Myanmar An Option For Indian Textile Entrepreneurs

Favourable government policies, low wages, shorter sea route and growing garment exports make Myanmar an attractive option for Indian textile entrepreneurs, says Rajesh Kumar Shah

The garment sector in Myanmar has grown enormously since the lifting of economic sanctions by Western nations in 2012, after a gap of 15 years. Today, it employs over 250,000 people and accounts for 10 per cent of export revenues earned by the country.

In 2014, Myanmar’s garment exports were estimated at US$ 1.5 billion in terms of FOB value, which has doubled in the last three years alone. The National Export Strategy (of Myanmar) wants to increase the country’s garment exports to about $4 billion by 2020.

Like Vietnam, Myanmar too is not self-sufficient in raw materials and imports many of its garment sector requirements. Second, unlike Bangladesh which has strong knitwear and woven apparel segments, most of the apparel exported by Myanmar are non-knitwear.

On the other hand, India is rich in cotton, and manufactures various kinds of yarn and fabric in large quantities, which are both supplied to the domestic industry and exported. This presents an opportunity for India to export its textiles, and also to invest in the Southeast Asian country for setting up textile and garment manufacturing units.

India is the fourth largest trade partner of Myanmar (third largest export destination for Myanmar and fifth largest source of imports into Myanmar), according to data with the Embassy of India in Yangon. Trade between India and Myanmar also takes place via third country (Singapore) and across the 1,624 km land border, in addition to direct trade. However, textiles is certainly not among the top traded items between the two countries.

“Trade (between the two) has been small. Almost no garment exports go to India and not too many textiles are imported from India. The vast majority comes from China,” notes Jacob A Clere, project manager, Myanmar Garment Manufacturers Association (MGMA).

Source:fibre2fashion.com

No sec. 115E benefit on short-term cap gain from sale of foreign exchange asset as it isn't an inves

IT/ILT : Short-term capital gains arising on sale of assets is not income 'derived from' foreign exchange asset so as to qualify as 'investment income' within the meaning of section 115E of the Act so as to be entitled to concessional tax rate of 20%

Capital gain arose on sale of land as assessee didn’t bring evidence to prove that land was held as

IT : Where assessee failed to bring any evidence on record showing that land was purchased by him as stock-in-trade for business purpose, Assessing Officer was justified in treating it as investment and computing capital gain arising from sale of land on basis of guidance value determined by State Government for stamp duty purposes

"Router" is computer peripheral and not an external device; taxable at 4% under Tamil Nadu VAT Act

CST & VAT : Tamil Nadu VAT - Where assessee, a dealer in computers and spares, sold router, commodity in question was a computer peripheral falling under Serial No. 22 of Entry No. 68 of Part B of First Schedule to Tamil Nadu VAT Act

Four Surat Firms Fined Rs 100 Crore For Duty Evasion

Directorate General of Foreign Trade (DGFT) on Monday has imposed a Rs 100-crore penalty on four Surat-based textile companies for misusing Export Promotion of Capital Goods (EPCG) schemes to claim duty-free imports without fulfilling the conditions required.

The four companies – Nirmal Polyesters Pvt Ltd, Krishna Trading company, Pradeep Kumar Nirmal Kumar Ltd and Meenu Exim Pvt Ltd – have allegedly defaulted on their export obligations, which were mandatory under the EPGC schemes where imports of raw-materials were exempt from cess.

Additional DGFT of Mumbai and the Appellate Authority upheld the order passed by the joint director general of Surat and also imposed a penalty of Rs 25 crore each on the respective firms, for misuse of the Advance Authorization Schemes. Hence, the violation of foreign trade policy rules, said the DGFT order.

"EPCG authorisation holder has to fulfill export obligations against the scheme specified. The action taken by the authorities was to recover the import customs duty on defaulters through an institutional mechanism," a senior official of DGFT told dna.

In the said order, these four companies had obtained advance licence during 2001-05, from joint DGFT Surat for duty-free imports of polyester filament yarn with condition to supply 100% of the finished goods to export oriented units (EOUs). Fabrics made out of such imported yarn should have been towards discharge of export obligation, but this was not the case here, according to DGFT. Each of the firm had obtained advance license for import worth around Rs 70 crore.

As per the Foreign Trade Policy 2009, Under the zero per cent duty, EPCG Authorization holder is required to undertake export obligation equivalent to six times of the duty saved within a period of six years from the date of issue of authorization.

In 2006, the joint-DGFT, Surat, received a report from Directorate-General of Revenue Intelligence (DRI), Ahmedabad informing that all the above companies had misused the Advance Licensing Scheme by selling the duty free imported raw materials in the local market instead of exporting or supplying to EOUs.

On the basis of the said report, the joint DGFT, Surat conducted an investigation and adjudicated the cases by passing order in August 2013, thereby refusing issuance of further license.

Further, all of the four entities filled appeal before Additional DGFT, Mumbai, the Appellate Authority.

After hearing the companies arguments and analysing the reports received from the Central Excise authorities confirming that the firms had not effected any supply of manufactured goods to EOU units, as claimed. Hence the decision to penalise the firms.

Under advance authorisation scheme, any exporter can import raw-materials and related inputs under 100% duty exemption schemes but only after obtaining the license from DGFT, the licensing authority under this category.

The government fixes value addition as per the standard input-output norms. Once the export obligation will be fulfilled with the licensing authority, importers can sell the manufactured products in domestic market.

Source:dnaindia.com

India's Gold Imports To Rise As Rbi Eases Curbs Ahead Of Budget

Gold imports to top consumer India are set to jump in coming months after the central bank eased gold import curbs, ahead of an expected cut in import duty in next week's federal budget.

The Reserve Bank of India said on Wednesday banks would again be allowed to import gold on a "consignment basis", under which they act as intermediaries and don't pay for the stock until a buyer has been found, which is usually quickly. Trading houses will be allowed to bring in gold with no conditions attached.

Gold flows into the country have slowed despite the removal in November of the so-called 80-20 rule that required importing agencies to re-export a fifth of total imports, as importers and customs officials waited for more clarity.

"These clarifications were pending for a long time and should boost sentiment. Gold imports may increase to 75-90 tonnes in coming months as against about 40 tonnes in recent months," said Prithviraj Kothari, executive director of the India Bullion & Jewellers' Association.

Imports had dropped despite the reversal of the rule as the industry was taken aback by the sudden change in the central bank's position and banks remained wary, fearing customs officials would hold up incoming shipments.

"Some imports had been stuck at the airport, but not huge quantities, as customs officials were awaiting clarification from the RBI. They will be cleared now," said Sudheesh Nambiath, an analyst at precious metals consultancy GFMS, owned by Thomson Reuters.

Nambiath said imports could average 80 tonnes a month, boosted by the RBI move and expectations of a duty cut. The central bank acted just days ahead of the government budget, due on February 28.

Expectations are high that Narendra Modi's government will reduce the import duty on gold from a record 10 per cent, set in 2013 by the previous government as part of efforts to cut the current account deficit.

"We view the clarification by the RBI on the 80-20 rule relaxation as positive for the bullion market as it is a step in the right direction towards the possibility of a relaxation in gold import duty," HSBC analyst James Steel said in a note.

"Indian gold demand would undoubtedly benefit if the government decided to cut gold import tariffs in response to the big drop in its current account deficit," he said.

The deficit has narrowed recently due to the drop in gold imports plus a sharp slide in oil prices. Gold is a popular gift at weddings in India and is also bought for auspicious occasions.

Demand should therefore pick up from March for the wedding season, which continues until July, while Akshya Tritiya, a major festival associated with gold-buying, falls in April.

Source:thehindubusinessline.com

Rupee Ends Weaker At 62.34/Dollar

The rupee closed weaker at 62.34 against the dollar on Wednesday hurt by demand for the American currency from oil importers. The rupee had closed at 62.16 on Monday.

The currency markets were closed on Tuesday for a national holiday. The Indian unit’s movement during the day mirrored that of its Asian peers, which were seen trading weaker against the American currency.

Suresh Nair, Director, Admisi Forex, said, “The rupee depreciated to near a week’s low on Wednesday against the US dollar, tracking most of its Asian peers, on caution ahead of the Federal Reserve’s January policy meeting minutes.”

Source:thehindubusinessline.com

HC remands case to Tribunal as it failed to consider issue raised by revenue

Excise & Customs : Where Tribunal : (a) failed to consider an issue raised by revenue and therefore, did not render a finding thereon and (b) merely stated that it need not interfere, matter was remanded back to Tribunal

Exp. on domestic transaction with non-AE not to be held as an operating exp. for international trans

IT/ILT : Expenditure incurred on account of domestic transaction with non-AE cannot be considered as operating expenditure in relation to international transactions with AE while computing profit margin of assessee

No recalling of ITAT's order if it disallowed interest when borrowed sum wasn't used in business of

IT: Where Tribunal specifically found that borrowed money was not used in money lending business by assessee, and, hence giving any credit towards payment of interest on borrowed fund did not arise, recalling of Tribunal's order was not justified

Sale of shares couldn't be treated as unexplained when AO failed to prove that share transaction was

IT : Where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68

RBI lifts ban on import of gold coins/medallions and allows import of gold on consignment basis

FEMA/ILT : Guidelines on Import of Gold by Nominated Banks/agencies

Reimbursement of technical exp. to foreign head office without making available technical service wa

IT/ILT: Technical expenses allocated by head office to assessee-Indian division was in nature of reimbursement of technical expenses to head office and not on account of any specific technical services having been 'made available' and, therefore, such amount could not be brought to tax in hands of assessee under article 13 of Indo-French Tax Treaty

Reversal and lapsing of credit under Cenvat Rule 11(3) applies only when all final products are whol

Cenvat Credit : Rule 11(3) of CENVAT Credit Rules, 2004 is applicable only when all final products become fully exempt from duty; said rule would have no application if from common Cenvat credit availed inputs or input services more than one final product are manufactured and some of them have remained dutiable

Glass bottles and plastic crates are eligible for credit as their cost is included in value of aerat

Cenvat Credit : Glass bottles and plastic crates, whose cost has been included on pro rata basis in value of aerated beverages, are eligible for credit to manufacturer of said beverages

RBI lifts ban on import of gold coins and medallions; permits import of gold on consignment basis

FEMA/ILT : Guidelines on Import of Gold by Nominated Banks/agencies

SC: Sum paid to NR professional for preparation of scheme for raising finance and tie up for loans w

IT/ILT : Where assessee-company, intending to set up a power project, took services of non-resident company who prepared scheme for raising required finance as well as tie up for required loan from Indian and international financial institutions, and loans were availed by assessee, said services would come within ambit and sweep of term 'consultancy service'

Builder was entitled to sec. 54EC relief on sale of land being held as capital asset and not as stoc

IT : Where assessee builder sold property which was held for 30 years and same was shown as land asset not as land stock, asset was capital in nature and assessee was to be exempted under section 54 EC on investment of said capital gain

Issue related to selection or rejection of comparables has to be decided by passing a speaking order

IT/ILT : Issue of selection or rejection of a comparable should be decided by a speaking order

In development agreements capital gain is levied on transfer of possession of land irrespective of t

IT : Where assessee had transferred possession of land and all other rights except title at time of entering into an agreement with a builder, capital gain would not be levied in relevant assessment year in which title of land was transferred