SME Chatroom: 'IGCR Rules apply only when exemption notifications say so'

SME Chatroom: 'IGCR Rules apply only when exemption notifications say so'
You can avail of the benefits of PIR, provided that your expansion project increases your installed capacity by at least 25 per cent.

Q. What are the criteria for goods to qualify for clearance at concessional duty rates under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017? Can we clear all the goods under these IGCR Rules or are there any notifications allowing specific goods only for import under such Rules?

Please note that the IGCR Rules only prescribe the procedures, and do not grant any exemption from payment of Customs duties. Rule 2(1) of the IGCR Rules says that these rules shall apply to an importer, who intends to avail the benefit of an exemption notification issued under sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), and where the benefit of such exemption is dependent upon the use of imported goods covered by that notification for the manufacture of any commodity or provision of output service.

Rule 2(2) of the said IGCR Rules says that these rules shall apply only in respect of such exemption notifications which provide for the observance of these rules. Thus, the duty concessions are available under exemption notifications and some of them mandate the procedures prescribed under the said IGCR Rules.

Q. We have an engineering unit. We have finalised an expansion project, where a number of capital goods and other goods will be imported. Can we avail of the benefits of Project Import Regulations 1986 (PIR)? And what are the procedures for availing of the benefits?

You can avail of the benefits of PIR, provided that your expansion project increases your installed capacity by at least 25 per cent. PIR is essentially a classification scheme. For a brief write-up on the scheme, see this link: https://www.cbic.gov.in/resources//htdocs-cbec/deptt_offcr/customs-manual2018.pdf;jsessionid=953511F14B45F3B8686E006E0F92A3A2.

The Tariff Rate at 98010011 for Industrial Projects has gone up from 5 per cent to 7.5 per cent but S.No. 601 in the exemption notification no. 50/2017-Cus dated June 30, 2017, says that the contracts registered with Customs till September 30, 2022 will get a concessional rate of 5 per cent till September 30, 2023.

For projects registered after September 30, 2022, the rate will be 7.5 per cent. Briefly, the procedures require you to get a certificate from your sponsoring authority, which in your case is the Ministry of Industry. Then you need to get your contracts registered with the Customs. When goods are imported, the goods will be assessed provisionally. You have to give a bond for differential duty backed by BG for 2 per cent of the CIF value (maximum Rs1 crore). After installation, you have to submit a reconciliation statement. The Customs will conduct a plant site verification and, based on that, the assessment will be finalised and the bond/BG redeemed.

Q. Who is the proper officer for conversion of shipping bills under Section 149 of the Customs Act, 1962? Please give the notification references.

The proper officer is the Superintendent for conversion before grant of order for clearance of the goods, and the Assistant/Deputy Commissioner for conversion after grant of order for clearance of the goods. Please see notifications no. 26/2022-Cus.(N.T.) and 27/2022-Cus.(N.T.), both dated March 31, 2022.

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