• RESERVE BANK OF INDIA

A.P. (DIR Series) Circular No. 36 Dated 14.11.2008 - Exim Bank's Line of Credit of USD 25 million to the Government of the Syrian Arab Republic

Exim bank has provided a Line of Credit (LOC) of USD 25 million (USD twenty five million ) to Government of the Syrian Arab Republic for financing export of specified goods from India vide an agreement concluded between Exim Bank and Government of the Syrian Arab Republic. The Credit Agreement under the LOC is effective from October 27, 2008 and date of execution of Agreement is June 5, 2008.

A.P. (DIR Series) Circular No. 35 Dated 10.11.2008 - Remittance related to Commodity Derivative Contract Issuance of Standby Letter of Credit / Bank Guarantee

RBI has decided to permit AD Category-I Banks to issue guarantees / standby letters of credit to cover these specific payment obligations subject to the conditions / guidelines provided therein. Issuance of guarantees / standby letters of credit can only be done in cases where the remittance is covered under the delegated authority or under the specific approval granted for overseas commodity hedging by the Reserve Bank. The Banks issuing guarantees/ standby letter of credit are required to have approved policy on the nature and extent of exposures that the bank can take for such transactions and should be part of the credit exposure on the customers and exposure should also be assigned risk weights, for capital adequacy purposes as per the extant provisions.

A.P. (DIR Series) Circular No. 34 Dated 10.11.2008 - Foreign Exchange Management (Deposit) Regulations, 2000 Credit to Non Resident (External) Rupee Accounts - Clarification

It has been clarified by the Reserve Bank of India that AD Category-I banks and authorised banks may credit proceeds of account payee Cheques also in addition to demand drafts / bankers' cheques, issued against encashment of foreign currency to the NRE account of the NRI account holder where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I / Category-II.

Press Release No. 2008-2009/685 Dated 12.11.2008 - Ways and Means Advances to the Government of India for the Financial Year 2008-09

RBI has decided to retain the limit for the Ways and Means Advances to the Government of India at Rs.20,000 crore as against the limit of Rs.6,000 crore fixed provisionally for a period till December 31, 2008. This temporary enhancement was done, in order to meet the unanticipated mismatches between Government payments and receipts arising from the cancellation of two auctions scheduled for the month of October 2008, and the bunching of expenditure following the supplementary demand for grants.

RBI DBOD Notification No. DBOD.BP.BC. 83 / 21.01.002/2008-09 Dated 15.11.2008- Review of Prudential Norms - Provisioning for Standard Assets and Risk Weights for Exposures to Corporates, Commercial Real Estate and NBFC- ND-SI

RBI has decided to change the Prudential norms pertaining to Standard Assets and Risk Weights for Exposures to Corporates, Commercial Real Estate and NBFC- ND-SI. Consequently, the provisioning norms for all types of standard assets and risk weights for the banks' claims on corporates, those secured by commercial real estate and the claims on the NBFC-ND-SI stand revised. The modifications introduced by this circular will apply to banks under the Basel I framework.

RBI DBOD Circular No. DBOD. No. Dir. BC. 82 /13.03.00/2008-09 Dated 15.11.2008 - Interest Rates on Non-Resident (External) Rupee (NRE) Deposits and FCNR(B) deposits

RBI has decided to revise the interest rates on fresh Non-Resident (External) Rupee (NRE) Term Deposits and FCNR(B) deposits in view of the prevailing market conditions, which will be effective from close of business in India as on November 15, 2008. The revised interest rates are provided therein.

RBI MPD Circular No. MPD. No. 310 /07.01.279/2008-09 Dated 15.11.2008- Export Credit Refinance Facility: Relaxation

Reserve Bank of India has decided to enhance the eligible limit of export credit refinance (ECR) facility from the present level of 15 per cent of the outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight to 50 per cent. The rate of interest charged on the ECR facility will continue to be the prevailing repo rate under the liquidity adjustment facility (LAF) of the Reserve Bank which is currently 7.5 per cent.

• PIB

Dated 12.11.2008 -TRAI Recommendations on Entry into Broadcasting

TRAI seeks space for Public Service Broadcasting in its Recommendations on "Issues relating to entry of certain entities into Broadcasting and Distribution activities"

It has been recommended by the TRAI to not to allow political parties to enter into broadcasting activities, but at the same time it has been recommended to broadcasting channels to provide "reasonable access" to recognized political parties during the run up to elections to Parliament and to the State Legislative Assemblies. In confirmation with secular fabric of the Constitution, it has been recommended to not to permit religious bodies to own their own broadcasting stations and teleports.

TRAI has recommended that in present scenario as regards the entry of State Governments, urban and rural local bodies, etc. may be allowed to continue subject to certain public service broadcasting obligations that can be imposed on the broadcasters in the country. With regard to their entry into broadcasting activities, TRAI has recommended that urban and local bodies, political bodies, religious bodies and other publicly funded bodies may not be permitted into distribution activities like cable television, DTH, etc.

• INDIRECT TAXATION

Customs

CBEC Customs Circular No. 19/2008 Dated 14.11.2008 -Clarification on setting up Duty Free Shops approved by FIPB -reg

It has been clarified that for setting up duty free shops at airport/ports, FIPB approval is only for the purpose of permitting foreign investment and any such approval does not automatically confer a right on the applicant to open a duty free shop at any port. Accordingly, Jurisdictional Commissioners of Customs/Central Excise are directed to ensure that the conditions, restrictions and guidelines issued in this regard and statutory requirements are followed scrupulously before grant of a license for setting up a duty free shop even in cases where the FIPB has approved the proposal.

CBEC Customs Circular No. 18/2008 Dated 10.11.2008 -Computation of Value under Section 14 for Levy of Export Duty

It has been decided to continue the existing practice of computation of export duty and accesses by taking the FOB price as the cum-duty price and changed practice of computation of export duty will be effective from 1st January, 2009.In order to calculate export duty, the transaction value, which is the price actually paid or payable for the goods for delivery at the time and place of exportation under section 14 of Customs Act 1962, shall be the FOB price of such goods at the time and place of exportation. For instance if the transaction is at Rs 100 FOB, and the duty is 15%, the export duty will be 15% of FOB price, that is Rs 15. 

Excise

CBEC Excise Circular No. 877/15/2008-CX Dated 17.11.2008-Clarification Regarding Reversal of Cenvat Credit in case of Trade Discount

It has been clarified that in cases where a manufacturer avails credit of the amount of duty paid by supplier as reflected in the excise invoice, but subsequently the supplier allows some trade discount or reduces the price, without reducing the duty paid by him, the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise. However, if the duty paid is also reduced, along with the reduction in price, the reduced excise duty would only be available as credit.

Customs Notification No. 128/2008-NT Dated 18.11. 2008

Central Government determines Rate of exchange of one unit of specified foreign currency equivalent to Indian rupees relating to imported and export goods vide amendment to the Notification No. 115/2008-Customs(N.T.) Dated 29 October, 2008 providing rate of exchange of conversion which is effective from 1st November, 2008 relating to imported and exported goods.

CBEC Customs Non-Tariff Notification No. 127/2008-Customs(N.T.) Dated 17.11.2008 - Amendment to the Notification No. . 36/2001-Cus (N.T.), dated, the 3rd August 2001

Central Government in exercise of power conferred by section 14(2) of the Customs Act, 1962 provides tariff value of the Crude and RBD Palm Oil/Palmolein vide amendment to the Notification No. 36/2001-Cus (N.T.), dated, the 3rd August 2001.

CBEC Customs Non-Tariff Notification No. 118/2008-Customs(N.T.) Dated 12.11.2008 - Customs (Compounding of Offences) Amendment Rules, 2008

Central Government amends Customs (Compounding of Offences) Rules, 2005 vide Customs (Compounding of Offences) Amendment Rules, 2008, in exercise of the power conferred under Customs Act, 1962. In the Customs (Compounding of Offences) Rules, 2005 provisions pertaining to Fixation of the compounding amount and has been substituted and it has been provided that application will be allowed subject to the condition that duty, penalty and interest liable to be paid have been paid for the case for which application has been made.

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

Circular No. IRDA/ INV/CIR/020/2008-09 Dated 11.11.2008 - IRDA (Investment) (4 th Amendment) Regulations, 2008 - Reg

Certain amendments / clarifications has been issued by the IRDA, in order to give effect to the Insurance Regulatory and Development Authority (Investment) (Fourth Amendment) Regulations, 2008. The revised instructions would supersede the existing requirements stipulated in previously issued Circulars.

• Vat Notifications

Andhra Pradesh

Notification No. G.O.Ms.No.1264 Dated 01.11.2008 -Amendment to Schedule IV of the Andhra Pradesh Value Added Tax Act, 2005

The Fourth Schedule appended to the Andhra Pradesh Value Added Tax Act, 2005 has been amended by the Andhra Pradesh government in exercise of the power conferred by the Section 79 of the said Act and a entry relating to specified commodities has been added to the Fourth Schedule by way of this amendment.