Export of Services - Whether mere receipt is convertible foreign exchange is sufficient to hold that service has been exported and not liable to servi...
Export of Services - Whether mere receipt is convertible foreign exchange is sufficient to hold that service has been exported and not liable to servi...
Tariff values notified for edible oils, brass scrap and poppy seeds, updating import valuation regime. Notification No.176/2009-Customs (N.T.) dated November 30, 2009 notifies tariff values for specified imported commodities for customs valuation, listing US dollar per metric tonne rates for various edible oils (noted as largely unchanged), Brass Scrap (all grades), and Poppy Seeds in the tabular schedule for use in import assessment.
Export stabilization signals improved external demand; FDI inflows remain strong and industrial growth revival gains momentum. October 2009 exports showed a moderated decline of 6.6% year on year, with certain sectors sustaining growth and several previously depressed commodities recording positive month on month turnaround. Labour intensive and manufacturing categories exhibited reduced contraction rates, while software exports showed no decline. The release attributes improvement to government Budget and Foreign Trade Policy support measures. Concurrently, FDI inflows for April-September 2009 were comparable to the prior year period, international reports rank India as an attractive FDI location, and industrial production registered robust recovery in September 2009.
Foreign Trade Policy promotes market diversification and fiscal incentives to reverse export decline and expand India's share in global trade. The Foreign Trade Policy establishes a framework to stabilise and reverse export decline and to expand the country's share in world trade by combining fiscal incentives, procedural rationalisation and enhanced market access to promote sectoral support and market diversification; early indicators cited a reduced rate of export decline attributed to the Policy and accompanying stimulus.
Foreign direct investment approvals and deferrals across sectors, with high value proposals referred for higher level clearance. Seventeen FDI proposals were approved across sectors for equity issuances, warrants, joint ventures, expansions and scheme based allotments, with some approvals involving no fresh inflow and others subject to policy constraints such as Press Note 1 of 2005. Twelve proposals were deferred due to sectoral sensitivities including retail single brand, insurance, defence manufacturing, telecom share transfers and structural conversions. Five proposals were rejected for involving non cash consideration or impermissible issuance mechanisms; two proposals were noted as court sanctioned mergers/demergers, and two high value proposals were referred to the Cabinet Committee on Economic Affairs for clearance.
Commencement of customs duty: duty takes effect on the notification date, not on policy publication. Commencement of a revised customs duty is governed by the date of issuance of the implementing notification rather than by the date of publication of a broader trade policy; until such notification is published the prior duty rate remains applicable.
Tax revenue collections decline in aggregate, showing reduced year on year growth and varied Budget Estimate achievement. Provisional October 2009 collections present month and April-October receipts for Customs, Central Excise and Service Tax against prior-year figures and Budget Estimates, showing year-on-year declines in aggregate receipts, differences in percentage of BE achieved across heads, and noting that excise data exclude a cess not administered by the Department of Revenue.
Import of sensitive items rose significantly, altering their share of total imports and shifting major source-country patterns. Import of sensitive items rose substantially in April-August 2009, increasing their share of total imports as gross imports fell; edible oils, pulses, fruits and vegetables, rubber, spices, marble and granite, tea and coffee, milk products and food grains showed increases while automobiles, cotton and silk, SSI products and alcoholic beverages declined. The edible oil surge was driven chiefly by higher imports of crude palm oil and its fractions, and source-country patterns shifted with increases from several countries and decreases from others.
Export of services: tribunal pre-deposit upheld where performance, consumption, and remittance links to India raise triable issues. Whether receipt in convertible foreign exchange suffices as export of service for exemption from service tax turns on contractual performance, destination and consumption of services, and commercial activities in India. The tribunal imposed a conditional pre-deposit pending appeal, and the High Court declined to interfere, noting triable issues-mutual service obligations, Indian consumers as payors, and remittance routing-that require adjudication by the tribunal.
Export of services: receipt in convertible foreign exchange insufficient to treat services as exported when benefits are consumed in India. The tribunal considered whether business auxiliary, marketing and support services supplied by an Indian subsidiary to foreign principals qualify as export of services under the Export of Services Rules, 2005. Although the Rules and Board guidance recognise recipient location and receipt in convertible foreign exchange as relevant, the tribunal concluded that where the ultimate benefit and consumption of the services occur in India the services are performed in India and do not meet the export criteria.
Distribution of taxation power clarifies legislative competence and legal limits on taxation authority under the constitution. The constitutionally mandated distribution of taxing power allocates legislative competence among Parliament and State Legislatures via the Union, State and Concurrent Lists in the Seventh Schedule, with specific tax subjects assigned to each List. The principle that taxes may be levied only by authority of law imposes a legal prerequisite on tax imposition. Amendments changing fiscal allocations or the Lists require the constitutional amendment procedure with additional state ratification for specified categories.
Import of sensitive items rose significantly, increasing their share of gross imports and driven by edible oil imports. Import of sensitive items rose by 34.5% in April-July 2009, increasing their share of gross imports from 2.7% to 4.7%. Automobiles, small-scale industry products and alcoholic beverages declined, whereas edible oil, pulses, fruits and vegetables, cotton and silk, rubber, spices, marble and granite, milk products, tea and coffee and food grains increased. Edible oil imports surged, driven mainly by higher crude palm oil and its fractions. Imports rose from suppliers such as Indonesia, Myanmar, the United States and Malaysia, and fell from China, Korea, Japan, Germany and the Czech Republic.
Foreign direct investment approvals and regulatory regularisations announced, including ex post approvals, waivers, and deferred proposals. Government approved thirteen FIPB recommended proposals covering fresh foreign equity inductions, issuance of shares and warrants, ex post facto regularisations of prior foreign participation, issuance against non cash consideration and advances, and waivers or amendments of capitalisation and approval conditions. Eight proposals were deferred pending further inputs; two were rejected for seeking capitalisation relaxations and impermissible foreign fund investments; one conversion to an operating cum holding company for downstream investment was noted without fresh inflow.
Tariff value notification for import commodities clarifies valuation basis for edible oils, brass scrap and poppy seeds. Notification sets tariff values in US dollars per metric tonne for specified imported goods-various edible oil categories (noting no change for several items), brass scrap (all grades), and poppy seeds-providing commodity-specific valuation benchmarks to be applied for customs assessment and import valuation purposes under the listed chapter headings and tariff items.
Fiscal consolidation urged as CBEC must adopt innovative measures to address indirect tax revenue shortfall. The Finance Minister urged restoration of fiscal consolidation and directed CBEC to adopt innovative measures to address a pronounced decline in indirect tax receipts, while redefining Customs and Central Excise roles toward trade facilitation, expansion of Service Tax, reduction of dwell time, and enhanced use of IT and Risk Management Systems to improve compliance, curb smuggling, and prepare administratively for implementation of a dual GST.
Foreign investment in micro and small enterprises permitted subject to sectoral caps and entry route conditions. FDI in micro and small enterprises is permitted subject only to sectoral equity caps, entry routes and relevant sectoral regulations following the MSMED Act; Press Note 18 (1997) is modified accordingly. Industrial undertakings that are not MSEs but manufacture items reserved for the MSE sector must obtain an Industrial Licence and undertake to export a significant share of new or additional annual production within a set period, and require prior government approval when foreign investment exceeds the automatic route threshold.
Foreign direct investment approvals: cleared, deferred, rejected, withdrawn, and one referred for higher-level consideration in varied sectors. Eight foreign direct investment proposals were approved while seven were deferred, one rejected, one withdrawn, one advised to approach the sectoral regulator, and one recommended for higher level consideration; approved transactions included non cash consideration mechanisms (share allotments for machinery or pre incorporation expenses), share swaps, convertible warrants, and increases in foreign equity, and one matter was subject to a judicial direction to hear both parties before final communication of decision.
Undervaluation of imports prompts seizure, valuation comparison and interim duty payment amid ongoing customs investigation. Undervaluation in import declarations of branded glassware by a Kolkata importer prompted search, seizure and document recovery showing routings through a Hong Kong trader and declared values substantially lower than those reported by the domestic distributor; seized stock and preliminary estimates indicated import duty evasion, the importer admitted undervaluation and paid an interim deposit while investigation continues.
Prohibited export seizure of red sanders: containers intercepted, goods seized under customs law and suspect arrested for smuggling. DRI Kolkata intercepted two export containers declared as ductile iron castings but found stuffed with logs believed to be Red Sanders, seized under the Customs Act as a prohibited export under the Foreign Trade Policy. An individual apprehended admitted transporting and delivering the wood, was identified as a mastermind of a smuggling racket, arrested and remanded, and further investigation into the export facilitation network is ongoing.
Tariff value notification sets import values for edible oils, brass scrap and poppy seeds affecting customs valuation. The Department of Revenue notified per metric tonne tariff values for specified commodities to guide import valuation: multiple edible oil categories (Crude Palm Oil; RBD Palm Oil; other Palm Oil; Crude Palmolein; RBD Palmolein; other Palmolein; Crude Soyabean Oil) are recorded as unchanged, while Brass Scrap (all grades) and Poppy Seeds have prescribed tariff values to be applied for customs assessment.
SEZ approvals: formal and in-principle project sanctions plus delegation to Unit Approval Committee for default operations. The Board of Approval granted Formal Approvals for two SEZ projects and one In-Principle Approval for a Solar SEZ, approved nine co-developer statuses, decided to enlarge the list of default operations, and authorised the Unit Approval Committee to approve default operations, with a notification to be issued.
The total import of sensitive items for the period April-August 09 has been Rs.22429 crores as compared to Rs.17206 crores during the corresponding period of last year thereby showing an increase of 30.4%. The gross import of all commodities during same period of current year was Rs.497108 crores as compared to Rs 648041 crores during the same period of last year. Thus import of sensitive items constitutes 2.7% and 4.5% of the gross imports during last year and current year respectively.
Imports of automobiles, cotton & silk, products of SSI and alcoholic beverages have shown a decline at broad group level during the period. Imports of all other items viz. edible oil, Pulses, fruits & vegetables (including nuts), rubber, spices, marble & granite, tea & coffee, milk & milk products and food grains have shown increase during the period under reference.
In the edible oil segment, the import has increased from Rs 4791.49 crores last year to Rs 8994.36 crores for the corresponding period of this year. The imports of both crude edible oil as well as refined oil have gone up by 89% and 81% respectively. The increase in edible oil import is mainly due to substantial increase in import of crude palm oil and its fractions.
Imports of sensitive items from Indonesia, Myanmar, Malaysia, United States of America, Brazil, Canada, Ukraine, Argentina, Benin, Australia etc. have gone up while those from China P RP, Korea RP, Japan, Cote D' Ivoire, Germany, Thailand, Czech Republic etc. have shown a decrease.
Import of sensitive items rose significantly, altering their share of total imports and shifting major source-country patterns.
Import of sensitive items rose substantially in April-August 2009, increasing their share of total imports as gross imports fell; edible oils, pulses, fruits and vegetables, rubber, spices, marble and granite, tea and coffee, milk products and food grains showed increases while automobiles, cotton and silk, SSI products and alcoholic beverages declined. The edible oil surge was driven chiefly by higher imports of crude palm oil and its fractions, and source-country patterns shifted with increases from several countries and decreases from others.
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