DUTY EXEMPTION / REMISSION SCHEMES ADVANCE … · 4 FTP 4.03 Advance Authrisati on Advance...

1

Chapter 4 – DUTY EXEMPTION / REMISSION SCHEMES ADVANCE AUTHORISATION

Sr.

No.

FTP / HBOP

Para New Provision Comments / Impact

1 FTP 4.00

Objective

Schemes under this Chapter enable duty free import of inputs for export production, including replenishment of input or duty remission.

Objective of scheme is specifically inserted.

2 FTP 4.01(b) Duty Remission Scheme.

Duty Drawback (DBK) Scheme, administered by Department of Revenue.

DEPB Scheme which is no longer applicable is removed from the scope of the Duty Remission Scheme.

3 FTP 4.02

Applicability of Policy & Procedures

Authorisation under this Chapter shall be issued in accordance with the Policy and Procedures in force on the date of issue of the Authorisation

Para Inserted for clarity. As such if the Authorisation is applied for but not issued before 1st April, 2015, the same will be governed by the new provisions. One of the major impact is to Applicants who have applied for the Annual Authorisation on Adhoc norms basis since the same is no longer allowed under the new policy.

4 FTP 4.03 Advance Authrisation

Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition,

The litigations w.r.t. consumables / oil required to be part of the / physically incorporated in the export product are put to rest by amending the provision to include the consumables / oil used in process of production.

2

Sr.

No.

FTP / HBOP


fuel, oil, catalyst which is consumed / utilised in the process of production of export product, may also be allowed

5 FTP 4.03 (b) Advance Authorisation is issued for inputs in relation to resultant product on the following basis: (i) As per Standard Input Output Norms (SION) notified (available in Hand Book of Procedures); OR (ii) On the basis of self-declaration as per paragraph 4.07 of Handbook of Procedures

The word adhoc norms is removed. This is not having any impact as in subsequent para of FTP the wording adhoc norms is used to replace with self-declared norms.

7 FTP 4.06 Advance Authorisation for Annual Requirement

Advance Authorisation for Annual Requirement shall only be issued for items notified in Standard Input Output Norms (SION), and it shall not be available in case of adhoc norms under paragraph 4.03 (b)(ii) of FTP.

Previously Annual Advance Authorisation was permitted for Adhoc norms as well, now the same is restricted to SION based applications.

8 FTP 4.06 (ii) Advance Authorisation for Annual Requirement shall also not be available in respect of SION where any item of input appears in Appendix 4-J.

Products falling under SION having input such as Spices, Drugs from unregistered sources, Penicillin, Tea Coconut oil, Silk in any form, precious metal etc. are not entitled for the Annual Advance Authorisation.

3

Sr.

No.

FTP / HBOP


9 FTP 4.09 Minimum Value Addition

(iii)For physical exports for which payments are not received in freely convertible currency, value addition shall be as specified in Appendix 4C.

Value addition in respects of Exports to Iran in India Rupees will be 15%. Export of Jewellery to Iran in Indian Rupees will also require value addition of 15%. Further value addition in case of Exports of Gems and Jewellery in other cases has been increased by percentage points ranging between 0.5 to 1%

10 FTP 4.12 Accounting of Input

(i) Wherever SION permits use of either (a) a generic input or (b) alternative input, unless the name of the specific input [which has been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, match the description in the relevant bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly with the name/description endorsed in the shipping bill.

The name / description of the input used (or to be used) in the Authorisation must match exactly with the name/description endorsed in the shipping bill incases where the SION permits generic / alternative input. Exporter needs to be careful while applying for Advance Authorisation quoting SION having generic inputs but importing specific input and consumption is also recorded with specific input. Such declaration may be considered as violation of Section 7 of FTDR Act and may also cause the problem while redeeming the Advance Authorisation.

11 FTP 4.12 (ii) In addition, if in any SION, a single quantity has been indicated against a number of inputs (more than one input), then quantities of such inputs to be permitted for import shall be

In cases where several items are used / consumed in production and single quantity is mentioned in SION, the import against the same shall be allowed in ratio of actual consumption. Indication of actual consumption in Shipping Bill is must.

4

Sr.

No.

FTP / HBOP


in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in shipping bills.

12 FTP 4.12 (iv) The above provisions will also be applicable for supplies to SEZs and supplies made under Deemed export. Details as given above will have to be indicated in the relevant Bill of Export, ARE-3, Central Excise certified Invoice / import document / document for domestic procurement/supply.

Condition of declaration of consumption in the relevant Bill of Export, ARE-3, Central Excise certified Invoice / import document / document for domestic procurement / supply for supplies to SEZ / EOU other deemed exports categories. This was already insisted for by various field officers, now brought by way of specific provision.

13 FTP 4.13 Pre-import condition in certain cases

(i) DGFT may, by Notification, impose pre-import condition for inputs under this Chapter. (ii) Import items subject to pre-import condition are listed in Appendix 4-J or will be as indicated in Standard Input Output Norms (SION).

Empowerment to DGFT to insert pre import conditions for certain Imports under Authorisation as listed under Appendix 4-J.

5

Sr.

No.

FTP / HBOP


(iii) Import of drugs from unregistered sources shall have pre-import condition.

14 FTP 4.14 Details of Duties exempted

Imports under Advance Authorisation are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, wherever applicable. However, Import against supplies covered under paragraph 7.02 (c), (d) and (g) of FTP will not be exempted from payment of applicable Anti-dumping Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any.

Transition Product Specific Safeguard Duty is also covered under exemption. Exemption of Anti-dumping duty Safeguard Duty and Transition Product Specific Safeguard Duty, if any will not be applicable to Advance Authorisation issued with respect to supply of capital goods against EPCG in addition to other 2 categories w.r.t. supply of marine freight containers and supply of goods to United Nations.

15 FTP 4.15 Admissibility of Drawback

Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid imported or indigenous inputs (not specified in the norms) used in the export product. For this purpose, applicant shall indicate clearly details of duty paid input in the application

Wordings reframed to remove the disputes with respect to drawback rate under all industry vis-à-vis Brand Rates. It is clarified that Drawback means the Brand rate of Drawback fixed by the Central Authorities.

6

Sr.

No.

FTP / HBOP


for Advance Authorisation. As per details mentioned in the application, Regional Authority shall also clearly endorse details of such duty paid inputs in the condition sheet of the Advance Authorisation.

16 FTP 4.18 Importability / Exportability of items that are Prohibited/Restricted/ STE

(i) No export or import of an item shall be allowed under Advance Authorisation / DFIA if the item is prohibited for exports or imports respectively. Export of a prohibited item may be allowed under Advance Authorisation provided it is separately so notified, subject to the conditions given therein.

Export of a prohibited item is allowed under Advance Authorisation subject to it is separately notified and the conditions therein are fulfilled.

17 FTP 4.20 Domestic Sourcing of Inputs

(i) Holder of an Advance Authorisation / Duty Free Import Authorisation can procure inputs from indigenous supplier/ State Trading Enterprise in lieu of direct import. Such procurement can be against Advance Release Order (ARO), Invalidation Letter, Back-to-Back Inland Letter of Credit.

Not Applicable for Annual Advance Authorisation. Invalidation letter to be issued in case of procurement of material against supplies to another Advance Authorization / DFIA / EPCG Authorisation holder.

7

Sr.

No.

FTP / HBOP


18 4.20 (iv) Regional Authority may issue Advance Release Order or Invalidation Letter at the time of issue of Authorisation simultaneously or subsequently.

This is a welcome move to avoid the duplication of efforts in first applying the Advance Authoristaion and then obtaining ARO / invalidation. This practice of separate application was insisted by certain regional authorities.

19 FTP 4.22 Export Obligation

(ii) In cases of supplies to turnkey projects in India under deemed export category or turnkey projects abroad, the Export Obligation period shall be co-terminus with contracted duration of the project execution or 18 months whichever is more.

In case of projects having duration less than 18 months, period for the fulfillment of EO is extended up to 18 months.

20 FTP 4.22 (iii) Export Obligation for items falling in categories of defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization or co-terminus with contracted duration of the export order whichever is more.

E.O. Period extended to 24 months for the specified categories.

21 FTP 4.23 Export Obligation Period (EOP) Extension for units

A company holding Advance Authorisation and registered with BIFR / Rehabilitation Department of State Government or any firm / company acquiring a unit holding Advance Authorisation which is under BIFR / Rehabilitation, may be

In case BIFR does not specify the EO extension period then extension period may be granted for 2 years which was previous up to 5 years.

8

Sr.

No.

FTP / HBOP


under BIFR/ Rehabilitation.

permitted export obligation extension for the Advance Authorisation(s) held by the acquired unit, as per rehabilitation package prepared by operating agency and approved by BIFR / Rehabilitation Department of State Government. If time-period upto which EO extension is to be granted is not specifically mentioned in the BIFR order, EO extension of two years from the date of expiry of EOP (including extended period) or the date of BIFR order, whichever is later, shall be granted without payment of composition fee.

22 HBOP 4.02 General Provision

(ii) Applicant shall upload documents as prescribed in ANF 4A, if any, at the time of online filing of application. No physical copy of application is required to be submitted to Regional Authority.

Paper work is done away with for application for Advance Authorisation which will ensure faster processing.

23 HBOP 4.02 (iii) In case an applicant is not able to upload any document as given in Appendix 4E electronically for

Physical submission required only in certain cases where documents cannot be uploaded for the fixation of norms.

9

Sr.

No.

FTP / HBOP


fixation of adhoc norms / standardization of norms, then only such documents may be submitted in physical form to the concerned Norms Committee in DGFT headquarters.

24 HBOP 4.05 Advance Authorisation for items which are otherwise prohibited for export

(i) Items covered under Chapter 7 and Chapter 15 of ITC (HS) Schedule 2, which is prohibited for export, may be allowed to be exported under the advance authorization scheme. Export shall be allowed subject to pre-import condition under notified SION/prior fixation of norms by Norms Committee in terms of paragraph 4.06 of Hand Book of Procedures. Import and Export would be permitted only through EDI enabled ports. (ii) The Export obligation period (EOP) of advance authorizations issued for such items shall be 90 days from the date of clearance of import consignment and no extension in EOP shall be allowed. Such import shall be subject to actual user condition and no

Since Export of prohibited items is permitted under Advance Authorisation subject to conditions mentioned in policy, procedure and fulfillment is specified.

10

Sr.

No.

FTP / HBOP


transfer of imported raw material, for any purpose, including job work, shall be permitted. In case of non-fulfilment of EO/ non-achievement of stipulated value addition, a penalty equal to five times of the CIF value of the imported material, corresponding to the shortfall in EO, shall be imposed in addition to the applicable duty and interest. Provisions of Paragraph 4.49 of Handbook of Procedures shall not be applicable in this case.

25 HBOP 4.06 Fixation of Norms

(i) In case where norms have not been notified, application in ANF 4B, along with prescribed documents, shall be uploaded online to concerned Norms Committee (NC) in DGFT headquarters for fixation of norm. Details of Norms Committees along with products groups dealt by each Norms Committee and respective email addresses for correspondence relating to norms fixation is as follows:----- (iii) The decisions of Norms

Procedure is made online which will expedite the norms fixation.

11

Sr.

No.

FTP / HBOP


Committees shall be available on the website of DGFT (http://dgft.gov.in) periodically and the applicants shall update themselves the status of norms fixation in respect of Authorisation obtained by them.

26 HBOP 4.07 Self-Declared Authorisations where SION does not exist

(ii) In case of revision / rejection, applicant shall pay duty and interest as notified by DoR within thirty days from the date of hosting of Norms Committee decision on DGFT website.:

The duty along with the interest needs to be paid within 30 days of hosting of Norms Committee decision.

27 HBOP 4.10 Advance Authorisation for applicants with multiple units

(ii) Such transfers shall not be allowed to units located in areas covered by Central Excise Notification Numbers 32/1999, 33/1999, 39/2001, 56/2002, 57/2002, 49/2003, 50/2003, 56/2003, 71/03, 8/2004 and 20/2007 and any other notification issued by DoR from time to time. (The areas presently included are Himachal Pradesh, Uttarakhand, Jammu and Kashmir, Kutch in Gujarat, Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal

Previously restriction was for transfer to the areas viz Himachal Pradesh, Uttaranchal. This is now extended to other areas.

12

Sr.

No.

FTP / HBOP


Pradesh and Sikkim). 28 HBOP 4.12

Entitlement

(a) Maximum CIF value of one or more authorisations to be issued under paragraph 4.07 of Hand Book of Procedures shall be as under: (i) For Status Holders – upto 300% of FOB and / or FOR value of preceding year’s exports and /or supplies. (ii) Other than Status Holders – upto 300% of FOB or Rs. 10 crore and / or FOR value of preceding year’s exports and/or supplies, whichever is higher.

Previously the limits were :- (i) for Status Holder – upto 500% of FOB and / or FOR value of preceding year’s exports and /or supplies. (ii) Other than Status Holders – upto 500% of FOB or Rs. 5 crore and / or FOR value of preceding year’s exports and/or supplies, whichever is higher.

29 HBOP 4.12 (vii) Wherever an applicant has applied for input on “net-to-net basis with accountability clause” and such cases fall under paragraph 4 of General Note for Engineering Products (Product Code – C), the same need not be referred to Norms Committee for fixation of norms. However, exporters shall indicate clearly details of such inputs imported on “net-to-net basis with accountability clause” in the

Documentation & details required there on are clearly stated to facilitate easy redemption in case of net-to-net basis.

13

Sr.

No.

FTP / HBOP


export/supply documents namely Shipping Bills, Bill of Exports, ARE-1, ARE-3 evidencing that these imported inputs have been exported.

30 HBOP 4.14 Application and On-line Inter-Ministerial Consultations for fixation of norms / adhoc norms

(i) Application filed online by the applicant shall be forwarded electronically to the concerned Technical / Administrative Ministry / Department / or any other agency by the respective Norms Committee in the DGFT headquarters within three days. (ii) The concerned Technical / Administrative Ministry / Department / or any other agency as the case may be, may communicate its views / comments / recommendations within 45 days electronically/online. In case no comments are received within 90 days, Norms Committee may take a view based on the facts available on record.

Complete procedure w.r.t. norms fixation is made online including inter departmental communication.

31 HBOP 4.17 Time limit for

Applicant may file representation against the decision of the Norms

Time limit is reduced to 90 days (previously 4 months) and representation beyond 90 days shall be subject to payment of composition fee of

14

Sr.

No.

FTP / HBOP


Representation

Committee with regard to the fixation of norms within a period of 90 days from the date of hosting of decision on DGFT website. Representation beyond 90 days shall be subject to payment of composition fee of Rs.5000/-.

Rs.5000/-.

32 HBOP 4.21 Maintenance of Proper Accounts

Every Advance Authorisation holder shall maintain a true and proper account of consumption and utilization of duty free imported / domestically procured inputs against each authorisation as prescribed in Appendix 4-I. This record in Appendix 4-I format, duly verified and certified by the jurisdictional Excise Authority, shall be submitted to the concerned Regional Authority at the time of filing application for redemption / bond waiver. Regional Authority shall compare the details of Appendix 4-I, with that of the inputs allowed in the authorisation, before allowing redemption or bond waiver against individual authorization. Such records shall be

Appendix 23 was required to be maintained and self-certification was necessary, no central excise certification was required. Now The Central Excise Certification is mandatory before application for redemption. This will definitely cause the issue of actual consumption reported in ERP vis-à-vis consumption reported in Shipping Bill based on SION / input allowed as per authorisation. This will be the major issue and duty demand may arise along with interest.

15

Sr.

No.

FTP / HBOP


preserved for a period of at least three years from the date of redemption.

33 HBOP 4.29 Admissibility of drawback in case of rejection of application

Customs authorities in terms of DoR rules against shipping bills filed and processed under an Advance Authorisation, in case application for an Advance Authorisation is rejected or modified by Regional Authority, may permit drawback.

This provision has been inserted to align with Board Circular issued by Customs.

34 HBOP 4.38 Facility of Clubbing of Authorisations

(v) Facility of clubbing shall not be available for Advance Authorisation for Annual Requirement.

Previously clubbing of Annual Advance authorization was allowed, the facility is not allowed for Annual Advance Authorisation.

35 HBOP 4.42 Export Obligation (EO) Period and its Extension

(c) Request for further extension of six months after first extension as in (b) above can be considered by Regional Authority, provided Authorisation holder has fulfilled minimum 50% export obligation in quantity as well as in value, on pro-rata basis. This will be subject to

There is no change in the provision with respect to first extension except that the Authorisation holder will have to submit a self-declaration to RA stating that unutilised imported / domestically procured inputs are available with the applicant. Second extension, however will be granted subject to fulfillment of minimum 50% obligation in quantity as well as in value on prorata basis. Also the extension will be subject to certificate from the independent

16

Sr.

No.

FTP / HBOP


payment of composition fee @ 0.5% per month on unfulfilled FOB value of export obligation. No further extension shall be allowed by Regional Authority. This provision shall also be applicable to Advance Authorisations issued during FTP 2009-2014. At the time of filing application for second extension, authorisation holder will have to submit a certificate to RA from an independent Chartered Accountant/Chartered Engineer certifying that unutilised imported/domestically procured inputs are available with the applicant.

Chartered Accountant/Chartered Engineer certifying that unutilised imported/domestically procured inputs are available with the applicant. This provision is also extended to authorization issued under the FTP 2009-2014.

36 HBOP 4.44 Monitoring of Export Obligation

(b) Within two months from the date of expiry of EO period, Authorisation holder shall file application online by linking details of shipping bills against the authorization. (c) Exporters shall link all exports on line on DGFT system by linking file number / authorisation number with the relevant shipping bill numbers /

Redemption process is also made online by incorporating linking process, DGFT however needs to upgrade its system and ensure compatibility with customs system to avoid the particle issue of non-visibility of the Shipping Bills on DGFT site.

17

Sr.

No.

FTP / HBOP


bill of exports / invoices in case of deemed exports on quarterly basis. (d) In case of non EDI shipping bills and supplies under deemed export, exporter shall file relevant details manually on the website of the DGFT within two months from the date of expiry of EO period. Copies of shipping bills shall be submitted to concerned Regional Authority for verification within two months from date of expiry of export obligation period. (e) e-BRC shall be linked with these shipping bills within six months from the date of expiry of export obligation/realisation or as per the time period prescribed for realization of foreign exchange by RBI. Regional Authority shall not take action for non-linking / submission of e-BRC before expiry of said period, provided other documents substantiating fulfilment of EO have been furnished by the exporter

37 HBOP 4.47 (a) Bond Waiver :- (i) For such a New process of online linking and uploading of documents needs to be

18

Sr.

No.

FTP / HBOP


Redemption / No Bond Certificate

request, an applicant has to file online application attaching Shipping Bills and e-BRC. Scanned copy of other documents as prescribed in the ANF 4F shall also be uploaded. In case of deemed exports or export from non-EDI ports, the documents evidencing proof of export/supply shall be submitted at the counter of Regional Authority concerned giving reference of online application in physical form except e-BRC.

completed before applying for Bond waiver.

19

FOREIGN TRADE POLICY ANALYSIS:

Chapter 4 Duty Free Import Authorisation (DFIA) Scheme: Policy

Sr.

No.

FTP / HBOP


1 FTP 4.25 DFIA Scheme

Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed / utilised in the process of production of export product, may also be allowed.

DFIA will not be allowed for import of fuel and energy sources. Further the litigations w.r.t. consumables / oil required to be part of the / physically incorporated in the export product are put to rest by amending the provision to clarify the inclusion of the consumables / oil used in process of production.

2 FTP 4.26 Duties Exempted and Admissibility of Cenvat and

Drawback

(i) Duty Free Import Authorisation shall be exempted only from payment of Basic Customs Duty.

(ii) Additional customs duty/excise duty, being not exempt, shall be adjusted as CENVAT credit as per DoR rules.

(ii) Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid inputs, whether imported or indigenous, used in the export product. However, in case such drawback is claimed for inputs not

Pre-export DFIA is discontinued.

DFIA will be granted on post export basis. DFIA shall be used for exemption from payment of Basic Customs duty only. As additional customs duty / excise duty (CVD) is required to be paid, cenvat will be allowed.

Drawback on duty paid input is also now allowed irrespective of imported or indigenous.

20

Sr.

No.

FTP / HBOP


specified in SION, the applicant should have indicated clearly details of such duty paid inputs also in the application for Duty Free Import Authorization, and as per the details mentioned in the application, the Regional Authority should also have clearly endorsed details of such duty paid inputs in the condition sheet of the Duty Free Import Authorization.

3 FTP 4.29 Validity &

Transferability of DFIA

(i) Applicant shall file online application to Regional Authority concerned before starting export under DFIA.

(ii) Export shall be completed within 12 months from the date of online filing of application and generation of file number.

(iii) While doing export/supply, applicant shall indicate file number on the export documents viz. Shipping Bill / Airway Bill/ Bill of Export / ARE-1 / ARE-3, Central

Restriction of 12 months for completion of export has been incorporated.

Request for transfer of DFIA can be made within a period of twelve months from the date of export or six months (or additional time allowed by RBI for realization) from the date of realization of export proceeds, whichever is later.

21

Sr.

No.

FTP / HBOP


Excise certified Invoice.

(iv) After completion of exports and realization of proceeds, request for issuance of transferable Duty Free Import Authorisation may be made to concerned Regional Authority within a period of twelve months from the date of export or six months (or additional time allowed by RBI for realization) from the date of realization of export proceeds, whichever is later.

(v) Applicant shall be allowed to file application beyond 24 months from the date of generation of file number as per paragraph 9.03 of Hand Book of Procedures.

(vi) Separate DFIA shall be issued for each SION and each port.

(vii) Exports under DFIA shall be made from a single port as mentioned in paragraph 4.37 of

22

Sr.

No.

FTP / HBOP


Handbook of Procedures.

(viii) No Duty Free Import Authorisation shall be issued for an export product where SION prescribes ‘Actual User’ condition for any input.

(ix) Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further revalidation shall be granted by Regional Authority.

DUTY EXEMPTION / REMISSION SCHEMES ADVANCE … · 4 FTP 4.03 Advance Authrisati on Advance...

Documents

Transcript of DUTY EXEMPTION / REMISSION SCHEMES ADVANCE … · 4 FTP 4.03 Advance Authrisati on Advance...