The specific provision under the Customs Act, 1962 is Section 26A that allows refund of import duty if the imported goods are found defective
One of the conditions for claiming refund is that the goods should not have been worked, repaired or used after importation
We are a 100 per cent EOU in the aircraft industry, and exported aircraft parts to a SEZ unit three years back. Some parts were rejected by the SEZ unit for technical reasons with proper documents. Now, I would like to re-import some of the parts under B-17 bond (with Procurement Certificate from EPD office) without payment of duty. How can I proceed, and on the basis of which notification?
You will have to pay the duty, as re-import from the SEZ is taking place after more than three years of supply, and such a situation is not covered under Annexure-1 to the notification no.52/2003-Cus dated March 31, 2003, for EOUs.
Para 2.50 A of the FTP says that imported goods found defective after Customs clearance, or not found as per specifications or requirements, may be re-exported back as per Customs Act, 1962. Can you please advise the corresponding specific provision under the Customs Act along with any conditions or restrictions for the same?
The specific provision under the Customs Act, 1962 is Section 26A that allows refund of import duty if the imported goods are found defective, or otherwise not in conformity with the specifications agreed upon between the importer and the supplier of goods. One of the conditions for claiming refund is that the goods should not have been worked, repaired or used after importation, except where such use was indispensable to discover the defects or non-conformity with the specifications. Another condition is that the goods are either exported without claiming duty drawback, or abandoned to Customs, or destroyed or rendered commercially valueless in the presence of the Proper Officer within a period of 30 days (or such extended period as the Commissioner may allow) from the date on which the Proper Officer makes an order for the clearance of imported goods for home consumption.
However, no refund shall be available in respect of perishable goods and goods which have exceeded their shelf life or their recommended storage-before-use period. There are other provisions under advance authorisation, EPCG, MEIS, SEIS and EOU schemes, which allow re-export of goods found defective or unfit for use. You can also re-export duty-paid goods against a drawback claim under Section 74, whether the goods are defective or not. You can re-export warehoused goods under Section 69 of the Customs Act, 1962, whether the goods are defective or not.
Our letter of credit favouring the foreign supplier called for a complete set of bill of lading (BL) made out to order of our bank. Due to disruption of courier service during lockdown, the supplier surrendered the original set of BL to the shipping line at his end and got an electronic delivery order issued in our favour. The negotiating bank refused to pay against a copy of the BL. Was that correct?
Yes. Under a letter of credit, the bank is obliged to pay only against documents that are in conformity with the terms and conditions of the Credit.