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GOVERNMENT OF INDIA

MINISTRY OF COMMERCE & INDUSTRY

DEPARTMENT OF COMMERCE

DIRECTORATE GENERAL OF FOREIGN TRADE

New Delhi

Policy Circular No. 5(RE-2008)/2004-2009

Dated the 28^th April, 2008

To

All Customs Authorities

All Regional Authorities

Subject: Utilization of Vishesh Krishi and Gram Udyog Yojana (VKGUY) scrips (Erstwhile Vishesh Krishi Upaj Yojana (VKUY) scrips).

Attention is invited to Para 3.8 of the Foreign Trade Policy 2004-2009.

2. It has been reported that some customs authorities are not permitting utilization of the scrips issued under VKGUY scheme (erstwhile VKUY Scheme) for purpose of imports even of goods/items that are freely importable under the ITC (HS) Book.

3. In view of this, it is hereby clarified that:

a) In terms of the ITC HS Book, all items that are listed from chapters 1 to 98 and where the itemized policy reads as ‘free’, are the freely importable items.

b) For VKUY Duty Credit Scrips issued for exports made during 2004-05, Policy - FTP (RE2004) applies. Accordingly Para 3.8.3, read with Para 3.8.3.1 (Notified by Notification No. 15 dated 4.1.2005) would determine the items permitted for imports under the scheme. Notification No. 15 dated 4.1.2005 specified that items under Chapters 1 to 24 were allowed for imports, except a few as listed therein. This is an additional provision (by adding Para 3.8.3.1) and does not undo what is already granted in Para 3.8.3. No negative or positive list for import of capital goods was announced, which means that import of capital goods was not allowed for duty credit scrips earned for export during this period.

c) For VKUY Duty Credit Scrips issued for exports made during 2005-06, Policy FTP (RE2005) applies. Accordingly Para 3.8.3, read with Para 3.8.3.1 would determine the items permitted for imports under the scheme. The negative list of imports for VKUY was listed as Appendix 37B items. Policy Circular 40 dated 8.12.2005 has been issued during FTP (RE2005), which clarified that all items that are freely importable under ITC HS, are allowed and this would include items covered under Chapters 1 to 24 also, except for a few items listed in Appendix 37B. However capital goods are not allowed, for VKUY scrips earned on export made during 2005-06. Thus all freely importable items except those listed in Appendix 37B were allowed, for duty credit scrips earned for export during this period.

d) In FTP (RE2006), the scheme was renamed as VKGUY. For VKGUY Scrips issued for exports made during 2006-07, import allowed is governed by Para 3.8.3 read with Para 3.8.3.1 of FTP (RE2006). All freely importable items covered under ITC HS book, except for a few items listed in Appendix 37B of the Handbook of Procedures Vol. I, are allowed. Further all freely importable capital goods are also allowed, except a few capital goods. This was done by amending Appendix 37B vide Public Notice No 61(RE2007)/2004-09 dated 5.10.2006.

e) VKGUY Duty Credit Scrips issued for exports made during 2008-09 can be used for imports, as governed by Para 3.12.4 of FTP (RE2008), of all freely importable items covered under Chapters 1 to 98 of the ITC HS book, except for a few items as listed in Appendix 37B of the Handbook of Procedures Vol. I. Similarly for VKGUY Duty Credit Scrips issued for exports made during 2007-08, Para 3.12.4 of FTP (RE2007) is relevant, and the Duty Credit Scrips can be used for imports of all freely importable items covered under Chapters 1 to 98 of the ITC HS book, except for a few items as listed in Appendix 37B of the Handbook of Procedures Vol. I.

4. Thus for export made during 2006-09, VKGUY duty credit scrips can be used for payment of duties of Customs on import of any items covered under Chapters 1 to 98 of ITC HS Book that are freely importable therein, except for a few items as listed in Appendix 37B of the Handbook of Procedures Vol. I. There has been no change in permitted items of imports during 2006-09 export periods.

This issues with the approval of Director General of Foreign Trade.

Sd/-

(A K Arora)

Dy. Director General of Foreign Trade

(Issued from F. No. 01/94/180/162/772/AM06/PC-I)