DGFT clarifies no import restrictions on second-hand capital goods

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: Under a quantity-based advance licence, can we import the full quantity of all the inputs stipulated in the licence, even if we actually use less quantity? We understand there were some cases where importers had to pay duty on excess import. Is it different for the licence issued on or before April 1, 1997 and post-1997? Please clarify.
—Kumar, Mumbai

A quantity-based advance licence envisages that you would import only the quantity of inputs that you would actually consume in an export product. If you actually utilise less quantity than imported under advance licence, you are required to pay import duty on the unutilised portion of that input.

Therefore, the best way is to import only the quantity of inputs that you are actually going to consume. The major difference between quantity- based advance licences issued up to March 31, 1997, and thereafter, is that earlier the licences were ‘transferable’.

We are an NGO engaged in creating livelihood options for the poor through self-help groups (SHGs) and micro financing. We also help these SHGs market their products, mainly bamboo and cane-based handicraft and furniture. Could you could tell us about the government’s support policies for such enterprises?
—Vishi, Manushi Jagran

There are several schemes, which fall under two categories. First, the government provides avenues to craftsmen for marketing their products through trade fairs and marketing venues like Dilli Haat (Delhi). Further, there are handicrafts marketing and service extension centres all over India. You could seek assistance from these. You may visit the website of development commissioner, handicrafts, (http://handicrafts.nic.in) for a list of these centres, tenders and other schemes.

Second, the development commissioner of small-scale industries, SSI ministry, has a purchase preference policy for certain handicrafts, viz., cane furniture, bamboo file tray, baskets, pencil stand, side racks, artistic wooden furniture, wooden paperweight, racks, glass covers made of wood and grass jute, jute furniture, jute bags, file cover and woollen & silk carpets.

You may supply the goods to the North Eastern Handicrafts & Handlooms Development Corporation, Assam Government Marketing Corpn., Craft Society of Manipur and Nagaland Handicrafts & Handlooms Development Corporation. These organisations participate in tenders for supplying goods procured from SHGs like yours.

Third, you may also adopt an unconventional approach and take advantage of the internet. You may develop your own website for marketing. Further, there are many organisations which help market products manufactured by craftsmen, such as Fair Trade Foundation, Fair Trade Federation, etc.

We recently purchased a second-hand plant from Germany and are facing problems with the customs. Our clearing agent tells us that in the recently announced exim policy, the government has banned import of second-hand capital goods. Our money is blocked and demurrage on the consignment is rising by the day. Whom should we approach in this regard?
—Sheth Brothers, Mumbai

The problem has arisen because in the recent Annual Supplement to the Foreign Trade Policy, “remanufactured goods” are placed in the “restricted list”. However, the meaning of remanufactured goods has not been defined. The customs authorities started insisting on licences for second-hand capital goods on the ground that they are remanufactured goods.

Therefore, many import consignments of second-hand capital goods got held up. The industry representative has represented the case before the Directorate General of Foreign Trade (DGFT). The DGFT has now clarified that the import restriction would be applicable only to re-manufactured goods, not to second-hand capital goods. The DGFT has also highlighted through a circular that second-hand capital goods are freely importable without a specific licence.

You may file a declaration to the customs that the capital goods imported are second-hand and do not fall under the category of re-manufactured capital goods.