Project

Report

CST Forms relevant for MRO

Standardizing Inbound and Outbound Registers at the warehouses

Early Payment Incentive (EPI)

Deemed Exports

By:

Abhishek Goel

Finance Trainee

Sales Tax Forms relevant for MRO

Form – C : Inter-state purchase of goods

Form – F : Inter-state transfer of goods to depots, agents etc.

Form – I : Inter-state sale made to SEZ

As Guided by Mr. Schillu John

C - Form

This form is to be filed when inter state purchase is to be made i.e.

the factory or the place of removal is in different state and seller is

in different state.

The purchasing dealer shall obtain a C-form from the authorities

and submit it to the selling party. The selling party shall charge the

CST at a lower rate of 2% on the invoice and at the time of deposit

it must submit a copy of the C-form as well.

The C- form is not required to be obtained for every transaction

and the same can be renewed after every quarter.

In absence of Form-C, purchasing dealer would have been liable for

payment of tax at the same rate which is applicable to sale of such

goods within the State of selling dealer.

Single Form C can be issued for quarter to cover the transactions

in between the two dealers.

Mechanism for C- Forms

The customer first obtains the form issued

by the State sales tax department. A single

C- form covers transaction between two

parties only.

The customer is required to

obtain the C-form from the

State Sales tax Authority, which

is issued to him in Triplicate.

The original and

the second copy is

to be sent to RIL

of which one is

submitted by RIL

to the Sales tax

authorities and

charges only 2% as

CST on invoice to

the dealer.

The third copy

is retained by

the dealer with

him for his

records.

Quarterly

Cycle

Form - F

Form – F is used in the case of stock transfer from one state to

another state without a sale.

A principal may transfer his goods to his agent, head office or a

manufacturing unit in one State may transfer its goods to its

branches or depots in other States, a purchasing agent may dispatch

goods to its principal in other State.

Such a transaction of stock transfer shall not be treated as a sale and

therefore no sales tax should be charged thereon.

In order to avoid the situation of levy of sales tax on such transfer

Form – F should be filed.

Blank Forms F are issued by the Sales Tax / VAT / Commercial Tax

Department of the State, in which goods are delivered, to the

consignee dealer.

Form - I

Form - I is to filed in case , there is an interstate sale to an SEZ

customer.

As SEZ are tax free zones and significant amount of their turnover is

exported, the Government ensures that no domestic taxes adds on to

the cost of exported goods.

The form is to be obtained from the SEZ dealer by RIL and CST on such

interstate sale shall be exempt.

Standardising Inbound and Outbound Registers

Need for standardising arises as the warehourses are controlled

and directed by MRO directly.

In case of any need of information for control and audit ,

uniform information shall be available for the same.

Format has been reproduced in an Excel workbook attached

along with this presentation.

- As guided by Mr. T Raghvan and Mr. Lakshminarayan

Early Payment Incentives (EPI)

Early Payment Incentives – An Introduction

Early Payment Incentive Projections

Mechanism of EPI Projections

As Guided by Ms. G. Revathy

Early Payment Incentives (EPI) – An Introduction

“Early payment incentive” as the name suggests is the incentive in

terms of discount/rebate to the customers in the event of their making

an early payment.

The credit period allowed to the customers is 10 days from the date of

invoice and all sales are made on ex-works terms.

If the payment is made by the customer immediately on issue of invoice,

he is being offered a cash discount on his purchase.

If the customer opts to make the payment within the credit period

allowed to him i.e. 10 days and makes the payment before the

completion of such period, then he stands to take the benefit of EPI.

Say, for Polyethylene, the EPI benefit is of Rs.100/MT/Day and applies

uniformly to all customers.

Early Payment Incentives (EPI) Projections and Reality Analysis

The customers who wants to take the benefit under EPI needs to make an

entry for the same in the B2B system with an amount they expect to pay to

reduce their dues on that day..

Such an entry is required to be made by the agents/customers everyday by

11:00 AM in the morning.

Such projections enables RIL to analyse the expected cash flows and to

decide upon the operating and financing leverage capacities.

It also enables RIL to ensure an effective operating cycle thereby meeting

both ends of purchase of raw materials and sale of finished stock.

Once the projections are being entered into the system , a reality analysis is

to be performed based on the actual receipts.

A reconciliation of the actual receipts with that of the projected entries

made by the customers is then prepared by Ms. G. Revathy.

Mechanism of EPI Projections and Reality Analysis

Entry for the expected amount of payment is made

by the customer/agent in the B2B system.

The designated person at the regional office gets an

automated mail regarding the same.

In the evening a reality check is performed to

compare the actual receipts from the customers

with that of the those entered in the system.

On the basis of respective EPI policy, the customer

is provided with an incentive which is in the form

of a month end adjustment.

Deemed Exports

What is Deemed Export ?

Understanding - Duty Exemption and Duty Remission

Understanding – Advance Authorization Scheme

Deemed Export Tree

The RIL Procedure and Document Checklist

What is a Deemed Export ?

A manufacturer /trader either by mode of Advance

Authorization/Duty Remission can claim the exemption/refund of

duty paid on inputs utilized for manufacture of goods to be

exported/already exported.

Customs Act,1962 provides a definition for exports to include, “with

its grammatical variations and cognate expressions, taking out of

India to a place outside India.”

Hence , with a grammatical variation “Deemed Export” is also

“Export” under the Customs Act , 1962.

Understanding - “ Duty Exemption and Duty Remission”

The Government of India has always shown a keen interest in promoting

exports because of which almost all exports are exempt from duty.

The manufacturer who produces goods to be exported procures raw material

from supplier (FSD/SSD) or another manufacturer or by importing (Customs

Duty) the raw material.

The manufacturer has to pay the full price for the goods he has acquired

including various duties and taxes levied by the state/central governments.

He may be eligible for the respective credits for these duties and taxes , but

the end user has to bear the full price of the same.

In order to ensure that these duties and taxes are not exported with goods ,

the government through its various agencies have created a mechanism of

Duty Exemption/Remission on export of goods.

The mechanism is in the form of “Advance Authorization Scheme” , “Duty

Drawback Scheme” , “ Remission of Duty” .

Understanding the Advance authorization schemes

Advance Authorizations are issued to allow duty free import of inputs,

which are physically incorporated in the export product (after making

normal allowance for wastage)

The raw materials/inputs are allowed duty free as per the quantity

specified in the Standard Input-Output Norms (SION) notified by the

DGFT or as per self-declared norms

The Advance Authorizations are issued both for physical exports as well

as deemed exports.

Customer (AA Holder)

Deemed Export Tree

Procures raw material from agents Imports

Clearance at the port

without payment of customs

duty (Copy of Advance

Authorisation to be

attached)

Agents procures

it from RIL (DTA

Plant)

Agents procures

it from RIL (SEZ

Plant i.e.

Jamnagar SEZ)

Similar to

Imports Next Slide

The RIL procedure and documents checklist

Order Received from a DE

customer

Issue of Tie up letter by

RIL

Customer /Agent will then furnish self

attested copy of Advance authorization

Order

made to

DTA Plant

No

Yes Customer /Agent to

furnish Original

invalidation letter

The customer shall

furnish Annexure-I

to RIL for removal of

goods without paying

ED.

RIL will then issue a

contract to the customer to

confirm product, quantity ,

rate and other terms and

conditions under which

supply is effected.

Thank You