Changes in SCOMET Policy Related to Chemical Industry

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CHANGES IN SCOMET POLICY RELATED TO CHEMICAL INDUSTRY Gagandeep Singh Deputy DGFT Directorate General of Foreign Trade

Agenda 2

Recent Policy changes  Changes in SCOMET  Changes in HBP  EUC  Facilitation measures  Stock & Sale 

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Policy changes

Purpose 4

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Implement India’s international commitments and obligations in the field of non-proliferation Continuing obligations as a member of MTCR and as an adherent to the NSG Guidelines Harmonise with the control lists of the Wassenaar Arrangement and the Australia Group

Date of implementation 5

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Any exports made on or after 1 May 2017 are subject to the new regulations.

If your export item falls under the revised SCOMET list, an authorization from the concerned licensing authority is required

Table A of Schedule 2 of ITC(HS) Classification of Export and Import Items 6

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Export of items specified in Categories 1, 2, 3, 4, 5, 7 and 8 may be permitted against an authorization issued by the DGFT.

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SCOMET LIST

Dual-use list 8

SCOMET -

Appendix 3 of Schedule 2 of ITC (HS) Classification

• Special • Chemicals • Organisms • Materials • Equipment • Technologies

SCOMET list categories 9

• Nuclear materials, facilities and related equipment

• Toxic chemical agents and other chemicals

• Microorganisms and Toxins

Category 0

Category 1:

Category 2:

• Aerospace materials, equipment, systems and related technologies Category 5:

• Munitions List

Category 6:

• Special Materials, Materials Processing Equipment, and Related Technologies Category 3:

• Electronics, computers, and information technology including information security

Category 7:

• Avionics and Navigation

Category 4:

• Dual-use list in line with WA

Category 8:

Category 8 of SCOMET 10

Special Materials and Related Equipment

Material Processing

Electronics, Computers, Telecommunicat ions

Information Security

Sensors and Lasers

Navigation and Avionics

Marine

Aerospace and Propulsion

Main changes in the SCOMET list 11

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Addition of Category 1D, 6 & 8 Amended SCOMET Category 2 New Categories 3D001 to 3D015 Categories 3A201, 3A303, 3A309, 4A003, 4A007, 4A017, 4B006, 5A102, 5A205 have been substituted with amended and new entries SCOMET Category 7C has been deleted

Category 1A 12

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No change This corresponds to Schedule 1 to the Chemical Weapons Convention (CWC)) Export of 1A chemicals is prohibited  Sulphur

mustards  Lewisites  Nitrogen mustards

Category 1B 13

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This corresponds to Schedule 2 to the Chemicals Weapons Convention Export is permitted only to States party to the CWC against an export licence Eg:  Phosphonic

acid methyl Ethanethiol, 2-(diethylamino)-

Category 1C 14

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Export is allowed to State Parties to the CWC without an export licence subject to the condition that the exporter shall notify within 30 days of export Export to states not party to the CWC is restricted and allowed only against an export licence and a Government signed End-Use-Certificate Eg: Ethyldiethanolamine  Phosphorous Pentachloride  Thionyl Chloride 

Category 1D 15

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Export is allowed to 41 specified countries without an export licence subject to the condition that the exporter shall notify within 30 days of such export Export to other countries is restricted and will be allowed only against an export licence

Category 1D 16

SCOMET Entry

Chemical

CAS Number

1D004 1D005 1D006 1D007

Ammonium bifluoride Diethylaminoethanol Diisopropylamine Dimethylamine

1341-49-7 100-37-8 108-18-9 124-40-3

1D008

Dimethylamine hydrochloride

506-59-2

1D009 1D014 1D015 1D016 1D017 1D018 1D019 1D020 1D021 1D022

Hydrogen fluoride Phosphorus pentasulphide Potassium bifluoride Potassium cyanide Potassium fluoride Sodium bifluoride Sodium cyanide Sodium fluoride Sodium hexafluorosilicate Sodium sulphide

7664-39-3 1314-80-3 7789-23-3 151-50-8 7789-23-3 1333-83-1 143-33-9 7681-49-4 16893-85-9 1313-82-2

1D023

Triethanolamine hydrochloride

637-39-8

1D024 1D025

Triisopropyl phosphite Diethylamine

116-17-6 109-89-7

Australia Group 25 chemicals 41 countries exempted

Category 1D – Table A countries 17

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Argentina, Australia, Canada, Japan, Mexico, New Zealand, Republic of Korea, Turkey, United States European countries:- Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Ukraine, United Kingdom

Commodity Identification Note 18

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Note 1: If items are prima facie, classifiable under two or more headings, the heading which provides the most specific description shall be preferred to heading providing a more general description.

The end-use of the item would be a relevant criteria in determining the classification.

Important notes (1) 19

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The object of the controls should not be defeated by the export of any non-controlled goods containing one or more controlled components when the controlled component or components are the principal element of the goods and can feasibly be removed or used for other purposes.

Important notes (2) 20

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Chemicals are listed by name, Chemical Abstract Service (CAS) number and CWC Schedule (where applicable).

Chemicals of the same structural formula (e.g., hydrates) are controlled regardless of name or CAS number. CAS numbers are shown to assist in identifying whether a particular chemical or mixture is controlled, irrespective of nomenclature.

However, CAS numbers cannot be used as unique identifiers in all situations because some forms of the listed chemical have different CAS numbers, and mixtures containing a listed chemical may also have different CAS numbers.

Category 3D 21

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Chemical and biomaterial manufacturing and handling equipment and facilities  Reaction

Vessels, Reactors or Agitators  Storage Tanks, Containers or Receivers  Heat Exchangers or Condensers  Distillation or Absorption Columns  Valves, Multi-Walled Piping, Pumps  

Toxic gas monitoring systems Fermenters, Centrifugal separators, flow filtration equipment, Spray drying equipment

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Changes in the HBP

Maintenance of Record (2.73c) 23

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Maintain records in manual or electronic form for a period of 5 years from the date of export or import, as applicable:      

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All documents submitted while making an application for SCOMET Authorization.

Correspondence with buyer/consignee/end-user or DGFT or relevant Government agency; Relevant Contracts; Relevant Books of account; Relevant Financial records; Any communication from any government agency related to an application for authorization for any item on the SCOMET list or a commodity classification request; Shipping documents including shipping bill, bill of entry and bill of lading

Catch-all controls (2.72b) 24

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If the exporter has been notified in writing by DGFT or  he knows or  has reason to believe that an item not covered in the SCOMET list has a potential risk of use in or diversion to weapons of mass destruction (WMD) or in their missile system or military end use (including by terrorists and nonstate actors), 

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Export of such an item may be denied or permitted subject to the grant of a license Process for authorising export would be similar to the one for SCOMET

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END USER CERTIFICATE (EUC)

EUCs and their applicability 26

Appendix2S (i)

• Required for export of SCOMET items in Categories 2,3,4,5,7 & 8.

• Re-export in case of stocked items

Appendix2S (ii)

• Required for export of SCOMET items in Category 1.

• Re-export in case of stocked items

Appendix2S (iii)

• Application for Stock and Sale authorization

End-user certificate 27

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Signed and stamped by all intermediaries in the supply chain Declaration certifying that The item will be used only for stated purpose and that such use will not be changed, nor items modified or replicated without consent of Government of India;  Neither the items nor replicas nor derivatives thereof will be retransferred without consent of Government of India, unless specifically exempted ;  End-user shall facilitate such verifications as are required

by Government of India 

EUC- Appendix 2S(ii) 28

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FACILITATION MEASURES

Simplified process after approval 30

Approval granted

by IMWG

Approval letter generated online and sent to regional office

Authorization issued automatically to exporter

Reduction in the time to get the authorization by around 7 days

Other facilitation measures 31

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The time for processing SCOMET applications is being brought down further from 45 days to 30 days. (Para 2.82 of HBP) For chemicals covered in the new Category 1D, prior authorisation will not be required if the export is to the 41 notified countries

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STOCK AND SALE POLICY

Stock & Sale authorization 33

Exporter ANF 2O Appendix 2S(iii)

Permission from IMWG ANF 2O(a) Appendix 2S(i)

Stockist

End User

Issued vide DGFT Public Notice No. 7/2015-2020 dated 17.05.2017

Stock & Sale authorization 34

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Only from the principal company/the wholly owned subsidiary in India to their subsidiaries/principal company abroad Exhaustive list of countries to which exports would be done by the stockist needs to be indicated in the EUC

Requirement to submit a statement of exports made, inventory with the stockist and transfers made to final end-users at regular intervals Stocked items should be transferred to the final end-user within the validity period of the authorization.

No ‘Stock & Sale’ applications for Category 0, 1C and 6 of the SCOMET list.

Repeat orders Applications for re-export/re-transfer from the stockist entity to the end-user

Guidelines and FAQs 35

http://dgft.gov.in/exim/2000/scomet/2017/guidelines2017.pdf

SCOMET page 36

http://dgft.gov.in/exim/2000/scomet/2017/scomet2017.htm

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Thank you