TIEP4 scheme permits whole or partial exemption of the fiscal levies on imported capital and intermediate goods used for manufacturing products and services for export.
- Obtain a prescribed TIEP4 application form from, Export Facilitation Unit, Customs House, Bristol Street, Colombo 1.
- Completed prescribed TIEP4 application should be submitted to Director General of Customs for approval along with the other documents. (see documentation for complete set of documents needed for the registration)
Applications under acknowledgement should be made well in advance to the bonding unit. (prior to the arrival of the shipment)
- At the time of each importation, the manufacturer or indirect exporter must submit the following documents to the Customs.
- Approval obtained on form TIEP4 granting exemptions of fiscal levies (General or Specific).
- Bank/Personal/Company Guarantee equal to the total Fiscal Levies.
- Other import documents such as CusDec, Invoice etc.
Documents needed for registration:
- Appropriately completed prescribed TIEP4 form in triplicate.
- Project report. (In the case of new projects, applications should be supported with a project report giving evidence of export capability and/or supply capability for export purposes, as the case may be)
- Certificate of VAT registration.
- Business registration (form 65)
- Memorandum of article (form 48)
- Other necessary approvals applicable. (Tea Board, Coconut Development Board)
- Approvals can be obtained in two types.
- General approval: valid for a period of one year from the date of approval.
- Single importation approval: Specific approval is given when applications are made for single importation. Operator has to get approval each and every time for each importation.
Exporters or indirect exporters who are making several importations of items within a period of one year should apply for the General approval.
Under TIEP4 scheme following items are eligible for whole or partial exemption of Customs import duties, Export Development Board Cess and Excise (Special Provisions) Tax.
- Capital goods including machinery, equipment, accessories.
- Appliances - Devices applied in the manufacturing process or supportive equipment such as air conditioners, computers, electricity generators and such other equipment, which are considered essential to the manufacturing process.
- Spare parts of project plant, machinery or equipment.
- Intermediate materials, directly used in the production process (excluding raw materials).
- Transport equipment and handling equipment used exclusively in the factory premises or place of production, in the production process.
- Breeding stock for agricultural projects.
The amounts of duty and tax exemption allowed are as follows:
- 100% exemption in the case of exporters who export 50% or more of the output and indirect exporters who supply 50% or more of their output to direct exporters.
- 50% exemption for exporters who export 25% or more but less than 50% of their output and indirect exporters who supply 25% or more but less than 50% of their output to direct exporters.
Securities for Levies
The exporter or indirect exporter should furnish a personal/company/bank guarantee to the Customs, as determined by the Director General of Customs equal to the full (i.e. 100%) of the value of the duty and taxes payable as described below.
- The Personal/Company/Bank Guarantee will be valid for a period of one year.
- New exporter or indirect exporter who import for the first time under the Scheme should furnish a 100% Bank Guarantee for the value of duty and tax payable.
- Existing Exporters/Indirect Exporters, who have over one year but less than 3 years of proven track record, may furnish a bank guarantee equal to 25% of the value of duty and tax payable and a Personal/Company guarantee for the balance 75% of the duties and taxes payable.
- An Exporter/Indirect Exporter who operates under the Scheme with a proven track record of over 3 years, may submit a Personal/Company guarantee equal to the full value of the duties and taxes payable (i.e. 100%)
Discharge of Bank/Personal/Company Guarantee
- At the end of one year from the date of importation exporter/indirect exporter shall submit to the Director General of Customs #* statement of output and, export/supplies of such products to exporters respectively, duly certified by a recognized Auditor in Form - TIEP 5.
- If the Director General of Customs satisfied that the export obligations have been met, he shall release the relevant guarantees. If for valid reasons the exporter/indirect exporter have not been able to fulfill his obligations, the Director General of Customs may grant an extension of the validity period of the approval, for a period of one year on acceptance of necessary guarantees. Further extension will be considered only under exceptional circumstances.
- If at the end of the first year or the further period allowed, the export obligations have not been fulfilled, the guarantees shall be enforced.
- In the case of Personal/Company Guarantees, if export obligations have not been fulfilled, the exporter/indirect exporter will be required to pay to the Customs the duty and taxes relating to the items imported and covered by the guarantees. Failure to pay such duty and taxes on demand by Customs will make the exporter liable to penalties under the provisions of the Customs Ordinance (Chapter 235).
- After discharge of the guarantee, the exporter/indirect exporter shall give a written undertaking to the Director General of Customs that the items imported under this scheme will not be sold, hired, leased, disposed of or used for any other purpose other than for which the items were allowed importation, without the prior approval of the Ministry of Finance or the Director General of Customs - within three years of such guarantee or any other lesser period approved by the Director General in considering the type or nature of the goods.
- If an application for duty and tax exemption under this scheme is rejected, the reasons therefore shall be conveyed to the applicant by the Customs (within 10 working days). Any exporter/indirect exporter who operates under the Scheme is dissatisfied with a decision of the Director General of Customs he will be entitled within 30 days of the communication of such decision to appeal to the Secretary to the Treasury or the Appellate Body appointed for the purpose.
See also: TIEP
--Gishan Chaturanga 17:07, 10 July 2012 (IST)