Page 26 - Bullion World Volume 4 Issue 2 February 2024

Bullion World | Volume 4 | Issue 2 | February 2024

with UAE at custom duty of 9%. It is gathered that Duty Rules for import of silver under CEPA which can be cross
Credit Scrips are also being used by the importers verified as and when required by Custom investigation.
through IIBX for payment of custom duty which provides
additional benefit to the importers while payment of Role of IIBX and IFSCA is important in monitoring of
duty. There is big potential of increase in import of silver the compliance of stipulated rules including Country
through IIBX with the comparative advantages of custom of Origin Rules, product Specific Rules and CAROTAR
duty and use of Duty Credit Scrips. Rules 2020, as the buyer/ importer of Silver under CEPA
of UAE and India relies on the IIBX for compliance of
Due to issues faced by the banks in importing silver stipulated Rules while placing BDR of CEPA Contract of
in the past, Banks are not allowed to import gold Silver by the Qualified Supplier.
and silver through IIBX. Participation of the Banks on
IIBX for import of gold and silver is important to bring There could be possible review of the Silver Imports
liquidity and price discovery. We expect RBI to consider under CEPA if its volume goes up abnormally high all of
participation of the Banks on IIBX for import of gold and a sudden. Therefore, importers have to use their own
silver as an additional source apart from their normal wisdom for making sure to comply with the Government
consignment model for import of bullion from foreign Rules and Regulations.
suppliers. It is felt that the value addition of 3% in export of silver
from UAE to India under CEPA (at lower duty of 9% in
It is expected that domestic market will generally remain current financial year ) including the profit margin of at
at discount to the landed cost of import based on least 2% by supplier is much on the higher side if we
prevailing international price with full duty paid @15% compare it with the normal premium on import of silver
as silver is being imported at much lower custom duty at full custom duty. Therefore, it needs review by both
under CEPA Agreement with UAE. HZL having annual the respective countries to revise the value addition at
production capacity of about 800 Tonnes of silver appropriate mutually agreed level under CEPA.
generally sells its silver at discount to the landed cost of
import of silver. However, domestic market price could It is observed that most of the silver imported under
be in parity with the landed cost of import whenever CEPA with UAE at lower duty is by the large silver bullion
Active Veri�ed
there is significant fall in international prices or there is traders. The small manufacturers and exporters with
Shop No. 3, First Floor,
substantial increase in seasonal demand. minimum net worth of less than Rs. 25 Crore are not
Zaveri Bazaar, Mumbai - 400 002
eligible to import silver from IIBX. This needs attention of
It is gathered that suppliers of silver in UAE include at the Government to take care of small manufacturers and
least 2% profit margin in the stipulated value addition exporters of silver jewelers so that they can derive direct
of 3% which includes local ingredients and other costs. benefit of the CEPA Agreement. Active Unveri ed Introducing
Importers on record and IIBX are required to take Address
adequate measures to comply with the Country of Origin Verification

Inactive Unveri ed
Disclaimer: This note is for the purpose of
exclusive information of the readers of Bullion
World. It has been prepared to the best of
our knowledge gained from notifications of Disabled
Government Departments including DGFT,
Customs and CEPA Agreement between UAE and
India as also related guidelines and instructions.

Readers are advised to go through India’s FTP,
UAE FTP and relevant rules on the subject in
respective countries for further clarification, if
any. Author of this note and FinMet will not be
responsible for any damage or loss or penalty
levied by any Government Authority of respective
countries in case of non-compliance of stipulated
Rules and Regulations by the importers and
exporters.

26 secure@sequel.co.in | +91 901 902 4444 | www.sequel247.com