Transferability of DCS under SFIS

[Dalia Felix]

An Indian company is running hotels and is eligible for Duty Credit Scrip (DCS) under the Served From India Scheme (SFIS) of FTP. As per para 3.12.7, 'the DCS is transferable within group company and Managed Hotels. One of the group companies are engaged in 'sea food' business.

Can the DCS of the hotel be used for importing fish (Chapter 3 of Tariff) for the sea food company of the group ?

[Deepak Aggarwal]

Dear Sir,

As per para 3.12.6 point (C) duty credit scrip can be used for import of consumables including food items. Relevant para is reproduced below:

Imports Allowed

(c) Duty Credit Scrip in case of hotels, clubs having residential facility of minimum 30 rooms, golf resorts and stand-alone restaurants having catering facilities, may also be used for import of consumables including food items and alcoholic beverages.

Also as per para 3.12.7, duty credit scrip is non transferable except used in group company and managed hotels. Relevant para is reproduced below:

Non Transferability

Entitlement /goods (imported / procured) shall be non-transferable (except within group company and managed hotels) and be subject to Actual User condition.However, these goods can be alienated on completion of 3 years from the date of import / procurement.

If we read both above paras, it seems that duty draw back can be used in group companies for import of consumables including food items.

In my opinion, in your case, duty draw scripts can be used for importing fish for the sea food company.

Thanks

[Dalia Felix]

Sir, thank you very much. My doubt is whether both the conditions (group company and managed hotels) are to be satisfied or only one (that is being a 'group company') is sufficient for transferring DCS? any circular/case law is available in this regard? What are the precautions to be taken?

[Deepak Aggarwal]

Hello,

You may refer to recent case-GMRHotels and Resorts Ltd. 2015 (1)TMI708 -ANDHRAPRADESH HIGH COURT, in this case only word group company was discussed.

It seems that in light of thisjudgmentalso, both word need to be readseparateleyi.e. group company or Managed hotel.

Thanks

AI Summary

Transferability of Duty Credit Scrip: group company use permits import of consumables under SFIS, subject to conditions. The Served From India Scheme allows Duty Credit Scrip to be used for import of consumables, including food items, by qualifying hospitality establishments, subject to actual user conditions. The scheme also provides that entitlements and imported/procured goods are non-transferable except within a group company and to managed hotels; recent discussion treats the terms separately, supporting the view that a hotel's DCS may be used by a group company for importing consumables such as fish, subject to scheme conditions and any applicable guidance.