CBIC
Legislation UpdatesRules & Regulations

   

On 30-6-2022, Ministry of Finance notified Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2022. By this amendment, Central Board of Indirect Taxes and Customs (CBIC) elaborates the provisions of import/export of jewellery sold on e-commerce exchanged through courier, which will come into force with immediate effect.

Key amendments:

  • Jewellery of precious metals and imitation jewellery are now included under the category of re-import which are being sold on any E-commerce [defined under Regulation 3(da)] platforms.

  • Application for assessment and clearance of imported or export goods, carried out by an Authorised Courier of jewellery of precious metals extends to their reimport in case of any return.

  • Regulation 6A has been newly inserted provides the conditions by which the jewellery is returned through courier mode on any e-commerce platform.

  • Importer/Exporter Code (IEC) holder which shall authorize the courier should remain the same along with the condition that terminal has to be unchanged.

  • Return of such jewellery is permitted through the same consignee and reasons for such return are to be provided to the Courier Bill of Entry.

  • Exporter, who is re-importing, will continue to have valid IEC and Registration-cum-Membership Certificate (issued by the Gems and Jewlery Export Promotion Council).

  • All the tax benefits that accrue on the export are neutralized.

  • Identity of re-imported jewellery will continue to be the same and will not be altered or enhanced.

*Shubhi Srivastava, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of AM Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna, JJ has held that the provisions of Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) are in addition to, and not in derogation of, the provisions of any other law for the time being in force and that Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act.

Issue before the Court

The notifications dated 29th March 2019 bearing S.O. Numbers. 1478-E,1479-E, 1480-E and 1481- were challenged for being in the nature of ‘quantitative restrictions’ under Section 9A of the FTDR Act, which could be only imposed by the Central Government after conducting such enquiry, as is deemed fit, and on being satisfied that the “goods are imported into India in such quantities and under such conditions as to cause or threatens to cause serious injury to domestic industry.” Further, in exercise of power under sub-section (3) to Section 9A the Central Government has framed the Safeguard Measures (Quantitative Restrictions) Rules, 2012, that prescribe mandatory and detailed procedure for initiation, investigation, hearing to parties and adjudication by the Authorised Officer, which statutory mandate has not been followed.

On applicability of Section 3(2) of the FTDR Act on imposition of quantitative restrictions on imports or exports

Section 3 of the FTDR Act, as enacted, had undergone amendments by addition of proviso to sub-section (2) and by insertion of sub-section (4) vide Act 25 of 2010.

Sub-section (1) of Section 3 states that the Central Government may, by an Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. It is a general provision which has no reference to GATT-1994. It authorises the Central Government to publish an order in the Official Gazette for development and regulation of foreign trade, i.e. imports and exports.

Sub-section (2) states that the Central Government can, by an order in the Official Gazette, make a provision for prohibiting or restricting or otherwise regulating, in all or specified cases and subject to such exceptions, if any, the import or export of goods and after the amendment vide Act 25 of 2010, services or technology.

“Sub-section (2) to Section 3, therefore, authorises the Central Government to, by an Order published in the Official Gazette, make provisions restricting the imports or exports. Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to Section 3 of the FTDR Act.”

On Section 9A of the FTDR Act being an escape provision

Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of General Agreement on Tariff and Trade (GATT)-1994. Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. To hold to the contrary, would mean holding that the Central Government has no right and power to impose ‘quantitative restrictions’ except under Section 9A of the FTDR Act. This would be contrary to the legislative intent and objective.

“Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act.”

Conclusion

The impugned notifications would be valid as they have been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is not entirely curtailed by Section 9A of the FTDR Act.

[Union of India v. Agricas LLP, 2020 SCC OnLine SC 675, decided on 26.08.2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Service Tax Appellate Tribunal, Allahabad (CESTAT): This appeal was filed before Archana Wadhwa, J. and Anil G. Shakkarwar, Member against the impugned order passed by the Commissioner.

Appellant was engaged in manufacturing and export of footwear and its parts falling under Chapter 64 of the Schedule to the Central Excise Tariff Act, 1985. For the purpose of exports and its procurement appellant had established four fully owned subsidiaries in foreign countries. These subsidiaries were working as overseas commission agents and were procuring export orders for the appellant. Inasmuch as the appellant is availing the said commission agent services from the companies located outside India, they were liable to pay Service Tax in respect of the commission paid to them, on reverse charge basis, in terms of Clause (iv) of Rule 2(1)(d) of Service Tax Rules, 1994. But such services come under exceptions. Such exemption should not be available on the export of the goods if the export is made by an Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary. The Commissioner concluded that appellants were not entitled to avail the benefit of the said Notification inasmuch as they have paid commission on export of goods procured through the wholly-owned subsidiaries.

Tribunal was of the view that the plain and simple meaning of the exception was that the exports were required to be made by an Indian partner to a company with equity participation in an overseas joint venture. It was admitted that the appellant had not exported the goods to its own wholly owned subsidiaries or overseas joint ventures. Tribunal thus favoured the appellant’s contention that the demand was barred by limitation. Therefore, the impugned order was set aside. [Super House Ltd. v. CCE, 2019 SCC OnLine CESTAT 6, Order dated 18-02-2019]