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DGFT Policy Circular No- 06/2004-09, dated
26.10.2004
Deemed export benefits on supplies made to Projects financed by multilateral or
bilateral agencies / funds covered under Para 8.2 (d) of Foreign Trade Policy
other than World Bank and Asian Development Bank.
Attention is invited to the provisions contained in para
8.2(d) of Foreign Trade Policy read with para 8.2.3 of Handbook of Procedures (Vol.I).
According to these provisions supply of goods to projects financed by
multi-lateral or bilateral agencies / funds as notified by the Deptt. of
Economic Affairs, Ministry of Finance under International Competitive Bidding in
accordance with the procedures of these agencies / funds, where the legal
agreements provide for tender evaluation without including the customs duty are
entitled to the deemed export benefits listed in paragraph 8.3 (a), (b) and (c)
of Foreign Trade Policy, whichever is applicable. The corresponding Customs
Notification No. 84/97 dated 11.11.1997 also allows exemption from payment of
additional customs duty on import of goods required for use in a project
financed by the World Bank, the Asian Development Bank or any other
International organization as defined in the said notification. Similarly, in
terms of Central Excise Notification No. 108/95 –CE dated 28.8.1995, goods
supplied to such projects are exempt from payment of excise duty.
2. An issue has been raised whether supply of goods to projects financed by
agencies / funds like Japan Bank for International Cooperation (JBIC) covered by
the Department of Economic Affairs, Ministry of Finance Notification as per
Appendix 33 of Handbook of Procedures would be eligible for all the deemed
export benefits covered under para 8.3 (a), (b) and (c) of Foreign Trade Policy.
Supplies to JBIC are not covered under Customs Notification No. 84/97 dated
11.11.1997 and Central Excise Notification No. 108-CE dated 28.8.1995, as
amended. The matter has been considered in consultation with all the concerned
deparments.
3. It is, accordingly clarified that (i) supply of goods made to projects
financed by agencies / funds notified by the Department of Economic Affairs and
covered under Appendix 33 of Handbook of Procedures would continue to be
eligible for deemed export benefits covered under para 8.3 (a) & (b), viz., (a)
advance license for deemed exports, and / or (b) deemed export drawback, as the
case may be. Such supplies would, however, not be eligible for exemption from
payment of excise duty as the agencies / funds are not covered under Excise
Notification No. 108/95 dated 28.8.1995, and (ii) In so far as refund of
terminal excise duty is concerned, it is clarified that as a general rule such
refund is available only in those cases where no CVD is payable on import.
Refund of excise duty would, therefore, be available if both conditions are
fulfilled, namely, supplies are made to projects financed by agencies / funds
which are covered under Appendix 33 of Handbook of Procedures and Additional
Custom Duty (CVD) is zero on import of such goods. Other conditions /
requirements for availing of deemed export benefits in the category referred to
above remain the same and continue to be applicable.
This issues with the approval of Director General of Foreign Trade.
(P.K. Santra )
Dy. Director General of Foreign Trade
For Director General of Foreign Trade
(Issued from F.No. 01/92/180/50/AM03/PC.II)