The importer has to utilise the imported goods or re-export them within a period of six months from the date of import, failing which the importer is liable to payment of duty with interest.
The Central Board of Indirect Taxes & Customs (CBIC) has now introduced the job work facility under the existing Import of Goods at Concessional Rate of Duty (IGCR) Rules, 2017. The move would allow importers, who don’t have an in-house complete manufacturing facility, to import goods at concessional rates for domestic manufacturing of goods and services. This followed the announcement made in the budget speech by Finance Minister Nirmala Sitharaman to amend the IGCR Rules to boost trade facilitation. This is also likely to help MSMEs that rely on contract manufacturing.
“The absence of this facility had earlier constrained the industry especially those in the MSME sector which did not have the complete manufacturing capability in-house,” the Ministry of Finance said in a statement. However, sensitive sectors such as gold, articles of jewellery, and other precious metals or stones have been excluded from the facility of job work.
“The job work has been permitted based on certain conditions that have been relaxed, looking towards their feasibility. This is going to benefit MSMEs, which didn’t have full manufacturing capacity, as now they can send the imported for job work and get products manufactured as per their norm. Pharma, chemical, and engineering are among the sectors to benefit from this development,” Vijay Shah, CEO at import-export consulting firm Petals Professional Services told Financial Express Online.
The government has also allowed importers of such capital goods to clear them in the domestic market at a depreciated value after payment of the differential duty and interest. “This was not allowed earlier and manufacturers were stuck with the imported capital goods after having used them as they could not be easily re-exported,” the ministry added. The importer has to utilise the imported goods or re-export them within a period of six months from the date of import, failing which the importer is liable to payment of duty with interest. Moreover, the procedure for availing the concessional customs duty under IGCR rules has been reviewed as the required intimations and records can be sent by email to the jurisdictional Customs officer.
“Through this, you can still do imports, warehousing, add on some value to products, and then export duty-free. Today, setting up a factory requires significant capital. If you don’t have that and if there are other reasons such as land procurement etc., then you have someone with a warehouse and the whole setup to make your product at a lesser operational cost. This is a win-win as it would help job workers as well and create many jobs. However, businesses don’t understand this concept,” Rajan Nair, who owns freight forwarding company Alltime Shipping told Financial Express Online.
An importer who intends to import goods at concessional rates will have to give one-time prior information of such goods to the Customs Officer along with information including name and address of the premises of the importer and his job worker; customs tariff heading, nature, and description of imported goods, etc. The importer is also required to submit a one-time continuity bond, to cover all the imports undertaken.
Source: Financial Express