As mentioned in the previous edition of the News Letter, the early part of the month of July was spent on seeking clarifications relating to procedures
As mentioned in the previous edition of the News Letter, the early part of the month of July was spent on seeking clarifications relating to procedures for submitting Legal Undertaking, Bond, furnishing Bank Guarantees , sealing of containers and understanding the manner in which the composite duty drawback could be claimed up to September 2017 and shipments made. Issues relating to claiming of input tax credits, preparing invoices, completing the formalities for GSTIN registration engaged the Council. At the same time, the implications of GST on the benefits claimed under the Foreign Trade Policy (FTP) were also examined.
Clarifications on GST
The Council took proactive steps to clarify various issues arising out of the GST to the exporters. Immediately on the issuance of Circular No. 22/2017 relating to transitional arrangement and amendments in the Duty Drawback Schedule and Circular No. 26/2017 dated July 1, 2017 on Export Procedures for sealing of containerised cargo, the Council organised a meeting of exporters based in Mumbai on July 5,2017 to take stock of the issues . The issues arising from this meeting were also flagged with the Secretary, Ministry of Textiles at a meeting convened at New Delhi on 6, July, 2017. Further clarifications were issued by the Central Board of Excise & Customs on 7, July,2017 vide notification No.16/2017 on the eligibility of various exporters for submission of Letters of Undertakings in place of Bonds.
Considering all these clarifications and various problems being faced by the Exporters, separate Focus Group meetings for exporters of Yarn/ Fabrics and Made-ups was also organised on July 14, 2017 a Mumbai.
We also attended a Stake holder meeting organised by FIEO on 13 July at Mumbai which was very informative and useful as the presence of Senior officials from Customs Commissionerate, Mumbai & Regional Office of DGFT helped clarify many matters.
Continuing it's engagement with the Trade/ Industry on GST matters, the Council also organised a Seminar at Coimbatore on July19, 2017 which was attended by around 200 Exporters & Manufacturers.
Guidance Note & FAQ's on GS
Apart from this, the Council issued a Guidance Note on GST Issues to Trade on 10 July, 2017. This was followed up by another Circular on "FAQ's on Job work" on July 11, 2017. Another Circular was issued on the same day on "FAQ's on Export and FTP related issues of GST". All these Circulars are very informative and are available on the Council's website in the section "E- Serve".
Issues in GST Implementation
Friends, judging from the reactions available from various sections of the Trade and Industry, the process of adaptation to GST procedures will take some time and effort all round. The Authorities have a crucial role to play as do all our clearing and forwarding agents. Consignments of many exporters are getting delayed as the Custom Notifications on accepting existing bonds and undertakings are being interpreted differently by the Customs Authorities at different ports. No timelines have been fixed within which the Bonds/ LUT's are to be issued. The format for making the application is also not available adding to the confusion.
A major issue is being faced by Merchant Exporters as they are required to pay IGST to the manufacturer when they procure the goods from the manufacturer. Under the GST Rules, the transaction is deemed to be a "Supply" and hence IGST is payable even though the merchant exporter can export the said goods under an LUT/ Bond. Unlike the erstwhile Central Excise regime no C.T -1 Certificate has been prescribed for clearance of goods without payment of IGST by the merchant. This problem can be addressed, if the provision of "Third Party Exports" is included in the GST laws.
We have taken up the matter with the Department of Revenue, Ministry of Finance and also the Ministry of Textiles for introducing the facility of clearance of goods from the premises of the manufacturer under LUT/ Bond facility so that they without payment of IGST.
ROSL for MADEUPS
Another important issue is the continuation of the Scheme Refunding State Levies (ROSL) to exporters of MADEUPS. The scheme was introduced by the Government vide a Notification dated 15 March 2017 where Exporters of MADEUPS were eligible for a refund of 3.9% on account of refund of State Levies.
With the advent of GST from July 1, 2017 the rates were revised downwards to 0.39% of FOB value vide a notification dated 27 June, 2017. However the Notification clearly specified that these rates were interim in nature and final rates effective from 1 July 2017 will be notified later after receiving the recommendations of the Drawback Committee.
In view of this, the Council held a series of meetings with the Trade and industry and made a presentation to the Drawback Committee at a meeting held on 18 July at New Delhi. The data in the required format prescribed by the Department is being collected and we will be making a submission shortly.
Further, some of the exporters are not getting the ROSL amount owing to glitches in the Computer System at the Custom formations at the Ports. The Department has now issued an advisory to the System Managers at all Customs locations to generate Temporary ROSL Scrolls for smaller amounts. These Scrolls will indicate the invalidated account numbers and exporters should correct the Account Nos. / IFSC Code at the Customs locations. We advise the exporters to carry out the necessary corrections in their Bank Account No so that the amount of ROSL due to them can be credited.
We have also requested the Ministry of Textiles and the Drawback Committee to extend the ROSL rates for a period of three months up to 30 September, 2017 as a transitory arrangement. The Ministry of Textiles is working on the modalities and we hope to get a favourable consideration of our request.
Upgradation of INDO-KOREA CEPA
While issues relating to GST and ROSL were engaging the attention of the Council during most of the fortnight, the Council also participated in a meeting to discuss upgradation of Indo- Korea CEPA at a meeting at New Delhi on 13 July, 2017. We impressed upon the Government to get Cotton Yarn removed from the restricted list of items and to "Zero" tariff levels so that exports can be increased.
We also need to emphasise that with value added items like Garments/ MADEUPS at "Zero" Tariff levels, we need to intensify our marketing efforts in the region.
Interactive Conference on India- Eurasia relations
The Ministry of External Affairs held an interactive conference on India- Eurasia relations at New Delhi on July 14, 2017. The EURASIAN Countries comprise of BELARUS, GEORGIA, Kazakhstan, KYRGYZSTAN, RUSSIA, TAJAKISTAN, TURKMENISTAN, UKRAINE, UZBEKISTAN, ARMENIA, and AZERBAIJAN.
Around 20 people participated in this conference including our Missions in these Countries by Webinar.
Currently (2016-2017), exports of Textiles and Clothing to these countries is around US$ 200 million, which has declined from an earlier level of US$ 460 (2014 - 2015). As these countries represent the erstwhile Soviet Union there is a need to understand the underlying Issues relating to increasing our presence in these markets. In case members have any suggestions, we can also work on them.
Summing - Up
Friends, as can be seen, we are experiencing tectonic shifts in our business practises with the advent of GST. Per se the legislation guarantees transparency and easing of doing business in the long run. In the short run we are experiencing "teething troubles" as many including the Authorities are learning on the job !
We need to show some patience and understand the procedures clearly. The Council is pro- actively assisting all the members and even non- members in understanding the GST rules and regulations.
Our doors are open to one and all and we will be happy to clarify GST related issues on a "real - time" basis.
Simultaneously, we are also taking up the other related issues in the Foreign Trade Policy so that exports of Cotton Textiles which during the period April - June, 2017 are showing a decline of ( - ) 2.13% can be turned around into positive growth in the coming months.
Ujwal R Lahoti