Reservation can’t ensure purchase

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: We manufacture water meters, an item reserved for small-scale industries. We find that in Gujarat, official departments buy from all suppliers. We have often complained but could not get a satisfactory reply.

Jagjit Industries, Shankar Tekri Udyog Nagar, Jamnagar, Gujarat

There are two distinct policies: one for reservation and one for exclusive purchase from SSIs. Many items figure in both the lists. However, water meters fall under the list of reserved items, and are not included in list of 350 items which are to be exclusively procured from SSIs.

We have three queries on government notifications:

• Diamond otherwise worked but not mounted or set have been marked as “Free” in the Exim Code ie ITC (HS) classification. Semi-processed, half-cut or broken diamonds don’t attract customs duty on import in DTA (No.422 of Customs Tariff Notification no.21/2002 dated 1.3.2002). Since para 4A.14 of Foreign Trade Policy 2004-09 reads, “Diamond imprest authorisation for import of cut and polished diamonds, half-cut diamonds, broken in any form, for mixing with cut and polished diamonds or for export as it is, may be issued for export of cut and polished diamonds,” does it mean that semi-processed, half-cut, or broken diamonds attracting nil customs duty can be imported in DTA only against a Diamond Imprest Licence?

• “No fixed wastage norms” is a salient feature of Indian SEZs in the commerce ministry’s website. But, this doesn’t appear anywhere in the SEZ Act, 2005, or SEZ Rules, 2006. As no input/output or wastage norms are prescribed for products in SEZ units, does it amount to “No fixed wastage norms” only?

• In the minutes of the sixth meeting of the combined Board of Approval for EOU and SEZs schemes held on 23.11.2004, it was decided “6.20 (04) request of EPC for EOUs and SEZ wastage norms of jewellery, under SEZ scheme. The Board clarified that wastage, as given in para 4.56 of Handbook of Procedures (Vol I), apply to both EOU/SEZ units. In case the wastage is more than specified, the proposal should be brought before the BOA with full justification. The commerce ministry (ref. no.14/6/2004-EOU) circulated these extracts to all Board members and the ministries concerned. EPCES has further circulated it to SEZ units. Do such decisions have the status of a standing order, independent of Foreign Trade Policy/Handbook of Procedures or SEZ Act/SEZ Rules?

T P Gopalakrishnan, executive secretary, Seepz Gems & Jewellery Mfrs. Association, on email

With regards to your first query, the answer is yes. The customs notification 21/2002, sr. no. 22 allows nil rate of duty subject to conditions. Semi-processed, half- cut, broken diamonds can be imported against Gems and Jewellery Replenishment authorisation at nil rate of duty Appendix 12 B clarifies your second query on replenishment entitlements.

The Board of Approval is part of the foreign trade policy and powers there under. Their action/ decisions are as good as the policy provisions.

Successive FMs promised to phase out the Central Sales Tax. What is a realistic target? Do you see movement on the GST, proposed by the Kelkar Committee. We are in the field of logistics and a decision on CST is crucial.

Mischelle, Rolling Stones Pvt. Ltd, Mumbai through email

The empowered committee of state finance ministers on Vat is considering a four-year phase out (as per their meeting in March ’06). The phase-out plan is gradual: first to 3%, then 2% and 1% and a final phase-out by 2009. The states, however, are yet to agree on a compensation formula for loss of revenue.

With regard to GST, the target set is 2010. In any case, CST has to be phased out before GST.