Among the many Customs notifications issued on the Budget day, a very helpful one relates to the import of road construction equipment. Strangely, similar dispensation is missing on the excise notification relating to goods supplied to projects funded by international agencies.
Under S No 230 of the Customs exemption notification 21/2002, dated March 1, 2002, goods of Chapter 84 or any other Chapter specified in list 18 are eligible for zero-duty imports, subject to fulfilment of condition 40 given in the annexure to the notification. The said condition 40 has three parts. The second part requires the importer to furnish an undertaking to the Customs that he shall use the imported goods exclusively for the construction of roads and that he shall not sell or otherwise dispose of the said goods, in any manner, for a period of five years from the date of import.
The amendment through notification 21/2010-Customs, dated February 27, 2010, says the Customs may allow the importer to sell or dispose of any of the imported goods on payment of Customs duty at the rate applicable at the time of import, but for this exemption, on the depreciated value of the goods will be calculated at the rate of 5 per cent on straight line method for each completed quarter starting from the date of import of the said goods till the date of their sale, subject to the condition that the ministry, authority, department or corporation concerned certifies that the said goods in the project, for which duty free import was allowed, are no longer required for the project.
This amendment recognises that many road construction projects may be completed within, say, two or three years and the imported goods may no longer be required for the projects. In such cases, the importers can, henceforth, sell off the goods.
Sometimes, the goods may be required to be shifted to some other project. The Central Board of Excise and Customs (CBEC), through its letter DOF number 334/1/2020-TRU, dated February 10, 2010, says it is permissible to relocate or re-deploy the machinery imported under the exemption to another road construction project for which the importer would have been otherwise eligible to claim the benefit of the exemption. This will prevent idling of the machines at projects that are completed.
The excise exemption notification 108/95, dated August 28,1995, allows duty-free clearance of goods required for government-approved projects financed by international organisations like agencies of United Nations, World Bank, Asian Development Bank, etc. In this notification, an explanation was inserted through notification 40/99, dated November 2,1999, clarifying that the benefit under the notification is available when the goods brought into the project are not withdrawn by the supplier or contractor and that the expression goods are required for the execution of the project shall be construed accordingly.
The position of suppliers or contractors availing of the excise duty exemption is similar to those importing road construction equipment duty-free. Once the project is completed, certain types of goods (like earth-moving equipment) supplied to the funded projects may not be required in that project. The contractors must be allowed to sell or move the equipment to some other projects funded by international organisations.
CBEC must amend the excise exemption showing the same practical approach that it has shown for customs exemption.