Can DGFT be a bit more sensitive?

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: We manufacture ACSR conductors. Against an export order, we got an advance licence from the DGFT for duty-free import of raw materials. We fulfilled our export obligation in time but could only import 80% of the sanctioned raw material in the specified time (30 months, including exten-sions) because of price fluctuations in the international market, and financial constraints. Our case for relaxation was referred to the policy relaxation committee (PRC), which allowed revalidation of the licence, provided we pay a 2% composite fee on the unutilised CIF value of the licence. The fee will make our imports uneconomical. What can we do?

—Shashi Cables Ltd, Lucknow

In my view, imposition of a 2% composite fee on unutilised value of imports is questionable on the ground that it is specified neither in the foreign trade policy nor in any DGFT circular. Second, it does not seem to take into account that the export obligation has been fulfilled in time and that the applicant is a small unit.

The unit has already been penalised for the delay as the basic customs duties have come down from 20% to 7.5% in the 30-month period.

In contrast, most advance licence cases are related to the issue of non-fulfilment of export obligation after the raw material is imported at zero duty. DGFT’s tough stance in such cases is understandable, as applicants would have availed of the benefit of import duty without meeting export obligations. Para 4.22.1 of the Handbook specifies the provision for payment of composite fee of 2% of the duty saved on unutilised items as applicable on cases where the licence-holder has made excess imports but not fulfilled the export obligation.

Therefore, in your case also, if at all a fee was to be levied, it could have been 2% of the “customs duty saved,” rather than 2% of the entire CIF value of unutilised imports, as DGFT’s order mentions, which looks harsh. You could represent your case once again to the PRC pointing out these facts.

The finance minister in this year’s Budget announced dereservation of 180 products. News reports suggest that the investment limit of 69 of these has been increased to Rs 5 crore. From where can one get hold of these lists? Are there other items where the investment limit is higher than Rs 1 crore?

—Richa Dalal, Mumbai