Duty Exemption & Remission Scheme

8/8/2019 Duty Exemption & Remission Scheme

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Advance Authorisation, Duty

Exemption Scheme &

Exporters



Duty Exemption & Duty Remission Scheme



FOREIGN TRADE POLICY CORRELATION WITH

Foreign Trade (D evelopment & R egulation) Ac t, 1992 Foreign Trade (R egulation) R ules, 1993

Customs Ac t, 1962

Customs Tariff Ac t, 1975

Foreign Exch ange Management Ac t, 1999

Exch ange Control R egulations

Industrial Policy R esolution, 1956

Industrial D evelopment & R egulation Act, 1951

Law of Weights & Measures

Central Ex cise

Miscellaneous



COMPOS ITION OF FORE IGN TRADE POLICY

Notifications

General Provisions

Imports

Exports

EPCG

Duty Exemption S cheme

100% EOU

S pecial Economic Zone

Deemed Exports

Definitions

Miscellaneous



DUTY EXEMPTION SCHEMECONCEPTS

Export

Import

Deemed export

Advance Authorization

Annual Advance Authorization

Intermediate Advance Authorization Duty Free Import Authorization

Duty Entitlement Passbook Scheme (D.E.P.B)

Duty Drawback

Assessable Value

Basic Duty

Additional Duty Special Additional Duty

Education Cess

Assessment

Advance Release Order

Back to back Letter of Credit



Chapter 8 : DEEMED EXPORTS

³Deemed Exports´ refers to those

transactions in which the goods supplieddo not leave the country and thepayment for such supplies is received

either in Indian rupees or in free foreignexchange.



DUTY DRAWBACK

Duty Drawback

Is a Reimbursement of

Import Duty Excise Duty

Paid on Inputs

Used in the Manufacture of ExportProducts



BRAND RATE

A I R S.B.R

DBK I, II, III



ADVANCE AUTHORISATION


Is a Facility

To Import Inputs

Used Required

In the Manufacture of Export Product

Without Payment of Import Duty

Subject to 15% Value Addition



DUTY FREE IMPORT AUTHORIZATION

Duty Free Import Authorization

q

Is A Pre / Post Export Facility

q

To Import Inputs

q

Used In Manufacturer of Export product

qWithout Payment Of Import Duty

q

Subject To 20% Value Addition



DUTY ENTITLEMENT PASSBOOKD.E.P.B

qIs Notional Credit Given

q

By Customs

q

As % of F.O.B. Value Of Exports

q

To Be Utilizedq

Against Payment Of Import Duty

q

For Any Product



ADVANCE AUTHORISATION


Is a Facility

To Import Inputs

Used Required

In the Manufacture of Export Product

Without Payment of Import Duty

Subject to 15% Value Addition



ADVANCE AUTHORIZATION SCHEME

Features

It is a Pre Export Incentive

The facility available to Merchant Exporter, Manufacturer Exporter.

The facility available to supporting Manufacturer and Co-Licensee

The Scheme provides Exemption from Basic, Additional Duty.

If any product attracts Antidumping Duty, the same too is not leviable.

15% Value Addition required.

Duty Free Import of Mandatory Spares upto 10% of CIF value of the

license permitted.



Facility available for Free of Cost material and New Comers.

The facility of prior Exports available.

Records of Utilization of Materials to be maintained under

Appendix 23.

Initial validity period of Authorization is 24 months.

The entitlement under Advance Authorization for Annual

Requirement shall be upto 300% of the FOB value of Physical

Export and /or FOR value of Deemed Exports in preceding

licensing year or Rs. 1 Crore whichever is higher.

ADVANCE LICENCE AUTHORIZATIONSCHEME



ADVANCE AUTHORISATION CORRELATION

DUTY DRAWBACK

EPCG SCHEME

DEEMED EXPORTS

FEMA ADVANCE INTERMEDIATE AUTHORISATION

ADVANCE RELEASE ORDER (ARO)

BACK TO BACK LETTER OF CREDIT

CUSTOMS

INDUSTRIAL POLICY



Admissibility of Drawback

4.1.14 (FTP)

In case of an Advance Authorization,

drawback shall be available for any duty

paid material, whether imported or

indigenous, used in goods exported, as per

drawback rate fixed by DoR, Ministry of

Finance (Directorate of Drawback).Drawback allowed shall be mentioned in

Authorization.



DUTY FREE IMPORT AUTHORIZATION

Duty Free Import Authorization

q

Is A Pre / Post Export Facility

q

To Import Inputs

q

Used In Manufacturer of Export product

qWithout Payment Of Import Duty

q

Subject To 20% Value Addition



DUTY FREE IMPORT AUTHORIZATIONFeatures

It is a P r e / Post Export Ince nt ive .

It per mits Dut y Free Import of Inputs use d in t he Ma nu f a cture of Export

Pr odu ct .

The Be ne fit is a va ila ble only a ga inst e xport of t hose pr odu cts where

SION are Fixe d.

It re qu ires a minimu m Va lue Addit ion of 20%.

Af ter f u lfillme nt of Export obligat ion, re quest for tra ns f era bilit y ca n be ma de t o t he Re giona l Aut hor it y.

No CENVAT Cre dit Fa cilit y s ha ll be a va ila ble for inputs e it her importe d

or pr ocure d indige nous ly a ga inst t he Aut hor izat ion.

The Dra wba ck s ha ll be a va ila ble in res pe ct of a ny Dut y pa id mater ia l.



DUTY ENTITLEMENT PASSBOOKD.E.P.B

qIs Notional Credit Given

q

By Customs

q

As % of F.O.B. Value Of Exports

q

To Be Utilizedq

Against Payment Of Import Duty

q

For Any Product



Features

It is a post export incentive

The minimum value addition required is 25%.

It is not subject to ¶Actual User Condition·.

No duplicate of DEPB can be issued if original is lost.

DEPB can be issued only against export of those items

where input /output norms have been notified.

The DEPB shall be valid for a period of 24 months from the

Date of Issue.

DUTY ENTITLEMENT PASSBOOK



CUSTOMS

AND ADVANCE AUTHORISATION



ORGANIZATION CHART

Minister of Finance

Secretary Finance

Secretary Revenue Secretary Expenditure

CBDT Central Board of Excise & Customs

Central Excise Customs

AppraisingPreventive

Air Sea AppealsLand



STRUCTURE OF CUSTOMS DEPARTMENTMinister of Finance

Secretary Revenue

Central Board of Excise & Customs

Commissionerates of Customs

Mumbai Kolkatta Chennai Bangalore Delhi, etc.

Principal Commissioner of Customs

Commissioner

Imp Prev.AppealsExp Cofe. Admn.

Asst. Commissioner

Appraiser Staff

Addl./ Jt. Commissioner /Dy. Commissioner

Ad j..



STRUCTURE OF CUSTOMS

TARIFFCustoms Tariff Act, 1975

Gen. Rules of Int.

(Rule 1 to 6)

Gen.Exemption(No. 1 to 132)

1st SCH Annex.

(I to XXV)

SCH - II

Sections (XXI)

Chapters

Ch. 1 to 98

Notes:1. Each section is preceded by ³Section Notes´

2. Each chapter is preceded by ³Chapter Notes´

3. Each chapter is divided into ³Headings´ & ³Sub-Headings´

4. Customs Tariff Classifications are eight digit numbers.



IMPORT DUTIES

In India Import Duties are levied pursuant to the Provisions contained

under Customs Tariff Act, 1976

Following are the types of import duties applicable:

a) Basic Import DutyThis is levied under Sec 2 of Customs Tariff Act, 1975.

b) Additional Duty / Countervailing Duty

This is levied under Sec 3 of Customs Tariff Act, 1975. It is

equivalent to the Central Excise Duty leviable on like goods

manufactured in India.

c) Special Additional Duty.

c) Education Cess.



ASSESSABLE VALUE

All Import Duties are levied based on Assessable Value

Assessable Value is the sum total of the following:

CIF Value of Import Consignment

Local Agency Commission if paid in India

Loading by Customs

1% - ´Landing Chargesµ

Other pre-importation cost

Note: All Pre Importation Costs are included for Assessable

Value purpose and all Post Importation Costs are excluded.



ADJUDICATION

STEPS

1) QUER Y MEMO

2) REPLY TO QUER Y MEMO

3) PERSONAL HEARING4) DECISION

NOTE

Conclude the reply with following 2 standard phrases:

a) We do not want Show Cause Notice

b) We are desirous of being heard in person.



SUBMISSIONS

CONTENTS

PART A - FACTS OF THE CASE

PART B ± GROUNDS



NOTIFICATION No.

93/2004-CUSTOMS DATED 10-09-2004



REDUCTION IN EXPORT DOCUMENTATION²ABOLITION OF VARIOUS

DECLARATIONS²REG.

[M.F. (DR), CIRCULAR NO. 34/2005-CUS., (F. NO. 609/132/2004-

DBK), DT.5.8.2005] .

The undersigned is directed to invite your attention to the above

mentioned subject and to say that in the wake of representations

from thetrade and industry that the present export documentation procedure

is

complex and cumbersome and that under the system the exporters

are

required to submit a large number of documents and declarations to

the

Customs, causing delays and adding to the transaction cost, the



The Sub-Committee was a multi disciplinary group and

consisted of representatives from the Customs, DGFT, RBI,

Federation of Indian Export Organizations (FIEO) and Delhi

Exporters Association. After a careful scrutiny of the export

documentation requirements under EDI system, the Sub-

Committee has found that the documents required for customs

purposes are only five viz. commercial invoice, packing list,

ARE-1, self declaration form and declarations pertaining to

various export promotion schemes. These documents are

essential documents containing vital information required for

various purposes by various agencies. The Sub-Committee has,

therefore recommended that these documents can not be



2.1. Exports under Drawback Scheme

The declarations being abolished are those relating to availing /non-availing of the

rebate of duty under Rules 18 & 19 of the Central Excise Rules, the goods

manufactured /not manufactured and exported against an Advance License, the goods

not manufactured or exported after availing of the facility under DEPB scheme, the

present market value of goods, the export value of goods being not less than the total

value of imported materials used in the manufacture of such goods, the market price

of export goods being not less than the drawback amount being claimed, the drawbackbeing claimed is more than 1% of FOB value /less than 1% of the FOB value but more

than Rs. 500 against the shipping bill, the payment of duties in respect of containers,

packing materials or other materials used in the manufacture and packing of export

products j and the goods being exported under bond or claim for rebate of duty. The

above declarations are presently listed at SI. Nos.3, 4, 5, 9, 10, 11, j 12, & 14 of

Appendix-III and SI. No. 2 of Appendix IV as prescribed vide I this office letter No.

609/99/2002-DBK dated 29.5.2002.



2.2. Exports under DEPB Scheme

The declarations being abolished are those relating to not claiming

the benefits-under Engineering Products Export (Replenishment of Iron and Steel Intermediates) Scheme and duty drawback, of

conversion of DEPB Shipping Bill into Drawback /DEEC Shipping Bill

and of credit in \ respect of additional duty debited from DEPB, the

fact of goods being; exported under DEPB Scheme, the present

market value of goods, DEPB benefits being claimed not exceeding

50% of the present market value of export goods, usage of

preservatives in export products and export products having beenobtained from aqua culture sources. The above

declarations are presently listed at SI. Nos. 2-7, 11, 12, 14 & 15 of

Annexure-F as DEPB declaration.

2 3 E t d DEEC/ DFRC S h



2.3. Export under DEEC/ DFRC Scheme

The declarations being abolished are those relating to export goods corresponding to

the goods specified in DEEC License and availing /non-availing of benefits under Rule

191-A and 191-B of the Central! Excise Rules, 1944. The said declarations arepresently listed at SI. Nos. l(a) & l(c) of the Annexure-II of the shipping bill.

3. Non EDI Stations

It is clarified that a few declarations viz. the goods manufactured /not manufactured

and exported against an Advance License, the goods not manufactured or exportedafter availing the facility under the DEPB scheme (SI. Nos. 4 and 5 of Appendix III as

prescribed by this office letter supra), not claiming the benefits under duty drawback

for exports under DEPB (SI. No. 4 of Annexure F as DEPB declaration) and the

declaration about export goods corresponding to the goods specified in DEEC License

(SI. No. l(a) of the Annexure-II of the shipping bill) for exports under DEEC/DFRC

license, although abolished in respect of exports under EDI,will continue to be filed at

non-EDI stations until such time that these stations are brought under EDI. Barring

these exceptions all declarations are abolished for exports under schemes indicated in

paragraph 3 above.



4. It is further clarified that the declaration dealing with no change in the

manufacturing formula and quantum per unit imported material (SI. No.

2 of Appendix III as prescribed by this office letter supra) is required to

be given only for fixation of brand rate of duty drawback under Rule 6 or

7 of the Drawback Rules, 1995 and, therefore, exporters need not givethis declaration for exports under claim of All Industry Rate of Duty

drawback.

5. A suitable Draft Notice and Standing Order may be issued for the

guidance of trade and staff. Difficulties faced, if any, in implementation

of the circular may be brought to the notice of the Board at an early

date.



CASE LAWS



2006(137) ECR 0299 (Tri-Mumbai)

2006 (111) ECC 0299

Manu / C M / 0299 /2006

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNALWEST ZONAL BENCH AT MUMBAI

M/s Galaxy Surfactants Ltd. and Sadanand Shetty

V/sCommissioner of Customs (EP), Mumbai

APPLICATION NO:C/S/1429 And 1471,1430 And 1470/06, 1431 And.01469/06 And Appeal No. C / 518 And 528 ,519 And 527, 520 And 526/ 06

DECIDED ON : 24.07.2006

PRIOR HISTORY: Arising out of Order in original No.(1) 06/06/CAC/CC/NRNdated 19th January,2006,passed by Commissioner of Customs (EP), Mumbai

Judges

Archana Wadhwa Member( judicial) and K.K. Agarwal, Member (Technical)



Demand ² Use of imported input ² violation of condition No. (vii) of notification No.30/97- Transfer of Impugned goods to

another unit-As also the same use in manufacture of

finished products sold in domestic market-Held ,export

obligation fulfilled ²As long as export obligation has been met it is immaterial

whether goods were first used for domestic clearances and

exports were made later on or vice versa ² As also said

material used in appellant's own unit ² No violation of condition No. (vii) of notification No. 30/97 ² Appeal allowed

² Stay petition disposed of



2005 (127) ECR 271 BOMBAYIN THE HIGH COURT OF JUDICATURE AT BOMBAY

A.V.INDUSTRIES

V/SUNION OF INDIA

Held:

EXIM ± Show Cause Notice ± Issuance ± Advance License-

Petitioner Importing Raw Material under DEEC Scheme ±Deletion of value restrictions from License ± Inadvertent lapseon part of DGFT ± On the basis of deletion, Petitioner madeimports believing that there were no value restrictions- Deletionof the condition even if a Bona fide error or misconstruction of

import policy, the Petitioner cannot be made to suffer ±Issuance of Show Cause Notice unjustified - Show CauseNotice quashed an set aside ± Respondents not entitled to takeimpugned action ± Classification does not apply to the case qualicense and import.

Ref: Cen & C:18th

October 2005 (127) p.g.271-274



2005 (127) ECR 358 (Tri. ± Chennai)

In the Customs, Excise and Service Tax Appellate Tribunal

South Zonal Bench

CC, ChennaiV/s

Sharda Castings Ltd. & Anr.

Held:

Valuation (Customs) ± Advance License- Transaction Value ± Enhancement ± Department demanded enhancement onthe basis of the custom recorded price of scrap imported andcleared through the same port ± practice of loading of price of imported goods without reference to quantity, place and time

of import has to be rejected when it is contrary to statutoryprovisions ± Transaction value has to be discarded on validgrounds ± Impugned order upheld.

Ref: Cen & C:18th October 2005 (127) p.g 358- 359



2007 (149) ECR 0026 (Tri.- Chennai)

2007 (123) ECC 0026

MANU / CE / 0026 / 2007

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,SOUTH ZONAL BENCH, CHENNAI

Seshasayee Paper and Boards Ltd.

v.

CCE, Salem

APPEAL NO: E/ 799/2006

DECIDED ON: 01.08.2007

PRIOR HISTORY : Arising out of Order-in-Original No: 6/2006 (Commissioner)dated 28th July, 2006 passed by the Commissioner of Central Excise Salem

Judges

P.G. Chacko, Member (Judicial) and P. Karthikeyan, Member (Technical)



Excise ± CENVAT ± Basic Customs Duty (BCD) ±Countervailing duty (CVD) ± DEPB license ± Rule 9(1) of

the CENVAT Credit Rules, 2004 ± Notification No. 96/04 ±Cus ± Board¶s Circular No. 59/2004 ± Cus. Dated21.10.2004 ± Appellants were manufacturers of paper andpaper boards for which they imported some of the inputson payment of Basic Customs Duty and countervailing duty

± payment of said duties were made by way of debits inDEPB License ± Respondent objected to availment of credit on two grounds ± that if a credit could be availedonly on an amount of duty paid in cash & such availmentwas not permissible in the absence of a documentspecified under Rule 9(1)- Issue ± Whether the importer was entitled to take CENVAT credit of the amount debitedin DEPB towards payment of CVD and whether suchavailment was permissible in the absence of a documentspecified under Rule 9(1)



Held, credit cannot be denied on grounds that

duty was not paid in cash ± this tantamount to

flouting condition (vi) of Notification No. 96/04 ±Cus. As also Board¶s Circulars in clarifications

thereof ± The credits in question are of the

amounts of debits recorded in the Bills of Entry

and certified by the proper officer ± It is not indispute that a Bill of Entry is one of the

documents specified under Rule 9(1) of the CCR

2004 for the purpose of availment of CENVAT

credit ± Therefore, appellants are entitled toCENVAT credit of the amounts debited in DEPB

as certified in the Bills of Entry ± Appeal allowed.



CONCLUSION

DO·S & DON·T S



DO·S & DON·T S

FOR ADVANCE AUTHORISATION

Is a preferred Export Incentive where Import content in Export Product is higher.

The quantity of inputs involved is substantial.

If it is proposed to combine Advance Autho. with Deemed Exports, the quantities to be

sourced locally must be substantial.

While deciding on Advance Autho., local purchase price must be compared with CIF

value of Import + Basic Import Duty.

At every stage transaction cost of operating under the scheme should be compared

with other Export Incentive schemes.

There should be good internal systems to track and preserve the relevant documents

from application stage to the stage of redemption.[

It is preferable if imports are effected after Export under Advance Authorisation



ADVANCE AUTHORISATION VS

ANNUAL ADVANCE AUTHORISATION

Annual Advance Autho. is preferable where the number of Advance Authos. in a

licensing year ranges from 5 to 10 Authos.

The transaction cost under Annual Advance Autho. is lower as compared to Advance

Authorization.

Annual Advance Autho. is preferable where flow of order is continuous and product of

export involved is same.

The Annual Advance Autho. is preferable where product of export and import are

standardized.

Advance Autho. is suitable where Export orders are on an ad- hoc basis.

The option of applying for Advance Autho. under self declaration basis is not available

under Annual Advance Authorization.

The flexibility in operation is more under Advance Autho. than Annual Advance

Authorization.



Advance Authorization Vs. DBK

Advance Autho. is preferable where Import content is inexcess of 25% of value of FOB value of exports

Advance Autho. is preferable where FOB value of exports ishigh

DBK is preferable where indigenous content of inputs if highin export product

DBK is preferable where FOB value of exports is lower

DBK is preferable where All Industry Rate of Drawback is

fixed. Advance Autho. is preferable where product of export is non

standardized

Advance Authorization is preferable where SION is fixed.

In case of Deemed export, DBK is preferable where product

2 42



2.42

FREE MOVEMENT OF EXPORT GOODS

Consignment of items meant for exports

shall not be withheld / delayed for any

reason by any agency of the Central / State

Government. In case of doubt the

authorities concerned may ask for anundertaking from the exporter.



2.42.1 : NO SEIZURE OF STOCK

No Seizure of Stock shall be made by any agency

so as to disrupt the manufacturing activity and

delivery schedule of Export goods. In

exceptional case, the concerned agency may

seize the stock on the basis of Prima Facie

evidence. However, such Seizure should be lifted

within 7 days

2 44



2.44REGISTRATION ± CUM ± MEMBERSHIP

CERTIFICATE

Any person applying for 1. A Authorization / Certificate / Permission to Import /

Export, [except items listed as Restricted Items in

ITC(HS)] or

2. Any other benefit or concession under this Policy shall

be required to furnish registration ² cum ² membership

certificate (RCMC) granted by the competent authority

in accordance with the procedure specified in

Handbook Vol.1unless specifically exempted under the

Policy.



ORGANISATIONS WEBSITE

Foreign Exchange

Dealers Association of

India

www.fedai.org.in

Department of Commerce & Industry www.commerce.nic.in

Foreign Trade Policy www.dgftcom.nic.in

List Of Export

Promotion Council In

India

www.indianexportersindex.

com

List Of Export

Promotion Council,

Boards etc

http://cyberjournalist.org.in/

linkst.html

USEFUL WEBSITES

W ld T d t



World Trade

Organizationwww.wto.org

Foreign Exchange

Management Actwww.femaonline.com

Reserve Bank Of India www.rbi.org.in

Federation of Indian

Chamber of Commerce &

Industry

www.ficci.com

Asian Clearing Union ±

ACUwww.asainclearingunion.org

Informative Site www.ieport.com

Country Profiles-Good

Informative Site

http://www.indianindustry.com/

country-profiles/south-africa.html

www.legallyindia.comLegal Aspects

SAARC d i



SAARC www.sdc.gov.in

International

Chamber of Commercewww.iccwbo.org

Central Board

of

Excise and Customs

http://www.cbec.gov.in

Zonal joint

Directorate General

of Foreign Trade

http://zjdgft.tn.nic.in

Indian Trade PromotionOrganization.

http://www.indiatradefair.com/index.html

Market Development

Assistant ± MDA- for

SSI Unit

http://www.laghuudyog.

com/sido/SSIMDA.Htm

Department of htt // i



Department of

Commerce ± Export

Import Data bank

http://www.commerce.nic.

in/eidb/ecomg.asp

Federation of IndianExport Organization

www.fieo.com

International Chamber

Of

Commerce ±India

www.iccindiaonline.org

World Trade Centre www.wtcmumbai.org

Department of

Scientific & Industrial

Research

Informative Site

http://dsir.nic.in/advt/dsirad1.htm

www.eximkey.com



LIST OF BOOKS RECOMMENDED

Set of Foreign Trade Policy Books ± By R. K Jain

Customs Tariff ± By R. K Jain

Customs Law Manual ± By R. K Jain

Export ± What, Where & How ± By Parasram Exports Do It Yourself ± By M. I Mahajan

Drawback Schedule ± Current Publication

DEPB Schedule ± Current Publication

Master Circular on Imports Master Circular on Exports

Customs Law Guide ± By R. Gururaj



S.M. ChaturvediS.M. Chaturvedi

Legal Legal ² ² Corporate Advisor Corporate Advisor

201,Siddhi Kanchan Vinayak Apts,201,Siddhi Kanchan Vinayak Apts,

(Opp. Mantri Venture) , Bangur Nagar , (Opp. Mantri Venture) , Bangur Nagar ,

Goregaon (W) ,MumbaiGoregaon (W) ,Mumbai-- 400 090400 090

Tel Tel -- 091091--022022--65249155, 65249155,

Mobile Mobile -- 98202841609820284160

[email protected][email protected]

Duty Exemption & Remission Scheme

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