Post Date : May 19, 2021
With the Government of India focusing on encouraging manufacturing activities in India, the Central Board of Indirect Taxes and Customs (CBIC) has announced its decision to bring job work under the ambit of import of goods at a concessional rate of duty or IGCR rules, permitting the importers who rely on contract manufacturers to pay duty at concessional rates on goods imported for domestic production of goods or providing services.
This facility has come as a big relief and freed the industry of earlier constraints, especially the MSME sector which did not have the complete manufacturing capability in-house.
The board said in a statement that “even importers who do not have any manufacturing facility can now avail the IGCR, 2017 to import goods at concessional customs duty and get the final goods manufactured entirely on job work basis”.
Further, it informed that the sensitive sectors such as gold, articles of jewelry, and other precious metals or stones have been excluded from this facility.
In another major change, the CBIC has allowed the importers bringing in capital goods at a concessional customs duty to clear them in the domestic market on payment of duty and interest, at a depreciated value. Earlier, this was not allowed and manufacturers were stuck with the imported goods after using them as they could not re-export the capital goods after use. This move will provide the Indian Manufacturers a major incentive.
The CBIC board has also laid down the process for importers, which includes a one-time intimation to customs authorities and furnishing a continuity bond.
Furthermore, the CBIC has also reviewed and simplified the process of availing the concessional customs duty under these rules. Now, the required intimations and records can be sent by email to the jurisdictional Customs officer to avoid any physical interface.
Experts say that the amendments have been made by keeping in mind the demand of various industry players. They believe that these amendments will make the job work and import easier and will enable local players to adjust to the revised global manufacturing practices, while also providing certainty to trade.
“The focus of the scheme has been on declarations and self-account mechanisms to make it more business-friendly,” said Niraj Bagri, Partner, Dhruva Advisors LLP.
These changes will bring in flexibility on direct movement to job worker premises, direct exports, and provision for local sale with consequential payment of customs duties saved with interest.