorin , Visakhapatnam , Dahej , Mundhra ,
Nagapattinam , Okha , Jamnagar and Muldwarka or through any of the airports at Ahmedabad , Bangalore, Bhubaneswar ,
Mumbai, Kolkata , Coimbatore , Delhi, Hyderabad, Jaipur , Chennai, Srinagar , Trivandrum , Varanasi , Nagpur and Cochin or
through any of the Inland Container Depots at Agra, Bangalore, Coimbatore , Delhi, Faridabad , Gauhati , Guntur , Hyderabad,
Jaipur , Jallandhar , Kanpur , Ludhiana, Moradabad , Nagpur, Pimpri ( Pune ), Pitampur ( Indore ), Surat , Tirupur , Varanasi ,
Nasik , Rudrapur ( Nainital ), Dighi ( Pune ), Vadodara , Daulatabad ( Wanjarwadi and Maliwada ), Waluj ( Aurangabad ),
Anaparthy (Andhra Pradesh), Salem, Malanpur , Singanalur , Jodhpur, Kota, Udaipur , Ahmedabad , Bhiwadi , Madurai ,
Bhilwara , Pondicherry , Garhi Harsaru , Bhatinda , Dappar ( Dera Bassi ), Chheharata ( Amritsar ), Karur , Miraj , Rewari ,
Bhusawal , Jamshedpur , Surajpur and Dadri or through the Land Customs Station at Ranaghat , Singhabad , Raxaul , Jogbani
, Nautanva ( Sonauli ), Petrapole and Mahadipur .
(7) notwithstanding anything contained in condition (4), where the Licensing Authority grants extension of block-wise
period for any block(s) or overall period of fulfilment of export obligation upto a period of two years or regularization of shortfall
in export obligation, not exceeding five per cent of such export obligation, the said block-wise period or overall period of export
obligation shall be extended or condoned by the Deputy Commissioner of Customs or Assistant Commissioner of Customs,
as the case may be :
Provided that in respect of sick unit referred to in the second proviso to condition (2), extension of overall period of export
obligation shall not be allowed.
3. Where the goods specified in the said Table are found defective or unfit for use, the said goods may be re-exported
back to the foreign supplier within 3 years from the date of payment of duty on the importation thereof:
Provided that at the time of re-export, the goods are identified to the satisfaction of the Deputy Commissioner of Customs or
Assistant Commissioner of Customs, as the case may be, as the goods which were imported.
Table
S.No.Description of goods
(1)(2)
1.Capital goods for pre-production, production and post production including second hand capital goods.
2.Capital goods in SKD/CKD conditions to be assembled into capital goods by the importer.
3.
Components of capital goods required for assembly or manufacture of capital goods by the importer.
4.
Spare parts of goods specified at Serial Nos.1 ,2 and 3 as actually imported and required for maintenance of capital
goods so imported, assembled, or manufactured.
5.Spare parts including consumables for the existing plant and machinery of the licence holder.
Explanation - For the purposes of this notification,-
(1)
"Capital goods" has the same meaning as assigned to it in Paragraph of 9.12 of the Foreign Trade
Policy;
(2)
"Foreign Trade Policy" means the Foreign Trade Policy 2004-2009 published vide notification of the
Government of India in the Ministry of Commerce and Industry, No. 1/2004 dated the 31st August, 2004
as amended from time to time;
(3)
"Licensing Authority" means the Director General of Foreign Trade appointed under section 6 of the
Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorized by him to
grant a licence under the said Act;
(4) " export obligation", -
( i ) in relation to importers other than those rendering services, means exports to a place outside
India, of products manufactured with the use of capital goods imported, assembled or manufactured in
terms of this notification :
Provided that export
obligation may also be
fulfilled by,-
(a)export of same products capable of being manufactured with the use of said capital goods; or
(b)export of same products manufactured in different units of the licence holder; or
(c)
through third party exports made by an exporter or manufacturer on behalf of the licence holder by
exporting the same product and in such cases , inter- alia the shipping bills shall indicate name of
both the third party and the licence holder; or
(d)making supplies of manufactured product in terms of paragraph 5.4 of the Foreign Trade Policy; or
(e)export of other goods manufactured by the importer;
(ii)
in relation to importers rendering services, means, receiving payments in freely convertible foreign
currency for services rendered through the use of capital goods :
Provided that in respect of units holding licence both as manufacturer exporter and service provider, the export obligation may
be fulfilled either by export of products specified in sub-clause ( i ) or by receiving payments in freely convertible foreign
currency for services rendered through the use of such capital goods.
Provided further that in respect of Group Company as defined in paragraph 9.28 of the Foreign Trade policy where licence has
been issued to any one of such Group Company, the export obligation may also be fulfilled by export of manufactured goods by
any other company(s) belonging to such Group Company:
Provided also that in respect of service providers in the Port Handling sector, the export obligation may be fulfilled by earning
service charges in Indian rupees which are otherwise considered as free foreign exchange by the Reserve Bank of India:
Provided also that in respect for hotels the export obligation may also be fulfilled by Managed Hotels as defined in paragraph
9.36 of the Foreign Trade Policy.
H.K . Prasad
Under Secretary to the Government of India
F . No. 605/40/2004-DBK
