Category: Custom Circular

Download Circular No. 26 /2013 -Customs Dated 19.07.2013 : Standard Unit Quantity Code (UQC)

Circular No. 26 /2013 -Customs

F. No. 450/180/2009- Cus. IV

Government of India

Ministry of Finance

Department of Revenue

(Central Board of Excise and Customs)

****

227- B, North Block, New Delhi

Dated 19.07.2013

To,

All Chief Commissioners of Customs/Customs (Preventive)

All Chief Commissioners of Customs and Central Excise

All Commissioners of Customs / Customs (Preventive)

All Commissioners of Central Excise and Customs

All Directors General under CBEC.

Sir / Madam,

Subject: Standard Unit Quantity Code (UQC) – regarding.

            The issue of poor quality of trade data has been engaging the attention of the Government. Further, an analysis of National Import Data Base (NIDB) reveals that there  are at times variations between the lowest and highest unit values of the same item, which might escape detection on account of the use of different unit codes.

2. The matter has been carefully examined with the objective of improving data quality both from the view point of generating error free trade statistics as well as providing usable contemporary reference values to the assessing officers. The Board notes that Standard     Unit Quantity Codes (UQC) indicated in the Customs Tariff Act, 1975 are not being uniformly declared by importers and exporters for the same items across different Customs locations. This impacts data quality and makes comparisons and aggregations difficult. The use of non-uniform UQCs for the same item also vitiates the quality of the NIDB data and reduces its utility to the assessing officers, who are unable to ascertain the contemporaneous values or assessment practice of a given item in different Customs locations. Therefore, the solution lies in improving the quality of data by using standard UQCs.

3. In this regard, it is seen that the Customs Tariff Act, 1975 prescribes only a single Unit Quantity Code (UQC) against each Tariff Item, and it is the requirement of the law that the same is properly declared by importers/exporters/Customs Brokers in the Bills of Entry/Shipping Bills. It is the view that the correct declaration of the UQC, as indicated in the Customs Tariff Act, 1975 would resolve the aforementioned difficulties. Accordingly, it is directed by the Board that Customs field formations should ensure that only the correct and prescribed Standard UQC as per the Customs Tariff Act, 1975 is mentioned in Bills of Entry/ Shipping Bills.

4.Board desires the Chief Commissioners of Customs to ensure that instructions as aforementioned are complied with scrupulously. There should, however, be an endeavour that the exercise does not result in delays in clearance of cargo. The Directorate of Valuation shall monitor the correct use of UQCs and DG (System) shall modify the software applications suitably to give effect to mandatory compliance of correct UQC.

5.Difficulty faced, if any, in implementation of aforementioned instructions may be brought to the notice of the Board

Yours faithfully

(R.P.Singh)

Director (Customs)

Download Circular No.25 /2013 – Customs Dated 1st July, 2013 : Import of Pets under Baggage

Circular No.25 /2013 – Customs

F. No. 495/16/2012-Cus.VI

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

*****

                        Room No.253-A, North Block,

New Delhi the 1^st July, 2013.

To,

All Chief Commissioners of Customs,

All Chief Commissioners of Customs (Preventive),

All Chief Commissioners of C.Ex. , Customs & S.Tax.

All Director Generals.

Sir/Madam,

Subject:  Import of Pets under Baggage – reg.

            Attention is invited to Board’s Circular No. 15/2013 – Customs dated 08.04.2013 on the above cited subject.

2. Board has received several representations regarding problems being faced in re-import of pets at airports. In this regard the undersigned is directed to inform that re-import of pets is not covered by Circular No. 15/2013 – Customs dated 08.04.2013. Therefore, it is clarified that re-import of pets as baggage is allowed subject to establishment of identity of pets by Customs authorities, production of the required health certificate from the country of export and examination of said pets by the concerned Quarantine Officer at this end.

3.These instructions may be brought to the notice of the trade / airlines / carriers by issuing suitable Trade / Public Notices.  Suitable Standing orders/instructions may be issued for the guidance of the field officers.

4.  Difficulties faced, if any, may be brought to the notice of the Board immediately.

Yours faithfully,

 (A.K. Goel)

STO (TU)

Download Circular No. 24 / 2013 – Customs, Dated 27th June, 2013 : Classification of Elements of Filters of Heading 8421

Circular No. 24 / 2013 – Customs 

F.No. 528/93/2012-STO (TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

229-A, North Block, New Delhi

27^th June, 2013

To

All Chief Commissioners of Customs/ Customs (Prev.)/ C&CE,

All Directors General of CBEC,

All Commissioners of Customs / Customs (Prev.) / C&CE

All Commissioners of Customs & Central Excise (Appeals).

Sir / Madam,

Subject: Classification of Elements of Filters of Heading 8421 – reg.

***

The Board has noted that while majority of import data in National Import Data Base shows that “elements of Filters” are being classified under Tariff Item 84219900 as parts of Filters.  These articles are also being classified under other Tariff Items viz. 39269099, 48120000, 48239090, 59119090, 68159990, 69091910, 73269099, etc. Therefore, Board has examined the matter with a view to provide clarity in classification of said articles under the Customs Tariff Act, 1975.

2. Heading 8421 of the Customs Tariff applies to, “Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases”.  The scope of parts of articles covered by the said Heading 8421 is explained in the World Customs Organization’s Harmonized Commodity Description and Coding System Explanatory Notes. These Explanatory Notes present an internationally accepted view of the scope of each Heading of the Customs Tariff. In this context, the Explanatory Note to Heading 84.21 provides that:

“Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading covers parts for the above-mentioned types of filters and purifiers. Such parts include, inter alia:

Leaves for intermittent vacuum filters; chassis, frames and plates for filter presses; rotary drums for liquid or gas filters; baffles and perforated plates, for gas filters.

It should be noted, however, that filter blocks of paper pulp fall in heading 48.12 and that many other filtering elements (ceramics, textiles, felts, etc.) are classified according to their constituent material.” (emphasis provided)

3. Thus, it emerges that elements of Filters are to be classified as per their constituent material. For instance, elements (of Filters) that are made up of paper would be classified in Headings 4812 or 4823; if made up of textile material for technical use then in Heading 59.11; if made up of glass then in Heading 70.19; etc. Filters by themselves would be classified under Heading 84.21.

4. Board desires that suitable instructions regarding the correct classification of elements of Filters may be issued to the field formations. Difficulty faced, if any, may be brought to notice of the Board.

Yours faithfully,

(Subodh Singh),

OSD (Customs), Tariff Unit

Fax: 011 – 23092173

Internal circulation – As usual.

Download Circular No. 24 / 2013 – Customs Dated 27th June, 2013 : Classification of Elements of Filters of Heading 8421

Circular No. 24 / 2013 – Customs

F.No. 528/93/2012-STO (TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

229-A, North Block, New Delhi

27^th June, 2013

To

All Chief Commissioners of Customs/ Customs (Prev.)/ C&CE,

All Directors General of CBEC,

All Commissioners of Customs / Customs (Prev.) / C&CE

All Commissioners of Customs & Central Excise (Appeals).

Sir / Madam,

Subject: Classification of Elements of Filters of Heading 8421 – reg.

The Board has noted that while majority of import data in National Import Data Base shows that “elements of Filters” are being classified under Tariff Item 84219900 as parts of Filters.  These articles are also being classified under other Tariff Items viz. 39269099, 48120000, 48239090, 59119090, 68159990, 69091910, 73269099, etc. Therefore, Board has examined the matter with a view to provide clarity in classification of said articles under the Customs Tariff Act, 1975.

2. Heading 8421 of the Customs Tariff applies to, “Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases”.  The scope of parts of articles covered by the said Heading 8421 is explained in the World Customs Organization’s Harmonized Commodity Description and Coding System Explanatory Notes. These Explanatory Notes present an internationally accepted view of the scope of each Heading of the Customs Tariff. In this context, the Explanatory Note to Heading 84.21 provides that:“Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading covers parts for the above-mentioned types of filters and purifiers. Such parts include, inter alia:

Leaves for intermittent vacuum filters; chassis, frames and plates for filter presses; rotary drums for liquid or gas filters; baffles and perforated plates, for gas filters.

It should be noted, however, that filter blocks of paper pulp fall in heading 48.12 and that many other filtering elements (ceramics, textiles, felts, etc.) are classified according to their constituent material.” (emphasis provided)

3. Thus, it emerges that elements of Filters are to be classified as per their constituent material. For instance, elements (of Filters) that are made up of paper would be classified in Headings 4812 or 4823; if made up of textile material for technical use then in Heading 59.11; if made up of glass then in Heading 70.19; etc. Filters by themselves would be classified under Heading 84.21.

4. Board desires that suitable instructions regarding the correct classification of elements of Filters may be issued to the field formations. Difficulty faced, if any, may be brought to notice of the Board.

Yours faithfully,

(Subodh Singh),

OSD (Customs), Tariff Unit

Fax: 011 – 23092173

Internal circulation – As usual.

Download Circular No. 22/2013 – Customs Dated 24th May, 2013 : Customs permission for transhipment of goods/containers from a Gateway Port to a Container Freight Station (CFS) of another Customs Station

Circular No. 22/2013 – Customs

F. No. 450 /120/2012-Cus-IV.

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

*****

New Delhi, Dated 24th May, 2013

To,

All Chief Commissioners of Customs / Customs (Prev).

All Chief Commissioners of Customs & Central Excise.

All Commissioners of Customs / Customs (Prev).

All Commissioners of Customs & Central Excise.

All Director Generals under CBEC.

Sir / Madam,

Subject: – Customs permission for transhipment of goods/containers from a Gateway Port to a Container Freight Station (CFS) of another Customs Station. – reg.

Attention is invited to Board’s Circular 18/2009- Cus dated 08.06.2009 which disallows direct movement of consignments from Gateway Port to CFS of another Customs Station.  It is only in exceptional circumstances on account of congestion etc, the jurisdictional Commissioners are empowered to allow the movement of consignments from Gateway Port directly to a CFS of another Customs Station.  Therefore, when goods consigned for an Inland Container Depot (ICD) are imported at a Gateway Port, these are transported first to the ICD and then to the connected CFS for physical clearance (they may also be cleared from the ICD itself).  Representations have been received highlighting  that  insisting that the goods should be received first in an ICD before being taken to one of its attached CFSs increases the dwell time and transaction cost for the importers.  This is particularly true when the CFS is located en route to an ICD wherein the goods have to cross the CFS to go to the ICD and then return to the said CFS for warehousing and clearance.

2.Board has examined the matter. It is seen that the present restriction in not allowing direct movement of goods from a Gateway Port to a CFS of another Customs Station is chiefly on account of the fact that the Indian Custom EDI System (ICES) module at present does not allow generation of Sub Manifest Transhipment Permit (SMTP) to allow the goods move directly from a Gateway Port to CFS. It is, however, felt that in the interest of reducing transaction costs and dwell time there is justification to allow the direct movement of goods from a Gateway Port to a CFS and vice versa, while at the same time ensuring proper accountability of the goods to safeguard revenue.  Accordingly, the Board is of the view that suitable modification in ICES may be carried out to implement the direct movement of goods from a Gateway Port to a CFS and vice versa.  Till such time the electronic system is made operational the following procedure /interim methodology is prescribed for direct movement of containers from Gateway Port to a CFS: –

(i) At the Gateway Port, Customs shall prepare a consolidated list of all SMTP generated CFS-wise for consignments bound for an ICD. This list should be transmitted electronically by the gateway port to the receiving Customs station /(ICD).

(ii)   The goods will move from the gateway port direct to the CFS under cover of a bond accepted by the Customs at the Gateway Port. The carrier will also carry the relevant SMTP in duplicate and hand over the same to the custodian at the CFS.

(iii) On arrival of the goods at the CFS attached to ICD, the custodian of the CFS shall prepare:

(a) A list of goods/container arrival, on daily basis.  This list shall inter alia cover the detail of SMTP generated at the gateway port, a hard copy whereof is received along with the goods/containers.  This list shall be signed by the custodians and shall be endorsed by Customs Officer in charge of the CFS.  The custodian of the CFS shall forward the list of goods/container arrival, to ICD on daily basis.

(b) A Landing Certificate (LC) on the lines of a Container Arrival list signed by custodian.

(iv) The Custodian of CFS shall forward a copy of Landing Certificate duly endorsed by Customs at receiving end to the Customs at the Gateway Port for re-crediting the bond executed with Customs.

(v) On arrival of the goods/container inside the CFS, the Custodian along with the surveyor, if any, in presence of the Customs Officer shall verify the correctness of details of consignments   and will make an endorsement in the SMTP. The endorsed SMTP shall be forwarded to concerned ICD. With receipt of endorsed SMTP and approval of Customs officer in charge at the ICD, local IGM shall be permitted to be filed at Service Center in case of LCL Cargo

(vi) The B/E will be filed at the ICD as usual and the goods will be examined and cleared at the CFS.

3. This facility shall be extended to that CFS that is at a considerable distance from the ICD, or en route to an ICD. Movement of consignments from the gateway ports to CFS adjacent to ICD shall continue to be permitted in the manner prescribed in Board Circular No 18/2009- Cus dated 08.06.2009. The furnishing of suitable bond by the custodian of the ICD/CFS with the Customs at the Gateway Port shall continue as at present.

4. Board Circular No 18/2009- Cus dated 08.06.2009 stands modified to the above extent.

5. Suitable Public Notices/Standing Order may be issued for guidance of trading public and staff. Difficulty faced if any may be brought to the notice of the Board immediately.

Yours faithfully,

 (M.V.Vasudevan)

Under Secretary to the Government of India (Customs IV)

Download Circular No.  16 /2013 – Customs Dated 10th April, 2013 : Board requesting for fixation of norms for waiver of payment of cost recovery charges for Customs staff posted at Seaports, Air Cargo Complexes, Courier Terminal, etc

Circular No.  16 /2013 – Customs

F.No.450/41/2010-Cus.IV(Pt)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Dated the 10^th April, 2013

To;

All Chief Commissioners of Customs / Customs (Prev)

All Chief Commissioners of Customs & Central Excise.

All Director Generals of CBEC

All Commissioners of Customs / Customs (Prev)

All Commissioner of Customs and Central Excise

 Sir/ Madam,

References have been received by the Board requesting for fixation of norms for waiver of payment of cost recovery charges for Customs staff posted at Seaports, Air Cargo Complexes, Courier Terminal, etc. in like manner of the norms in force for ICDs/CFSs.

2.The matter was examined by the Board and a view emerged that in the manner of ICDs/CFSs other Customs facilities – Seaports, Air Cargo Complexes, Courier Terminals and Diamond Plazas – would merit similar exemption from the payment of cost recovery charges for the Customs staff posted therein once they satisfy certain performance criteria that confirm their continued viability.  The Board also noted that the Ministry of Civil Aviation’s Greenfield Airport Policy required the Airport operators to pay the cost recovery charges for the Customs staff (amongst others).  However, the Board observed that unlike ICDs/CFSs the staffing norms for these other Customs facilities including Airports had not been finalized. In this background,  the Board constituted a Committee of Chief Commissioners of Customs to recommend the norms for staffing of the Customs staff at the various Customs facilities.  The Committee of Chief Commissioners was also entrusted with the task of identifying the performance benchmarks that would make a particular facility eligible for the grant of exemption from the payment of cost recovery charges for the Customs staff posted therein.

3.Based on the report of the Committee of Chief Commissioners, the Board has obtained the approval of the Competent Authority for the staffing norms for sanction of posts on cost recovery basis at various Customs facilities and also for the performance norms that would make a facility eligible for consideration of grant of exemption from the payment of cost recovery charges.  The facility-wise (Sea Port, Air Cargo Complexes, Courier Terminals and Diamond Plaza) staffing norms for the posting of Customs staff on cost recovery basis as well as the norms for eligibility for grant of exemption from payment of cost recovery charges for such Customs staff are as follows:

Staffing norms:

Customs Facility	Dy./Asst. Commissioner	Appraiser/ Superintendent	Inspector/ Examiner	STA/TA	Sepoy	Total
Sea Port	2	4	12	2	12	32
Air Cargo Complex	2	8	12	4	5	31
Courier Terminals	4	9	12	4	8	37
Diamond Plaza	1	2+2	8	2	4	19

Norms for eligibility for grant of exemption from the payment of cost recovery charges:

Facility	Minimum Annual Volume/Value of Import & Export Cargo	Minimum Annual Number of Documents – Bills of Entry/Shipping Bills
Sea Port	6 Lakhs MTs.	3,000
Air Cargo Complex	12,000 MTs	35,000
Courier Terminals	1.5 Lakh Packages	20,000
Diamond Plaza	Rs. 15,000 Crores	12,000

Note:      Both performance norms (cargo and documents) would be reduced by 50% for facilities that handle only import or export cargo.

4.         The staffing norms for Airports will be determined on the basis of the Class of the Airport (Class A, B or C) as per the criteria of minimum number of international flights and passengers. Also, it is envisaged that there would be 4 shifts at Class A and B Airports and 2 shifts at Class C Airports. The norms for identifying the Class of an Airport, the staffing norms for the posting of Customs staff on cost recovery basis, and the norms for eligibility for grant of exemption from payment of cost recovery charges for such Customs staff are as follows:

Norms for identifying the Class of an Airport:

Class of Airport	Minimum No. of international flights per annum (incoming and outgoing)	Minimum No. of passengers per annum (incoming and outgoing)
Class A	12,000	10 lakhs
Class B	6,000	5 lakhs
Class C	3,500	3 lakhs

Staffing norms for Airports:

Class of Airport	Staffing Norms
	Dy./Asst. Commissioner	Superintendent	Inspector	Sepoy	Total
Class A	4	38	78	24	144
Class B	4	29	48	16	97
Class C	–	8	16	4	28

Norms for eligibility for grant of exemption from the payment of cost recovery charges:

Minimum number of international flights is 3500 (both incoming and outgoing) and the minimum number of passengers is 3 lakhs (both incoming and outgoing) in each of the preceding two financial years.

5.The conditions for grant of exemption from payment of cost recovery charges for all facilities viz. Sea Ports, Air Cargo Complexes, Courier Terminals, Diamond Plazas and Airports shall be as follows:

(a) Both performance norms i.e. volume/value and number of documents in case of Sea Ports, Air Cargo Complexes, Courier Terminals, Diamond Plazas and number of international flights and number of passengers in case of Airports must be met in each of the preceding two financial years.

(b)  Exemption from cost recovery charges shall be prospective; and

(c)  No cost recovery charges should be outstanding.

6. It has also been decided that based upon the aforementioned norms, jurisdictional Commissioners would review the existing facilities and send proposals for waiver of cost recovery charges for eligible facilities within 60 days. The proposal shall be sent to DG, HRD, CBEC.  Thereafter, similar review would be undertaken in April each year and proposals for waiver of cost recovery charges sent to DG, HRD, CBEC by 30th April. DG, HRD, CBEC will process the proposals to ensure the necessary orders for exemption of cost recovery charges and regularization of posts are got issued in a time bound manner.

7.These instructions may be brought to the notice of the custodians, Airport operators by issuing Trade/Public Notices. Suitable internal orders/instructions may be issued for the guidance of the officers.

8.Difficulties faced, if any, in implementation of the Circular may please be brought to the notice of the Board

Yours faithfully,

(M.V. Vasudevan)

Under Secretary to the Government of India (Cus.IV)

Download Circular No. 15 / 2013-Customs Dated 8th  April, 2013 : Import of Pets under Baggage

Circular No. 15 / 2013-Customs 

F. No. 495/16/2012-Cus.VI

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

                        Room No.253-A, North Block,

New Delhi, 8^th  April, 2013.

To,

All Chief Commissioners of Customs,

All Chief Commissioners of Customs (Preventive),

All Chief Commissioners of C.Ex. , Customs & S.Tax.

All Director Generals.

Sir/Madam,

Subject:  Import of Pets under Baggage – reg.

Attention is invited to Board’s Circular No. 94/2002- Customs dated 23.12.2002 on the above cited subject wherein it was provided that import of pets upto two numbers per passenger may be allowed at one time subject to the production of the required health certificate from the country of origin and examination of the same by the concerned Quarantine officer.

2. Board has re-examined the present policy of import of two pets by passengers in view of representations received in this regard. Accordingly, it has been decided to allow import of two pet animals as baggage only to persons transferring their residence to India after two years of continuous stay abroad in terms of Baggage Rules 1998 subject to production of the required health certificate from the country of origin and examination of said pets by the concerned Quarantine Officer at this end. This new dispensation shall come into force with effect from 15^th April 2013. Import of animals (pets) in general would continue to be governed by DGFT policy.

3. Board’s Circular No. 94/2002 – Customs dated 23.12.2002 stands modified accordingly to that extent.

4. These instructions may be brought to the notice of the trade/airlines/carriers by issuing suitable Trade / Public Notices.  Suitable Standing orders/instructions may be issued for the guidance of the field officers.

5. Difficulties faced, if any, may be brought to the notice of the Board immediately.

Yours faithfully,

 (S.C.Ganger)

Under Secretary (Customs)

8^th April, 2013

Download Circular No. 31/2013-Customs Dated 6th August, 2013 

Circular No. 31/2013-Cus.        

F. No. 528/43/2013-STO (TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

****

New Delhi, the 6^th August, 2013

All Chief Commissioner of Customs

All Chief Commissioner of Customs and Central Excise

All Commissioners of Customs

All Commissioners of Customs and Central Excise

Sir/Madam,

References have been received in the Board to clarify whether or not a purchase order can be considered as a contract in terms of provisions contained in the Project Import Regulations, 1986. It is also reported that in this regard varying practices are being followed in different Customs Houses.

2.         The matter has been examined. Regulation 5 of Project Import Regulations, 1986 mandates that amongst other requirements, every importer claiming assessment of the goods under the heading No. 98.01 shall apply to the proper officer at the port where the goods are to be imported or where the duty is to be paid, for registration of the contract or contracts, as the case may be. Such application shall be accompanied by the original “deed of contract” together with a true copy thereof. In regard to the scope of the terms “deed of contract” it is seen that as per Section 10 of the Indian Contract Act, 1872 a valid contract is one that contains the following ingredients:-

(i)   it is entered into by free consent of parties competent to contract;

(ii)   there should be lawful consideration;

(iii)  there should be a lawful object; and

(iv)  it is not expressly declared to be void (i.e. void under the statute).

3.         In view of the aforementioned legal position it is evident that a purchase order that contains all the essential ingredients of a valid contract must be treated as one under the Indian Contract Act, 1872. The implication is that such a purchase order can be accepted as a “deed of contract” for the purpose of Regulation 5 of Project Import Regulations, 1986. Board desires that pending cases, if any, may be finalized accordingly.

Yours faithfully

(Alok Agarwal)

OSD (Tariff Unit)

Download Circular No. 33/2013-Customs Dated 23th August, 2013 : Customs Duty Exemption for Import of Ash Handling Systems, Water Treatment Plant and Coal Transportation Facilities etc. Required for Ultra-Mega/ Mega Power Projects under Heading 9801(Project Imports)-Clarification

Circular No. 33/2013-Customs

F.No.354/94/2011 -TRU

Government of India

Ministry of Finance

(Department of Revenue)

Tax Research Unit

*****

New Delhi, dated the 23^th August, 2013

To,

All Chief Commissioners of Customs.

All Chief Commissioners of Customs & Central Excise.

All Chief Commissioners of Central Excise.

All Directors General of CBEC.

Sub: – Customs Duty Exemption for Import of Ash Handling Systems, Water Treatment Plant and Coal Transportation Facilities etc. Required for Ultra-Mega/ Mega Power Projects under Heading 9801(Project Imports)-Clarification -Reg.

Sir / Madam,

             I am directed to invite your attention to notification No. 12/2012-Central Excise  (S. Nos. 337&338), dated 17-03-2012, which provides exemption to machinery, instruments, apparatus and appliances etc. required for setting up of ultra-mega/ mega power projects. Particular attention is invited to the Explanation, which clarifies that the goods required for setting up of these projects include the goods required for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transportation facilities for such a project, notwithstanding the fact that such facilities are set up inside or outside the power plant’s designated boundary.

2.         In this connection, representations have been received from the trade and industry that the benefit of exemption is being denied to the afore-cited goods when they are imported for setting up of ultra-mega/ mega power projects. It has been requested that, for removal of doubts, a clarification,on the lines of excise exemption, should be issued by the Ministry that the said goods required for ultra-mega/ mega power projects are eligible for customs duty exemption.

3.         The matter has been examined by the Ministry. In Pre Budget 2011-12, representations were received from power producers that limited interpretation of the term power project as facilities inside the plant boundary only, was restrictive in nature and was limiting the scope of exemption of customs and excise duty on goods required for these facilities. It was requested that the benefit of exemption for ultra mega power projects should be extended to the development of facilities both inside and outside the power plant’s designated boundary such as ash pond, water intake, coaltransportation within the scope of the term ‘project’. The matter was examined and it was decided to clarify that the benefit of exemption, available for ultra mega power projects, would be available for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transportation, both inside and outside the power plant’s designated boundary. Accordingly, an Explanation was inserted at S. Nos. 91A & 91B of notification No 6/2006-CE, dated 1.3.2006 [now S. Nos. 337 and 338 of notification No. 12/2012-CE dated 17-03-2012].

4          The explanation clarified, without any ambiguity whatsoever, that the goods specified in paragraph 1 above and required for setting up of ultra-mega/ mega power projects would be eligible for the benefit of excise duty exemption even if the facilities are set up outside the power plant’s designated boundary. No such clarification was issued for the purpose of availing of the customs duty exemption, as it was felt that this exemption would be available to the said goods under project imports.

5.         Subsequently, representations were received, seeking clarification in respect of customs duty exemption on the said goods required for setting up of ultra-mega/ mega power projects. The issue was examined in consultation with Ministry of Power (MoP).  MoP vide letter dated 13^th October, 2011 clarified that facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transport facilities are an integral part of mega power projects and therefore, customs duty should be exempted for import of these goods under the Mega Power Policy. On the basis of this, a clarification dated 29-12-2011 (copy enclosed) was issued to the Commissioner of Customs, Nhava Sheva, stating that these goods are eligible for customs duty exemption.

6.         Now, it has been brought to the notice of the Ministry that in the absence of a general clarification, the Customs authorities at certain places are demanding duty on these goods on the ground that the goods are used outside the power plant’s designated boundary. However, the foregoing would make it clear that the intention all along was to grant exemption from Customs duty on these goods.

6.1        For removal of doubts, it is clarified that the goods required for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transport facilities required for ultra-mega/ mega power projects are eligible for customs duty exemption, notwithstanding the fact that such facilities are set up inside or outside the power plant’s designated boundary.

7.         Difficulties, if any, faced in the implementation of the instructions may be brought to the notice of the Ministry at an early date.

Encl: As above.

Yours faithfully,

(P.K.Mohanty)

Joint Secretary (TRU)

Telephone: 011 23092687