CBIC brings job work under IGCR Rules; may help MSMEs operating without complete manufacturing facility

by Joseph K. Clark

After paying the differential duty and interest, trade, Import, and Export for MSMEs: The Central Board of Indirect Taxes & Customs (CBIC) has now introduced the job work facility under the existing Import of Goods at Concessional Rate of Duty (IGCR) Rules, 2017. The move would allow importers who don’t have an in-house complete manufacturing facility to import goods at concessional rates for domestic manufacturing of goods and services. This followed the announcement in the budget speech by Finance Minister Nirmala Sitharaman to amend the IGCR Rules to boost trade facilitation. After paying the differential duty and interest, the government has also allowed importers of such capital goods to clear them in the domestic market at a depreciated value. This is also likely to help MSMEs that rely on contract manufacturing.

“The absence of this facility had earlier constrained the industry, especially those in the MSME sector, which did not have the complete manufacturing capability in-house,” the Ministry of Finance said in a statement. However, sensitive sectors such as gold, articles of jewelry, and other precious metals or stones have been excluded from the facility of job work. “The job work has been permitted based on relaxed conditions, looking towards their feasibility. This will benefit MSMEs, which didn’t have full manufacturing capacity, as now they can send the imported for job work and get products manufactured as per their norm. Pharma, chemical, and engineering are among the sectors to benefit from this development,” Vijay Shah, CEO of import-export consulting firm Petals Professional Services, told Financial Express Online.

CBIC

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After paying the differential duty and interest, the government has also allowed importers of such capital goods to clear them in the domestic market at a depreciated value. “This was not allowed earlier, and manufacturers were stuck with the imported capital goods after using them as they could not be easily re-exported,” the ministry added. The importer has to utilize the imported goods or re-export them within six months from the date of import, failing which the importer is liable to payment of duty with interest. Moreover, the procedure for availing of the concessional customs duty under IGCR rules has been reviewed. The required intimations and records can be emailed to the jurisdictional Customs officer.

“Through this, you can still do imports, warehousing, add on some value to products, and then export duty-free. Today, setting up a factory requires significant capital. If you don’t have that and if there are other reasons such as land procurement, etc., you have someone with a warehouse and the whole setup to make your product at a lesser operational cost. This is a win-win as it would also help job workers and create many jobs. However, businesses don’t understand this concept,” Rajan Nair, who owns freight forwarding company Alltime Shipping, told Financial Express Online.

An importer who intends to import goods at concessional rates will have to give one-time prior information of such goods to the Customs Officer along with details including name and address of the premises of the importer and his job worker; customs tariff heading, nature, and description of imported goods, etc. The importer must also submit a one-time continuity bond to cover all the imports undertaken. Get live Stock Prices from the BSE, NSE, and US Market, and the latest NAV and portfolio of Mutual Funds; check out the newest IPO News, Best Performing IPOs, calculate your tax by using an Income Tax Calculator, know the market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter. Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news.

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