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CUSTOMS CIRCULAR No. 37/2002 Dated 28th June, 2002
To,
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise
All Commissioner of Customs & Central Excise
All Commissioners of Customs.
New EXIM Policy 2002-2007 and Handbook of Procedures,
2002-2007-Amendments in the Provisions Relating to
Gem & Jewellery Export Promotion Schemes-Reg.
I am directed to invite your attention to the new Export and Import Policy and
Handbook of Procedures, 2002-2007 announced by Ministry of Commerce & Industry
on 31st March 2002. The new five year Export and Import Policy and the Handbook
of Procedures replace the old EXIM Policy and Handbook of Procedures, Vol.I
1997-2002. In the new EXIM Policy & HOP, certain changes have been introduced in
the provisions relating to Gem and Jewellery Export Promotion Schemes. To
implement the changes, amendments have been made in the notifications governing
duty free import of goods by Gem and Jewellery units vide notification No.
64/2002-Cus, dated 24-6-2002. Further, a fresh notification (No. 60/2002-Cus,
dated 7-6-2002) has been issued for allowing import of pearl, precious and
semi-precious stones against replenishment licences without payment of duty in
supercession of notification No. 35/2001-Cus, dated 30-3-2001. A copy each of
the notifications is enclosed for easy reference. Introduction of new EXIM
Policy and HOP has also necessitated amendments in existing
circulars/instructions and the same has been made wherever necessary. The
salient features of the changes are explained below:
(i) Amendments in Exim Policy:
2. Under the provisions Exim Policy and HOP, the diamond, gem and jewellery
export promotion schemes were under Chapter 8. In the new EXIM Policy and
Handbook of Procedures Vol. I. 2002- 07, gem and jewellery export promotion
schemes have been shifted to Chapter 4.
3. In the existing notifications relating to gem & jewellery export promotion
schemes, at several places, references have been made to various paragraphs of
the EXIM Policy and HOP. Consequent to the re-numbering of Chapters and
Paragraphs in the new EXIM Policy & Handbook, these notifications have been
amended suitably so as to correctly reflect the new Chapter and Paragraph
numbers. Further, in these notifications, references have been made to the
Export and Import Policy, 1997-2002 and Handbook of Procedures, 1997-2002. As
the old Policy and HOP have been replaced by the new EXIM Policy and Handbook of
Procedures, Vol.I, 2002-07, notification Nos. 41/99-Cus, dated 28-4-99;
42/99-Cus, dated 28-4-99; 56/2000-Cus, dated 5-5-2000, 57/2000-Cus, dated
8-5-2000 and 55/2001-Cus, dated 16-5-2001 have been suitably amended so as to
align them
with the new Exim Policy and HOP 2002-2007.
(ii) Paragraph 4.4.16 (para 8.13 under old Exim Policy): Diamond Imprest
Licence (DIL)
4. Paragraph 8.3 of the previous Policy provided that Diamond Imprest Licence (DIL)
may be issued, in advance for import of rough diamonds. It also provided that
DIL may be issued for import of cut & polished diamonds for mixing with other
cut & polished diamonds and export thereafter or for exports as it is. Such
licences carry an export obligation. Now, this provision has been amended so as
to allow import of semi-processed diamonds, half-cut diamonds and broken
diamonds alongwith the cut & polished diamonds under DIL (paragraph 4.4.16 of
the new policy)
5. At present, notification No. 42/99-Cus dated 28-4-99 allows import of cut &
polished diamonds and gemstones upto 5% of the FOB value of the preceding
financial year’s export of cut & Polished diamonds or studded jewellery without
payment of duty subject to re-export of the same within a period of one year.
The facility to import cut & polished diamonds is allowed only to status holders
and actual users. The maximum size of diamond allowed to be imported under the
notification has been fixed at one-fourth of a carat or less.
6. To implement the change in the Policy, notification No. 42/99-Cus, dated
28-4-1999 has been suitably amended so as to allow import of semi-processed,
half cut and broken diamonds along with cut and polished diamonds against
Diamond Imprest License issued under Paragraph 4.4.16 of the Exim Policy.
(iii) Export of Cut & Polished Diamonds for Certification/Grading and
Re-import thereof
7. In the last EXIM Policy, in para 8.13(b)(now para 4.4.2 of new Policy), a new
provision was made to allow gem & jewellery exporters with a track record of at
least three years and having an annual average turnover of Rs.5 crore and above
during the preceding three licensing years to export cut & polished diamonds
each weighing 0.50 of a carat and above for the purpose of certification/grading
by specified laboratories/agencies as mentioned in the said para and for
re-import thereof without payment of duty. The diamond exported are to be
re-imported within a period of three months. The diamonds would be exported
subsequently as per the provisions of the policy. At the time of the export of
the diamonds for certification purposes, all the essential particulars necessary
for establishing identity of the goods at the time of re-import are required to
be furnished by the exporters.
8. A notification (No. 55/2001-Cus, dated 16-5-2001) has been issued to
implement the above policy provision. Under new policy, this provision has been
amended to allow authorized offices/ agencies of such institutes/laboratories to
export cut & polished diamonds and re-import the same after certification or
grading. To implement the changes in the Policy, notification No.55/2001-Cus.
dated the 6.5.2001 has been suitably amended.
(iv) Abolition Licenses for Import of Rough Diamonds
9. Hitherto, the exporters of Gem & Jewellery were allowed to import rough
diamonds, pearl, precious & semi-precious stones without payment of duty against
various licenses e.g. Diamond Imprest license, Bulk license, Gem Rep Licenses
etc as specified in the Policy & HOP under notification No. 35/2001-Cus, dated
30-3-2001.
10. In the new Exim Policy, the following licenses for import of rough diamonds
have been done away with
(i) Replenishment license issued under, and in accordance with paragraph 8.2 of
the Exim Policy;
(ii) Replenishment licenses issued under and in accordance with the paragraph
8.37 of the EXIM Policy;
(iii) Bulk licenses issued under and in accordance with the paragraph 8.10 of
the EXIM Policy;
(iv) Replenishment licence issued under and in accordance with paragraph 8.13(a)
of the EXIM Policy read with paragraph 8.26 of the HOP;
11. Further, the import duty on rough diamonds has been reduced from 5% to Nil
vide notification No. 37/2002-Cus. dated 11-4-2002. This means that now for
import of rough diamonds, no exemption notification allowing duty free import
against replenishment license is required.
12. Consequent to discontinuation of certain licenses in the New Exim Policy and
HOP and abolition of duty on import of rough diamond, notification No.
35/2001-Cus, dated 30-3-2001 has been superceded and replaced by a fresh
notification No. 64/2002-Cus dated 7-6-2002 so as to allow duty free import of
raw pearl, natural or cultured and precious (other than rough diamonds) or
semiprecious stones, unset & uncut against gem rep licences (para 4.4.13) and
replenishment license
(para 4.4.1) of the Exim Policy.
(v) Exports through Exhibition/Export Promotion Tours/Export of Branded
Jewellery -
13. Under paragraph 8.57 (a) (ii) of the HOP 1997-2002, personal carriage of
gold/silver/platinum jewellery, precious, semi-precious stones, beads and
articles as samples upto US $ 1,00,000 (one lakh) for export promotion tours and
temporary display/sale abroad was permitted with the approval of Gem & Jewellery
Export Promotion Council subject to the condition that the exporter would bring
back the jewellery/goods or repatriate the sale proceeds within 45 days from the
date of departure through normal banking channel. The said paragraph has been
modified and the new paragraph 4.71.2 (a) (ii) of the HOP, 2002-2007 now
specifically includes cut and polished diamonds in the category of goods allowed
to be taken out through personal carriage for the purpose specified in the para.
14. Diamond falls in the category of precious stones. Therefore, technically
speaking personal carriage of diamonds is already allowed under the Policy.
However, for the purpose of clarity, the same has been specifically mentioned in
paragraph .17.2(a)(ii) of the HOP. Personal carriage of diamonds for export
promotion tours may, therefore, be allowed. However, to establish the identity
of goods, it may be ensured that the specifications such as size, shape,
circumference, caratage (weight), colour, cut & height etc of the cut and
polished diamonds would be declared by the exporter at the time of export so
that the same could be matched at the time of re-import of the goods into the
country.
(vi) Wastage Norms
15. Under paragraph, 8.28 of the HOP, 1997-2002, chains/bangles of
gold/platinum/silver manufactured by a full-mechanized process were allowed
wastage of 1.25%. The said paragraph has been modified and the new paragraph
4.56 of the HOP now allows the same wastage norm for any unstudded jewellery/articles
of gold/platinum/silver manufactured by a fully mechanized process. This means
that any unstudded jewellery/articles manufactured by a fully mechanized
process. This means that any unstudded jewellery/articles manufactured by a
fully mechanized process would be eligible for 1.25 per cent wastage or
manufacturing loss.
(vii) Value Addition
16. Under paragraph 8.28 A of HOP, 1997-2002, the value addition prescribed for
plain gold/silver/platinum jewellery articles and ornaments like Mangal Sutra
containing black beads/imitation stones/ cubic zirconia etc. was 10%. This has
been amended vide paragraph 4.56.1 of the HOP 2002-2007 so as to reduce the
value addition norm from 10% to 7%.
17. Under paragraph 8.28 A of HOP, 1997-2002, the value addition norm for
gold/platinum/silver unstudded chains and bangles manufactured by a fully
mechanized process was 3%. The same value addition has been prescribed in the
new HOP for all unstudded jewellery/articles manufactured by a fully mechanized
process.
(viii) Replenishment Licence for Import of Consumables
18. Under the old HOP (paragraph 8.88), plain/studded jewellery items equal to
2.5% of FOB value of exports of preceding year was allowed to be imported on
payment of applicable duty against a replenishment licence. This provision has
been deleted in the new Handbook of Procedures 2002- 2007 (paragraph 4.80 of the
HOP).
(ix) Personal Carriage of Gem & Jewellery Export/Import Parcel
19. Under the previous HOP, foreign bound passengers were allowed to carry gems
and jewellery export parcels in baggage from all EOU/EPZ/SEZ units and all firms
in DTA through the airports in Delhi, Mumbai, Kolkata, Chennai & Bangalore. This
provision has been modified and paragraphs 4.81 and 4.82 of the new HOP now
allow personal carriage of gem and jewellery export and import parcels through
Hyderabad and Jaipur Airport also. The Commissioners of the Customs/Excise,
Hyderabad and Jaipur may kindly make suitable arrangements for implementation of
this provision.
20. Wide publicity may be given to the above changes by issue of a Public Notice
in this regard.
21. Difficulties, if any, faced in implementation of the above changes may be
brought to the notice of the Board at an early date.
Kindly acknowledge receipt of this circular.
Sd/-
(C. P. Goyal)
Sr. Technical Officer (FTT)
F.No. 305/22/2002-FTT
Government of India
Ministry of Finance
Department of Revenue
New Delhi