L.B. Singhal
Director General

SUB : MASTER CIRCULAR ON RUPEE EXPORT CREDIT ISSUED BY RBI VIDE CIRCULAR NO. DBOB.IECS. .No. 27/04.02.02/2004-05 DATED 12-8-04

SUB : EXEMPTION FROM PROCEDURE OF DRAWING SAMPLES IN RESPECT OF CONSIGNMENT OF RAW SILK IMPORTED FROM CHINA BY EOUs/SEZ UNITS

Import of raw silk of grade 2A or below, from China is subject to antidumping duty. For regulating such import of raw silk from China, Department of Revenue had issued a Circular No. 39/2003-Cus dated 7th May, 2003 (copy enclosed) stating that the consignment coming from China may be regularly checked and got tested for the grade.

In the Open House organized by EPCES in Kolkata on 18-6-04, which was chaired by Shri G. K. Pillai, Additional Secretary & DGFT, Ministry of Commerce, and attended by Shri A. K. Prasad, Director (Customs), Ministry of Finance, it was submitted by the EOUs/SEZ Units that import by EOUs/SEZ Units are exempted from payment of all kind of duties including exemption from antidumping duty. Since imports by EOUs/SEZ Units are not subjected to antidumping duty at all, there was no justification in subjecting import of raw silk by such units to this sampling procedure. Director (Customs) had agreed for this request subject to the condition that unit give a legal undertaking that in case of non completion of export obligation/any mis-utilization, along with other duties, antidumping duty would also be paid. This was agreed by EOU/SEZ Units present in the Open House.

Accordingly, the Department of Revenue has now issued Circular No. 48/2004-Customs, dated August 24, 2004 (copy enclosed), wherein import of raw silk from China by 100% EOUs/SEZ Units have been exempted from the practice of drawing samples. The Circular has provided that practice of drawing samples in respect of consignment of raw silk imported from China by EOUs/SEZ Units may be discontinued subject to the condition that these units give a legal undertaking (without bank guarantee or security) to the Assistant/Deputy Commissioner of Customs to the effect that in case duty become chargeable subsequently for any contravention etc they will pay the antidumping duty as if the goods were of ISA grade 2A or below. The detailed procedure of execution of legal undertaking may please been seen in the Circular.

This Circular will certainly help EOUs/SEZ Units, importing raw silk from China, as there will not be any wastage of raw silk in samples withdrawn, time consumed in opening the consignment, testing the consignment, taking it back etc will be saved and that will consequently reduce the transaction cost. EOUs/SEZ Units willing to avail this facility may please see this Circular.
This is for your information please.
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CIRCULAR NO 48 /2004-Customs, Dated : August 24, 2004

To,
All Chief Commissioner of Customs,
All Chief Commissioners of Central Excise,
The Chief Departmental Representative( CESTAT)
All Commissioners of Central Excise,
All Commissioners of Customs,

Sub:- Drawal of Samples of Raw Silk Imported from China by 100% EOU/SEZ.

I am directed to invite your attention to Board's Circular Nos.39/2003-Customs, dated 7-5-2003 where under it has been provided that consignments of raw silk imported for China be tasted for grade.

2. Representations have been received from the trade that EOUs are facing difficulties because of this practice as drawal of sample is being insisted by the department for every import consignment of silk by EOUs from China.

The matter has been examined by the Board. Board's Circular 39/2003- Cus was issued to deter unscrupulous importers who misdeclare the grade of silk in order to circumvent anti-dumping duty leviable on Mulberry raw silk( not thrown) of grade 2A or below.( Notification No 2/2003-Cus dated 2-1-2003 read with Notification No 106/2003-Cus dated 10-7-2003 as amended by Notification No 136/2003-Cus dated 3-9-2003).

3. EOUs are exempt from payment of anti-dumping duty. The rationale behind drawing of samples in case of import by EOUs is to ensure that in case the consignment imported by the EOUs of grade 2A or below , is not used for export production or diverted in to DTA clandestinely ,etc, the EOUs , would have to pay anti- dumping duty.

4. In consideration of the genuine difficulties faced by the EOUs , the Board has decided that the practice of drawing samples in respect of consignments of raw silk imported from China by the EOUs may be discontinued subject to the condition that the EOUs give a Legal Undertaking ( without Bank Guarantee or Security) to the Assistant or Deputy Commissioner of Customs in charge of the port of import , Airport, ICD or LCS to the effect that in case duty becomes chargeable subsequently for any contravention, misuse etc, they will pay the anti-dumping duty as if the goods were of ISA grade 2A or below . The LUT ( in original) should be transferred, after retaining a copy, to the Assistant Commissioner / Deputy Commissioner having administrative control over the EOU for monitoring and enforcement, where necessary. The same procedure may also be adopted in case of import of raw silk from China by units in Special Economic Zones with only modification being that in case of Special Economic Zone the undertaking would be furnished before the Assistant/ Deputy Commissioner of Customs of the concerned Special Economic Zone.

5. Wide publicity may please be given to the above said instruction by way of issuance of Public Notice.
6. Hindi version follows.
F.No.305/101`/2004-FTT
( Ranjit Kumar)
Sr. Technical Officer (FTT)

Circular No. 39/2003-Cus
7th May, 2003
F.No. 528/19/2003-CUS (T.U.)
Government of India
Ministry of Finance & Company Affairs
Department of Revenue
(Tariff Unit)

Subject : Imposition of anti-dumping duty on raw silk, testing of grades - reg.

I am directed to refer to the subject mentioned above and to say that as you are aware, notification no. 2/03 dated 2.1.03 has imposed antidumping duty on raw silk of grade 2A and below imported from China. According to reports received by the Board, some unscrupulous importers are misdeclaring grades of raw silk consignments in order to avoid payment of anti dumping duty. Therefore, the consignments coming from China may be regularly checked and got tested for the grade.
2. However, to ensure that clearance is not delayed, the consignments may be cleared without waiting for test report, taking a test bond with suitable Bank Guarantee from the importers.
Pramod Kumar
Appraising Officer(Tariff Unit)