EXIM POLICIES, PROCEDURES &

DOCUMENTATION

Submitted to ~ Presented by ~Prof. Mohit Moghe Isha Joshi MIB – I semester

Prestige Institute of Management & Research, Indore

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CONTENTSExport Promotion of Capital Goods SchemeDuty Remission Scheme

Duty Drawback SchemeDuty Exemption Schemes

Advance Authorization SchemeDuty Free Import Authorization Scheme

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EXPORT PROMOTION CAPITAL GOODS

SCHEME

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INTRODUCTIONThe scheme allows import of capital goods for pre production, production and post production.The objective is to help in import or domestic procurement of capital goods like machinery, etc. for producing quality goods and services for exports.The idea here is to enhance India’s export competitiveness.

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GOODS ELIGIBLECapital Goods by definition are plant, machinery, equipments or accessories required in manufacture or production or for rendering services.Other than capital goods, computer software systems, spares, moulds, dies/catalysts are also allowed.All of these items can be imported or indigenously procured without payment of duties under EPCG Scheme given that they will be used for producing export goods and services.

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EPCG SCHEME

Zero Duty EPCG Scheme

(3%) Concessional

Rate

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ZERO DUTY EPCG SCHEMEIt allows import of capital goods for pre-production, production and post-production at zero customs duty.Export Obligation – 6 times of duty saved on import of capital goodsExport Obligation Period – to be fulfilled in 6 yearsActual user condition should be satisfied

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It is available for exporters of –HandicraftsPlasticsEngineering and Electronic ItemsChemicals and Pharmaceutical ProductsLeather and Leather Products

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EXPORT OBLIGATION UNDER ZERO DUTY EPCG SCHEMEOnce the goods have been imported, the authorization holder of the EPCG license would have to make exports and show proof of the same to DGFT for redemption of authorization.The exports in the next 6 years should be at least 6 times the duty saved in the authorization.This export should be over and above the average exports done by the firm in the last 3 years.Export Obligation is divided into two blocks –

4 years (at least 50% of export obligation)2 years(remaining part of export obligation)

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(3%) CONCESSIONAL RATE EPCG SCHEMEIt allows import of capital goods for pre-production, production and post-production at 3% customs duty.Export Obligation – 8 times of duty saved on import of capital goodsExport Obligation Period – to be fulfilled in 8 yearsActual user condition should be satisfied

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3% CONCESSIONAL RATE EPCG SCHEME FOR VARIOUS SECTORS

SECTOR EXPORT OBLIGATION

EXPORT OBLIGATION PERIOD

CONDITIONS(if any)

Agricultural Units

6 times 12Years -

Small Scale Industries

6 times 8 years An investment not more than 50 lakhs

Projects 8 times 8 years Turnkey/ Import Projects

Retail 8 times 8 years Area should be of min. 1000 sq.m.

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Travel and Tourism Vehicles –Export Obligation and Period – 8 times-8 YearsOnly hotels/travel & tourism/golf tourism departments can import motor cars, SUV, all purpose utility vehicles.For tourism purpose onlyThere should be 1.5 crore FOREX earned in current & 3 preceding licensing years.Import shall not exceed 50% of average FOREX earned in preceding 3 licensing years.

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PLAN FOR BIFRIf a company is registered under BIFR (Board of Industrial & Financial Rehabilitation) , then that company can get an extension in fulfillment of export obligations under the EPCG Scheme.

Extension provided is up to 5 years

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INCENTIVES FOR FAST-TRACK COMPANIES

If 75% of the export obligation is fulfilled in half or less than half year, then the remaining 25% is not necessary to be completed.

DUTY EXEMPTION & REMISSION SCHEMES

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DUTY REMISSION SCHEMECurrently there is only one Duty Remission Scheme which is administered by the Customs Department and is known as Duty Drawback Scheme.Duty Drawback is the rebate of duty chargeable on imported material or excisable material used in the manufacturing of goods in and is exported. The exporter may claim drawback or refund of excise and customs duties being paid by his suppliers.The percentage of reimbursement varies from product to product depending on the inputs used while making the product.This percentage rate is published annually by the Department of Revenue after the budget.

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DUTY EXEMPTION SCHEMES

Advance Authorization

SchemeDuty Free Import

Authorization

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ADVANCE AUTHORIZATION SCHEMEAn Advance Authorization is issued to allow duty free import of inputs which are physically incorporated in export product.

Products like fuel, oil, energy or catalysts, which are consumed/utilized to obtain export product may also be allowed.

Advance Authorization is issued on products or inputs which fall under the Standard Input Output Norms (SION) or on the basis of Self – Declaration norms as per paragraph 4.7 of HBP (Volume 1).

Actual User condition should be satisfied.

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DUTIES EXEMPTED UNDER ADVANCE AUTHORIZATION

1)Basic Customs Duty2)Additional Customs Duty (Countervailing

Duty)3)Education Cess (2%)4)Antidumping Duty5)Safeguard Duty

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VALUE ADDITION1) Minimum 15% value addition for all physical

exports

2) Mandatory 50% value addition in case of export of TEA

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DOCUMENTS REQUIRED FOR AVAILING ADVANCE AUTHORIZATION

1) IEC2) RCMC3) Proforma Invoice4) Letterhead – 10 copies5) Certificate from Chartered Accountant

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ADVANCE RELEASE ORDERS (ARO) OR INVALIDATION LETTERARO or Invalidation Letter is required when an exporter is importing inputs from State Trading Corporations where, ARO is denominated in freely convertible FOREX or INR.

However, supplies may be obtained against Authorization from EOU/EHTP/BTP/STP/SEZ units, without using ARO or Invalidation Letter.

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ADMISSIBILITY/PERMISSIBILITY FOR DRAWBACKIt is refundable only after taking permission from the Department of Revenue & Ministry of Finance.

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PROHIBITED ITEMS Prohibited items of imports mentioned under

ITC(HS) shall not be imported under AA/DFIA

Items reserved for imports by STEs (State Trading Enterprises) cannot be imported against AA/DFIA. However, those items can be procured from STEs against an ARO or Invalidation Letter.

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DUTY FREE IMPORT AUTHORIZATION SCHEME

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalysts which are required for the production of the export product.DGFT, by means of Public Notice, may exclude any product(s) from the purview of DFIA.The products about which SION has been notified can only be imported.This scheme is in force from 1st May, 2006.Actual User condition should be satisfied.

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DUTIES EXEMPTED UNDER DFIA

1)Basic Customs Duty2)Additional Customs Duty (Countervailing

Duty)3)Education Cess (2%)4)Antidumping Duty5)Safeguard Duty

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VALUE ADDITIONMinimum of 20% value addition is required for all products except for Gems & Jewellery.

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TRANSFERABILITYDFIA is Transferable, that is, if the exporter doesn’t need those duty free inputs after the exports, he may transfer his license to his colleague in need for money.

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