Installation Certificate Not Required for Ships under SFIS Scheme

[DGFT Policy Circular No. 26 dated 17th March 2010]

Subject: Import of Ships (Vessels) & other moveable capital goods etc. if imported under SFIS Scheme of FTP and their installation, clarification thereof.

Attention is invited to SFIS Scheme under the FTP 2004-09 & current FTP 2009-14. Trade and Industry has represented that some Customs Authorities are seeking ‘Installation Certificate’ from the ship owners, and since the import item is a Ship (a moveable capital asset/good), there appears to be some confusion in the minds of Customs Authority (Particularly at Mumbai Sea Ports & Kakinada Sea Port) in this regard, on account of which Customs has stopped allowing use of SFIS for payment of duties on import of ships by the service providers.

2. The matter has been examined in detail. It is clarified that:

a) The provision relating to disallowing import of ‘Vehicle’ was introduced in FTP RE2006 (Updated as on 7.4.2006) and applies to SFIS duty credits scrips issued on Foreign Exchange earned during 2005-06 and thereafter, implying that there is no such stipulation for SFIS duty credits scrips issued for Foreign Exchange earned prior to 2005-06 period under the FTP. The intention of this provision is to protect the domestic sector industry of ‘motor cars, sports utility vehicles and the likes’ and thereby disallows such imports only under SFIS Scheme.

a) Ships cannot be treated as ‘vehicle’. Hence, it is clarified that the import of Ships, a capital good for Shipping Sector, is permitted under the scheme.

b) Upon imports, Ships are registered with the Director General of Shipping (or Mercantile Marine Board, as the case may be) and only then these vessels are treated as ‘Indian Flag vessels’. Ships are moveable capital assets; hence these cannot be installed at one particular location. Thus, the requirement of ‘installation certificate’ cannot be insisted upon, for such moveable capital assets /goods. Customs Authorities are accordingly not to insist on the ‘installation certificate’ for moveable capital assets /goods, if imported under the SFIS scheme.

3. This clarification regarding non-requirement of installation certificate shall also apply to EPCG for Service Providers wherein import of moveable capital goods is permitted.

This issues with the approval of the DGFT.