AEO benefits continue even after switching operations to MOOWR: Expert

All benefits available as AEO will continue to be available even after your switching over to manufacturing
We have recognition as Tier-2 Authorised Economic Operator (AEO). We have a DTA manufacturing unit. We intend to take Section 65 licence and manufacture in bonded warehouse. Will our benefits as AEO continue if we switch our operations under Manufacture and Other Operations in Warehouse (No.2) Regulations 2019 (MOOWR)?

Operating under Section 65 of Customs Act, 1962 has no effect on AEO status. All benefits available as AEO will continue to be available even after your switching over to manufacturing in bonded warehouse under MOOWR.

AD (DIR Series) Circular No. 49 dated May 4, 2010 and AD (DIR Series) Circular No. 16 dated October 4, 2004 issued by the Reserve Bank of India, provide that price of shares to be transferred to persons resident outside India, shall not be less than the fair value determined by a SEBI registered Category – I Merchant Banker or a Chartered Accountant, as per the discounted free cash flow method. After this, revised pricing guidelines were issued in 2014. My question is whether there are any other guidelines after 2014? 

It appears you are referring to transfer of shares of unlisted companies by a person resident in India to a person resident outside India. As per Regulation 11 (2)(c) of the  Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 notified by RBI  through notification no. FEMA 20(R)/RB-2017 dated 7th November 2017, ‘Unless otherwise specified in these Regulations or the relevant Schedules, the price of capital instruments of an Indian company transferred from a person resident in India to a person resident outside India shall not be less than the valuation of capital instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a Securities and Exchange Board of India registered Merchant Banker or a prac­ticing Cost Accountant, in case of an unlisted Indian Com­pany’. The same position is mentioned in RBI Master Direction no.11/2017-18 dated 4th January 2018 (as amended).

The facility for filing of MEIS applications for shipments made from 1st April 2020 onwards was disenabled by the DGFT on July 23rd this year, for want of funds. Now, we are unable to file the MEIS applications for shipments made before 1st April 2020 also. Will we ever get this benefit? What should we do?

I think you will get the MEIS duty credit scrips when the government has enough money and allows you to file the applications. You may wait till that happens or move the Courts against the DGFT disenabling the facility to file the MEIS applications.

We refer to CBIC Circular no. 107/26/2019-GST dated 18th July 2019 clarifying various issues relating to supply of Information Technology enabled Services. We understand that this circular has been held in abeyance. What is the current position?

That Circular has, in fact, been withdrawn by the CBIC thro­ugh its Circular no. 127/46 /2019-GST, dated 4-12-2019.




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