Apex exporters body FIEO on Wednesday asked the finance ministry to relook at a proposed "harsh and draconian" provision in Budget 2021 related to customs as it will hurt the exporting community and the country's image as a reliable supplier of goods.
Federation of Indian Export Organisations (FIEO) President S K Saraf said certain provisions brought through the Finance Bill have "serious" bearing on exports.
Apex exporters body FIEO on Wednesday asked the finance ministry to relook at a proposed “harsh and draconian” provision in Budget 2021 related to customs as it will hurt the exporting community and the country’s image as a reliable supplier of goods. Federation of Indian Export Organisations (FIEO) President S K Saraf said certain provisions brought through the Finance Bill have “serious” bearing on exports. He said the proposed amendment in Section 113 of the Customs Act (which deals with confiscation of goods attempted to be improperly exported) needs a relook as it is “harsh and draconian”.
A sub-section is proposed to be inserted in Section 113, which states that goods would be liable for confiscation if products entered for exportation under claim of remission or refund of any duty or tax or levy make a ‘wrongful claim’ in contravention of the provisions of this Act. “The word ‘wrongful claim’ is subject to various interpretations and will put exporters at the mercy of field formations even if the remission rates are wrongly calculated or dispute about classification of the product under a particular rate arises.
“The remission rates may be 2 per cent of the product value and for such a small benefit, the entire goods should not be confiscated. We request the government to kindly look into the newly created Sub-Section(ja) of Section 113 of the Customs Act,” he told reporters. Saraf also said the Finance Bill has amended the Section 16 of the IGST Act withdrawing the facility of exports on payment of IGST (Integrated Goods and Services Tax) as originally envisaged in the law. Until now, till the changes are notified in the Act, exporters have the option to ship either under bond/LUT (letter of undertaking) or on payment of IGST.
Most of the exporters were availing the IGST payment facility as the mechanism of refund was entirely seamless without any transaction cost, he claimed. If the IGST system was functioning seamlessly and was preferred option for the exporters, there was no need to dispense with such option, Saraf said adding if there are any challenges faced by the tax authorities, it should be discussed so that an amicable solution is found rather than dropping an “excellent” facility extended to the exporters while entering the GST regime.
“With this I feel that exporters probably are considered by the government as a drain on the economy. Exports play a key role in economic development, but we find that the treatment meted out to exporters is rather sad and sorry,” he said. He added that a large number of exporters both of goods and services are still awaiting for their claims for 2019-20 and 2020-21 (up to December 2020) both in respect of Merchandise Exports India Scheme (MEIS) and Services Exports India Scheme (SEIS).
“Their liquidity has entirely dried up. Many of them in the micro and small sector are not in a position to take new orders due to rising uncertainty and lack of liquidity at their disposal,” he said. Recently about 2,000 exporters are receiving notices from Directorate of Revenue Intelligence (DRI) and GST departments for import against Advance Authorization prior to exports, he said.
The FIEO President also demanded immediate announcement of rates under RoDTEP (remission of duties and taxes on export products ) scheme as exporters are not able to finalise their contracts. Talking about exports, he said going by the current trend, the country’s exports may reach USD 285-290 billion by the end of 2020-21 as against USD 314 billion in 2019-20. In the next fiscal, if things come on track, Indian exporters should target USD 340-350 billion worth of exports, he said.