The work undertaken by DGICCE in respect of Bhutan exports can be categorized in two parts:
1. Refund of excise duty to RGOB
2. Export to Bhutan for govt. aided projects.
As per the Agreement on Trade and Commerce between the Royal Government of Bhutan and Government of India, there is free trade and commerce between the two countries of goods produced in either country. Article VIII of the Agreement provides that :
"Each of the Government agree to provide appropriate refund to be mutually decided annually in respect of excise duties on goods of its origin exported to another."
In pursuance of the above provision, the GOI(MEA) has been annually paying refund of excise duties collected on goods exported from India to Bhutan. On reference from MEA, exercise to work out approximate refund amount is undertaken by DGICCE. The documents regarding claim of refund from RGoB are sent from MEA to the Board which in turn are sent to DGICCE. The amount of refund is worked out as under.
The value of imports to Bhutan for project-imports and in hard currency is deducted from the total value of imports as claimed in documents received from RGoB. Thereafter, the claim is divided into two categories, viz.,
For category (i), the import value as submitted by RGoB is knocked down by 40% to arrive at an ex-duty assessable value and thereafter duty is worked out applying effective rate to respective goods under the Tariff heading they fall. For category (ii) uniform rate of 25% is applied on the import value as submitted by RGoB without knocking down the import value.
The amount of refund worked out by DGICCE is sent to Board which in turn transmits the same to MEA. The MEA grants the refund amount. The amount of refund granted by MEA has never been communicated to DGICCE.