Mayur College

8/4/2019 Mayur College

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A PROJECT REPORT

ON

ADVANCE AUTHORIZATION SCHEME

Submitted in partial fulfillment of

the requirement for

Master of Management Studies (MMS)

Name of the Name of theFaculty Guide Company Guide

ByMayur Antre Day and Date:

Roll No. B. 63

Batch of 2010-12NCRDS

STERLING INSTIUTE OF MANAGEMENT STUDIESAFFILIATED TO UNIVERSITY MUMBAI


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Advance Authorization

ACKNOWLEDGEMENT

Perseverance, inspiration, and motivation have always played a key role in the success of anyventure, but no significant achievement can be solo performance especially when starting a

project ground up. At the outset it is my duty to acknowledge with gratitude the generous

help that I have received from Indian Oil Corporation Limited. It took many very special

people to enable it and support it. Here I would like to acknowledge their precious co-

operation and express my sincere gratitude to them.

Firstly, I would like to express my sincere gratitude to Mr. Sharad Sawant for granting me

the opportunity to undertake an internship at the Indian oil Corporation Limited (Marketing

Division, Mumbai).

I am extremely thankful to Miss Sara Mathias who has assigned us mentor and has been very

supportive. She has played a great role as a coordinator.

My deep appreciation goes to Mr. Sagar Mudhole our mentor for this project. His energy,

zeal, guidance and constant support has helped us to gain lot of knowledge and helped us to

finish our project efficiently.

I would like to grab the opportunity to thanks Miss Lalitha whose patience and sincerity has

helped us in getting the right information at right time. And she over a period of time has

rendered her valuable guidance and without whose profound advice this study would not

have been completed successfully.

I, also heartily thank all the respondents for their invaluable support, time, information and

suggestions at every step of the study work, which led to the successful completion and a

worthwhile learning.Student Name:- Mayur Antre Signature

Date ..


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CERTIFICATE OF ORIGINALITY

I_____________________________________ Roll No __________________of 2010, a full

time bonafide student of first year of Master of Management Studies (MMS) Programme

of Sterling Institute of Management Studies, Nerul, Navi Mumbai, affiliated to University of

Mumbai. I hereby certify that this project work carried out by me at

_________________________________________________ the report submitted in

partial fulfillment of the requirements of the programme is an original work of mine under

the guidance of the industry mentor ____________________________________________

___________________________________________________________________________

and faculty mentor_______________________________________________________and is

not based or reproduced from any existing work of any other person or on any earlier work

undertaken at any other time or for any other purpose, and has not been submitted anywhere

else at any time.

(Faculty Mentor's Signature) (Student's Signature)

Date: Date:


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COLLEGE CERTIFICATE

By Faculty Guide

This is to certify that _________________________________(Name) a student

of______(discipline)_______from______(Institute/University) has done/is doing

his/her semester project at _________ from ___________to_____________ under

my guidance.

The project work entitled _____________________ embodies the original work

done by__________during his/her above full semester project training period.

Date:

Name of Faculty Guide Authorized Signatory

DR. Anjankumar Maiti

Position of Faculty Guide Signature

Place Your College Name with Stamp Director ( Academic Activities)


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Company Certificate


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INDEX

SRNO

TOPIC PAGENO

1

Executive Summary

3

2

INDUSTRY OVERVIEW

7

3COMPANY OVERVIEW

11

4

TAXATION in INDIA

29

5

Literature Review

35

6 Research Topic 40

7 Research Finding 61

8 Data Analysis and Interpretation 68

9 Recommendation and Suggestion 73

10 Research Objective 74

11 Conclusion 61

12 Bibliography 62


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EXECUTIVE SUMMARY

The Duty Exemption Scheme enables duty free import of inputs required for export

production.

According to Director General of Foreign Trade (DGFT), various duty exemption scheme

have been introduce by it under Foreign Trade Policy (FTP) in order to promote and

encourage more export. FTP 2009-14 aims at arrest and reverse the decliningtrend of exports

and to provide additional support especially to those sectors which have been hit badly by

recession in the developed world. It likes to set a policy objective of achieving an annual

export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the

remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be able

to come back on the high export growth path of around 25% per annum. By 2014, it is expect

to double Indias exports of goods and services.

Advance Authorization is issued to allow duty free import of inputs, which are physically

incorporated in the export product (making normal allowance for wastage). In addition, fuel,oil, energy, catalysts etc. which are consumed/utilised in the course of their use to obtain the

export product, may also be allowed under the scheme.

At present India imports about 50% of its required crude oil demand from foreign country

mainly from the Middle East Asia and Eupore. Import of crude oil is subjected to 5%

customes duty, hence by availing the survice of Advance Authorization this can be brought

down. This scheme enables you to take advantage of Duty Exemption Scheme at 15% value

addition

This project covers; the study of Advance Auhorisation at H.O. related to indirect

taxes, flow of information from the various offices and locations to the H.O. (taxation

department).


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INDIAN OIL CORPORATION LTD.


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INDUSTRY OVERVIEW

Economy of India

The Economy of India is the tenth largest in the world by nominal GDP and the fourth

largest by purchasing power parity (PPP). The country's per capita GDP (PPP) is $3,339

(IMF, 129th) in 2010. Following strong economic reforms from the post-independence

socialist economy, the country's economic growth progressed at a rapid pace, as free market

principles were initiated in 1991 for international competition and foreign investment.Despite fast economic growth India continues to face massive income inequalities, high

unemployment and malnutrition.

Oil Industry in India

An Introduction to Oil Industry in India

After the Indian Independence, the Oil Industry in India was a very small one in size and Oil

was produced mainly from Assam and the total amount of Oil production was not more than

250,000 tonnes per year.

This small amount of production made the oil experts from different countries predict the

future of the oil industry as a dull one and also doubted India's ability to search for new oil

reserves. But the Government of India declared the Oil industry in India as the core sector

industry under the Industrial Policy Resolution bill in the year 1954, which helped the Oil

Industry in India vastly.

Oil exploration and production in India is done by companies like NOC or National Oil

Corporation, ONGC or Oil and Natural Gas Corporation and OIL who are actually the oil

companies in India that are owned by the government under the Industrial Policy Rule. The
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29http://en.wikipedia.org/wiki/Per_capita_GDPhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capitahttp://en.wikipedia.org/wiki/IMFhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Income_in_Indiahttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Malnutrition_in_Indiahttp://en.wikipedia.org/wiki/Malnutrition_in_Indiahttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Income_in_Indiahttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/IMFhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capitahttp://en.wikipedia.org/wiki/Per_capita_GDPhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29


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National Oil Corporation during the 1970s used to produce and supply more than 70 percent

of the domestic need for the petroleum but by the end of this amount dropped to near about

35 percent. This was because the demand on the one hand was increasing at a good rate and

the production was declining at a steady rate.

Oil Industry in India during the year 2009-2010 fulfilled most of demand through importing

oil from multiple oil producing countries. The Oil Industry in India itself produced nearly

135 million metric tons of Oil from the year 2009-2010. The Import that is done by the Oil

Industry in India comes mostly from the Middle East Asia.

The Oil that is produced by the Oil Industry in India provides more than 35 percent of the

energy that is primarily consumed by the people of India. This amount is expected to grow

further with both economic and overall growth in terms of production as well as percentage.

The demand for oil is predicted to go higher and higher with every passing decade and is

expected to reach an amount of nearly 250 million metric ton by the year 2024.

Some of the major companies in the Oil Industry in India are:

Oil India Ltd. Indian Oil Corporation Limited Reliance industries Bharat Petroleum Corporation Limited Hindustan Petroleum


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INDIAN OIL CORP.OVERVIEW

Indian Oil Corporation Limited, or Indian Oil, is anIndianstate-owned oil and gas

company headquartered at Mumbai, India. It is Indias largest commercial enterprise, ranking

125th on the Fortune Global 500 list in 2010. Indian Oil and its subsidiaries account for a

47% share in the petroleum products market, 34.8% share in refining capacity and 67%

downstream sector pipelines capacity in India. The Indian Oil Group of Companies owns and

operates 10 of India's 19 refineries with a combined refining capacity of 65.7 million metric

tons per year.

Indian Oil operates the largest and the widest network of fuel stations in the country,

numbering about 17606 (15557 regular ROs & 2049 Kissan Sewa Kendra). It has also started

Auto LPG Dispensing Stations (ALDS). It supplies Indane cooking gas to over 47.5 million

households through a network of 4,990 Indian distributors. In addition, Indian Oil's Research

and Development Center (R&D) at Faridabad supports, develops and provides the necessary

technology solutions to the operating divisions of the corporation and its customers within

the country and abroad. Subsequently, Indian Oil Technologies Limited - a wholly owned

subsidiary, was set up in 2003, with a vision to market the technologies developed at Indian

Oil's Research and Development Center. It has been modeled on the R&D marketing arms of

Royal Dutch Shell and British Petroleum.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Natural_gashttp://en.wikipedia.org/wiki/Mumbai,_Indiahttp://en.wikipedia.org/wiki/Mumbai,_Indiahttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Indanehttp://en.wikipedia.org/wiki/Faridabadhttp://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/British_Petroleumhttp://en.wikipedia.org/wiki/British_Petroleumhttp://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/Faridabadhttp://en.wikipedia.org/wiki/Indanehttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Mumbai,_Indiahttp://en.wikipedia.org/wiki/Natural_gashttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/India


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HistoryIndian Oil began operation in 1964 as Indian Oil Company Ltd. The Indian Oil Corporation was

formed in 1964, with the merger of Indian Refineries Ltd. Feroze Gandhi was the first chairman of

Indian Oil Corporation Limited.

Indian OilCompany

Ltd 1959

IndianRefineries

Ltd.1958

Indian OilCorporationLtd

1964
http://en.wikipedia.org/wiki/Feroze_Gandhihttp://en.wikipedia.org/wiki/Feroze_Gandhi


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Products

Indian Oil is not only the largest commercial enterprise in the country it is the flagship

corporate of the Indian Nation. Besides having a dominant market share, Indian Oil is widely

recognized as Indias dominant energy brand and customers perceive Indian Oil as a reliable

symbol for high quality products and services.

Benchmarking Quality, Quantity and Service to world-class standards is a philosophy that

Indian Oil adheres to so as to ensure that customers get a truly global experience in India.Our continued emphasis is on providing fuel management solutions to customers who can

then benefit from our expertise in efficient sourcing and least cost supplies keeping in mind

their usage patterns and inventory management.

Our Retail Brand template of XtraCare(Urban), Swagat(Highway) and Kisan Seva

Kendras(Rural) are widely recognized as pioneering brands in the petroleum retail segment.

Indian Oils leadership extends to its energy brands - Indane LPG, SERVO Lubricants,

Autogas LPG, XtraPremium Branded Petrol, XtraMile Branded Diesel, XtraPower Fleet

Card, Indian Oil Aviation and XtraRewards cash customer loyalty programme.

Products

Indane Gas Auto Gas Natural Gas Petrol/Gasoline Diesel/Gas oil ATF/Jet Fuel SERVO lubricants & greases Marine Fuels & Lubricants Kerosene Bulk/Industrial Fuels Bitumen
http://www.iocl.com/products.aspxhttp://www.iocl.com/Products/Indanegas.aspxhttp://www.iocl.com/Products/AutoGas.aspxhttp://www.iocl.com/Aboutus/NaturalGas.aspxhttp://www.iocl.com/Products/Gasoline.aspxhttp://www.iocl.com/Products/HighSpeedDiesel.aspxhttp://www.iocl.com/Products/AviationTurbineFuel.aspxhttp://www.iocl.com/Products/LubesGreases.aspxhttp://www.iocl.com/Products/LubesGreases.aspxhttp://www.iocl.com/Products/Marinefuels.aspxhttp://www.iocl.com/Products/SuperiorKeroseneOil.aspxhttp://www.iocl.com/Products/BulkIndustrialFuel.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/BulkIndustrialFuel.aspxhttp://www.iocl.com/Products/SuperiorKeroseneOil.aspxhttp://www.iocl.com/Products/Marinefuels.aspxhttp://www.iocl.com/Products/LubesGreases.aspxhttp://www.iocl.com/Products/AviationTurbineFuel.aspxhttp://www.iocl.com/Products/HighSpeedDiesel.aspxhttp://www.iocl.com/Products/Gasoline.aspxhttp://www.iocl.com/Aboutus/NaturalGas.aspxhttp://www.iocl.com/Products/AutoGas.aspxhttp://www.iocl.com/Products/Indanegas.aspxhttp://www.iocl.com/products.aspx


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Petrochemicals Special Products

Group companies and joint ventures

Indian Oil Technologies Ltd: Indian Oil Technologies Ltd. is the marketing arm ofIOCL which markets the entire range of technologies developed at the Indian Oil

R&D Centre, Faridabad. Indian Oil Technologies Ltd. headquarters is located at the

Indian Oil R&D Centre.

Indian Oil (Mauritius) Ltd. Lanka IOC PLC - Group company for retail and storage operations in Sri Lanka. It is

listed in the Colombo Stock Exchange. It was locked into a bitter subsidy payment

dispute with Sri Lanka's Government which has since been resolved.[citation needed]

IOC Middle East FZE Chennai Petroleum Corporation Limited Green Gas Ltd. - a joint venture with Gas Authority of India Ltd. for city-wide gas

distribution networks.

Indo Cat Pvt. Ltd., with Intercat, USA, for manufacturing 15,000 tonnes per annum ofFCC (fluidised catalytic cracking) catalysts & additives in India.

Indian Oil - CREDA Biofuels Ltd.A joint venture with Chattisgarh government forproduction and marketing of Bio-fuels.

Numerous exploration and production ventures with Oil India Ltd., Oil and NaturalGas Corporation
http://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/Bitumen.aspxhttp://www.iocl.com/Products/PetrochemicalsSpecialities.aspxhttp://www.iocl.com/Products/SpecialProducts.aspxhttp://en.wikipedia.org/wiki/Faridabadhttp://en.wikipedia.org/wiki/Mauritiushttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Colombo_Stock_Exchangehttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Chennai_Petroleum_Corporation_Limitedhttp://en.wikipedia.org/wiki/GAILhttp://en.wikipedia.org/w/index.php?title=Intercat&action=edit&redlink=1http://en.wikipedia.org/wiki/Oil_India_Ltd.http://en.wikipedia.org/wiki/Oil_and_Natural_Gas_Corporationhttp://en.wikipedia.org/wiki/Oil_and_Natural_Gas_Corporationhttp://en.wikipedia.org/wiki/Oil_and_Natural_Gas_Corporationhttp://en.wikipedia.org/wiki/Oil_and_Natural_Gas_Corporationhttp://en.wikipedia.org/wiki/Oil_India_Ltd.http://en.wikipedia.org/w/index.php?title=Intercat&action=edit&redlink=1http://en.wikipedia.org/wiki/GAILhttp://en.wikipedia.org/wiki/Chennai_Petroleum_Corporation_Limitedhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Colombo_Stock_Exchangehttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Mauritiushttp://en.wikipedia.org/wiki/Faridabadhttp://www.iocl.com/Products/SpecialProducts.aspxhttp://www.iocl.com/Products/PetrochemicalsSpecialities.aspx


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International rankings

Indian Oil is the highest ranked Indian company in the Fortune Global 500 listing, 125th

position in 2010. It is also the 18th largest petroleum company in the world and the number

one petroleum trading company among the National Oil Companies in the Asia-Pacific

region. IOCL was featured on the 2010 Forbes Global 2000 at position 313. It is fifth most

valued brand in India according to an annual survey conducted by Brand Finance and The

Economic Times in 2010.

Loyalty programs

XTRAPOWER Fleet Card Program is aimed at Large Fleet Operators. Currently it has 1

million customer base. XTRAREWARDS is a recently launched loyalty program for retail

customers where customers can earn reward points on their purchases.in the org

Competitors

Indian Oil Corporation has two major domestic competitors,Bharat Petroleum and

Hindustan Petroleum. Both are state-controlled, like Indian Oil Corporation. There are two

private competitors,Reliance Industries andEssar Oil.Other competitors are coming faster.

Concerns

The volatility in the crude market & subsidy burden on the IOCL has dented the company

performance like other PSU oil companies. This is also reflected in its FORTUNE rating thisyear. Moreover, bureaucratic hurdles in projects are hurting company advancement. IOCL

has one of the best technical manpower for execution of jobs.
http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Bharat_Petroleumhttp://en.wikipedia.org/wiki/Bharat_Petroleumhttp://en.wikipedia.org/wiki/Hindustan_Petroleumhttp://en.wikipedia.org/wiki/Hindustan_Petroleumhttp://en.wikipedia.org/wiki/Reliance_Industrieshttp://en.wikipedia.org/wiki/Reliance_Industrieshttp://en.wikipedia.org/wiki/Essar_Oilhttp://en.wikipedia.org/wiki/Essar_Oilhttp://en.wikipedia.org/wiki/Essar_Oilhttp://en.wikipedia.org/wiki/Essar_Oilhttp://en.wikipedia.org/wiki/Reliance_Industrieshttp://en.wikipedia.org/wiki/Hindustan_Petroleumhttp://en.wikipedia.org/wiki/Bharat_Petroleumhttp://en.wikipedia.org/wiki/Forbes_Global_2000


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Comparison of IOCL with its main Competitor

Parameters IOCL HPCL Advantage -IOCL

Size Largest Second largest More resources that can be utilize

Employees 36,217 11,246 Excellent potential in HR

Revenue 51.81Billion (USD) 31.7 Billion(USD ) Very high shareholder value

Patents 195 including 48 US

patents

Not known. Greater opportunity to develop

new products

Refineries 10 4 Long term supply of petroleum

products.

Pipeline 9,300 km 1054 kilometres Fast distribution of products

Overseas

presence

Present independently in

3 countries

Not present

independentlyA greater market for its products

Availability

of raw

materials

Very high due to large

number of refineries and

very good distribution

system

Access to raw

material is limited

The cost involved in the

transportation of the goods is

saved to a great extent.


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Indian Oil ProductsFuels & Feedstock Lubricants &

GreasesPetrochemicals &Specialties

Other Products

Naphtha Automotive

Lubricating Oils

Benzene Liquefied

Petroleum Gas

Light Diesel Oil Automotive Specialty

Oils

Calcined Petroleum

Coke

High Speed Diesel/

Gas Oil

Furnace Oil/ LSHS/

HHS

Railroad Oils Hexane Motor Spirit/

Gasoline

Industrial Lubricating

Oils

Jute Batching Oil Aviation turbine

fuel/ Jet Kerosene

Metal Working Oils Paraffin &

Microcrystalline

Waxes

Superior Kerosene

Oil/ KERO


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Objectives

To serve the national interests in oil and related sectors in accordance and consistent

with Government policies.

To ensure maintenance of continuous and smooth supplies of petroleum products byway of crude oil refining, transportation and marketing activities and to provide

appropriate assistance to consumers to conserve and use petroleum products

efficiently.

To enhance the country's self-sufficiency in crude oil refining and build expertise inlaying of crude oil and petroleum product pipelines.

To further enhance marketing infrastructure and reseller network for providingassured service to customers throughout the country.

To create a strong research & development base in refinery processes, productformulations, pipeline transportation and alternative fuels with a view to

minimizing/eliminating imports and to have next generation products.

To optimise utilisation of refining capacity and maximize distillate yield and grossrefining margin.

To maximise utilisation of the existing facilities for improving efficiency andincreasing productivity.

To minimise fuel consumption and hydrocarbon loss in refineries and stock loss inmarketing operations to effect energy conservation.

To earn a reasonable rate of return on investment.


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To avail of all viable opportunities, both national and global, arising out of theGovernment of Indias policy of liberalisation and reforms.

To achieve higher growth through mergers, acquisitions, integration anddiversification by harnessing new business opportunities in oil exploration &

production, petrochemicals, natural gas and downstream opportunities overseas.

To inculcate strong core values among the employees and continuously update skillsets for full exploitation of the new business opportunities.

To develop operational synergies with subsidiaries and joint ventures andcontinuously engage across the hydrocarbon value chain for the benefit of society at

large.

Obligations

Towards customers and dealers:- To provide prompt, courteous and efficientservice and quality products at competitive prices.

Towards suppliers:- To ensure prompt dealings with integrity, impartiality andcourtesy and help promote ancillary industries.

Towards employees:- To develop their capabilities and facilitate their advancementthrough appropriate training and career planning. To have fair dealings with


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recognised representatives of employees in pursuance of healthy industrial relations

practices and sound personnel policies.

Towards community:- To develop techno-economically viable and environment-friendly products. To maintain the highest standards in respect of safety, environment

protection and occupational health at all production units.

Towards Defence Services:- To maintain adequate supplies to Defence and other

para-military services during normal as well as emergency situations.

Financial Objectives

To ensure adequate return on the capital employed and maintain a reasonable annualdividend on equity capital.

To ensure maximum economy in expenditure. To manage and operate all facilities in an efficient manner so as to generate adequate

internal resources to meet revenue cost and requirements for project investment,

without budgetary support.

To develop long-term corporate plans to provide for adequate growth of theCorporations business.

To reduce the cost of production of petroleum products by means of systematic costcontrol measures and thereby sustain market leadership through cost competitiveness.

To complete all planned projects within the scheduled time and approved cost.


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Managerial Hierarchy in IOCLIndian Oils workforce isplaced in two cadres, i.e. Officers and Staff. The Officers

hierarchy is as follows:

Managerial hierarchy at IOCL

Grade A Officer

Grade B Assistant Manager

Grade C Deputy Manager

Grade D Manager

Grade E Senior Manager

Grade F Chief Manager

Grade G Deputy General Manager

Grade H General Manager

Grade I Executive Director/ Director/ Chairman

The Staff Cadre consists of the following:

White Collar Workmen (WCW) They are generally placed in Administrative Offices andlook after office functions ranging from typing, stenography, filing, accounts, maintenance andtechnical assistance to officers etc.

Blue Collar Workmen (BCW) They function from operating locations. Their designationsrange from chargeman to khalasi, operator, driver, forklift operator, etc.

Both WCW and BCW fall in Six GradesGRADE I to GRADE VI in Marketing Division

and in Eight GradesGRADE I TO VII in Refineries and Pipelines Division.

Employee strength - 33,04 There are 2,316 women employees, constituting 7.71% of the total

manpower.


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Set up of Indirect Tax at Indian Oil Corporation

EXECTIVE DIRECTOR

GENERAL MANAGER

DGM

Mana er

HEAD OFFICE

4 Regional

offices

4 Regional

offices

CHIEF/SENIOR

MANAGER

15 STATE

OFFICES


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COPORATE OFFICE

NEW DELHI

HEAD OFFICE

MUMBAI

REGIONS

Northern Region

Western Region

Eastern Region

STATE

OFFICES

DECISION

MAKER

ADVISORY

BOARD

DEAL

WITH

EXCISE

ISSUES

DEAL WITH

SALES TAX

ISSUES AND

DISTRIBUTE

CREDIT OF

SERVICE TAX


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FUNCTION OF TAX GROUP AT IOCLThe taxation department at IOCL is engaged performing varied functions which are related tohandling the internal and external aspects affecting the working.

The various functions of the taxation department are being performed aligned with the

external factors like government policy, laws and henceforth. The various functions of the

taxation department are as follows:

Change Implementation

Regulatory Changes

The basic function includes updating the departments with changes. Communicated through

the notifications issued by the regulatory authorities and then implement them in the working

as in effect with the complying date.

Example - Any modification or changes made in the act by law, obligatory for the

organization will be communicated by the H.O. to all the requisite locations, offices and

regions.

Change in Business Operations

The changes in the business regulations made due to the decision made by the high level

management needs to be updated and incorporated in the working immediately.

Tax Compliance: The department is also liable to abide by the tax compliances issued by

the regulatory authorities in relation to the accounting, calculating and filling of the related

effective indirect tax applicable to IOCL.

Litigation Management: There are various incidences and cases where various litigation

arises in context with various laws and provinces related to the state laws and the central

laws. Therefore it is the function of the taxation department to manage these litigation.


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Environmental Scanning: For dealing with various litigation tax department has to do

environmental scanning, procedurally:

Review of each case. Analyze the pros & cons of each case Identify the course of actions Strategizing the actions to be taken Execute the strategies for achieving the desired objective.

Tax Planning: The main basic function of the taxation department is to analyze the working

of the corporation in order to formulate an effective tax plan so as to facilitate easy

formulation of methods for accounting taxation to be followed by all the state and location

offices.

Responsibility Centre: The core function of the tax department is to act as a responsibility

centre for the whole corporation on various issues.

All Taxation Issues- Head Office Excise, Customs & Sales Tax - Regional Office Sales Tax and Other Local Levies - State Offices


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SWOT Analysis for IOCLInternal environmentStrengths

IOC controls 12 refineries, by virtue of which it has a total share of around 40% ofIndias overall refining capacity. IOC has also acquired equity stakes in CPCL and

BRPL, and in 2001, these refineries became subsidiaries of IOC. 58% ofIOCs refining capacity is located in the Northern and Western regions, which

are high demand and high growth areas.

Although its refineries are located the interior of the country, and not near the majorports IOC has a very strong distribution network by virtue of having a share of 48%

in the countrys product pipelines. The total capacity of these product pipelines is

49.79 MMT.

IOC also acquired management control of the marketing company IBP, therebystrengthening its position in these activities. It also has a dominant share in all

segments in terms marketing infrastructure. Its network includes 19830 retail outlets,

8000 LPG distributors, and 6492 kerosene/LDO dealers. By virtue of entering into extensive joint venture agreements, and of its own initiative

as well, the company has a presence in various other related activities such

aspetroleum storage, pipelines, lube additives, exploration, petrochemicals, gas,

training and consultancy, etc.

The company has already entered overseas markets such as Sri Lanka, Maldives, andOman and is presently considering entering Turkey through a JV. The company is in

talks with Caliak of Turkey to set up a 10 million TPA grassroot refinery with an

investment of $2 billion and establish retail business. IOC is also weighing the

possibility of entering Indonesia.


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Weakness

The company is the market leader in the industry, but still it had many

weaknesses.

The major weakness for the company is the R&D. The company starts working on it. The petrochemical product development technology is another weakness for the

company.

The technological drawback, as compared to some major foreign player is anotherweakness for the company.

External environmentOpportunityThe IOCL has much opportunity in the present market conditions. This is because the

petroleum products are become a need for everyone and still contains a lot of Scope for

customization.

Since the company has the maximum no. Of out lets and also the maximum no. Ofrefineries in India, it can very easily go for extension at any point of time, and can

introduce any new products, which will get support from its huge market network.

The company can make the buying process more easy for the customers, by implyingmany more schemes in the range of XTRAPOWER AND XTRAREWARD.

The company can think over the issue to build its own pipelines, so that it will be aindependent player and it will also support its aviation fuel supply.

Company have a great scope in E&P. It is already involves in E&P but only in a verylimited scale.


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ThreatsSince the company is the market leader in the field , so have maximum threats

from the other players and many other issues.

The foreign players with more advanced technology are the biggest treat for thecompany.

The crude oil supply is also a big issue in front of the company, because the companycannot fix its price and so, some time had operate in loss also. it is the biggest

problem because the maximum part of their crude is been imported.

In future the market will welcome more private players, which will eat up its marketshare.

If the Govt. Policies allow the private players to set their own price, the privateplayer can seriously harm the market share of IOCL.


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TAXATION in INDIA

India has a well developed tax structure with a three-tier federal structure, comprising the

Union Government, the State Governments and the Urban/Rural Local Bodies. The power to

levy taxes and duties is distributed among the three tiers of Governments, in accordance with

the provisions of the Indian Constitution. The main taxes/duties that the Union Government

is empowered to levy are Income Tax (except tax on agricultural income, which the State

Governments can levy), Customs duties, Central Excise and Sales Tax and Service Tax. The

principal taxes levied by the State Governments are Sales Tax (tax on intra-State sale ofgoods), Stamp Duty (duty on transfer of property), State Excise (duty on manufacture of

alcohol), Land Revenue (levy on land used for agricultural/non-agricultural purposes), Duty

on Entertainment and Tax on Professions & Callings. The Local Bodies are empowered to

levy tax on properties (buildings, etc.), Octroi (tax on entry of goods for use/consumption

within areas of the Local Bodies), Tax on Markets and Tax/User Charges for utilities like

water supply, drainage, etc.

Since 1991 tax system in India has under gone a radical change, in line with liberal economic

policy and WTO commitments of the country. Some of the changes are:

Reduction in customs and excise duties Lowering corporate Tax Widening of the tax base and toning up the tax administration


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Types of TAX

1. Direct Tax.

2. Indirect Tax

1. Direct Tax

The term direct tax generally means a tax paid directly to the government by the

persons on whom it is imposed.

In the general sense, a direct tax is one paid directly to the government by the persons

(juristic or natural) on whom it is imposed (often accompanied by a tax return filed by

the taxpayer). Examples include some income taxes, some corporate taxes, and

transfer taxes such as estate (inheritance) tax and gift tax. In this sense, a direct tax is

contrasted with an indirect tax or "collected" tax (such as sales tax or value added tax

(VAT)); a "collected" tax is one which is collected by intermediaries who turn over

the proceeds to the government and file the related tax return. Some commentators

have argued that "a direct tax is one that cannot be shifted by the taxpayer to someone

else, whereas an indirect tax can be.
http://en.wikipedia.org/wiki/Juristic_personhttp://en.wikipedia.org/wiki/Natural_personhttp://en.wikipedia.org/wiki/Income_taxhttp://en.wikipedia.org/wiki/Corporate_taxhttp://en.wikipedia.org/wiki/Transfer_taxhttp://en.wikipedia.org/wiki/Indirect_taxhttp://en.wikipedia.org/wiki/Sales_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Sales_taxhttp://en.wikipedia.org/wiki/Indirect_taxhttp://en.wikipedia.org/wiki/Transfer_taxhttp://en.wikipedia.org/wiki/Corporate_taxhttp://en.wikipedia.org/wiki/Income_taxhttp://en.wikipedia.org/wiki/Natural_personhttp://en.wikipedia.org/wiki/Juristic_person


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2. Indirect Tax

The term indirect tax has more than one meaning.

In the colloquial sense, an indirect tax (such as sales tax, a specific tax [a tax per unit], value

added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary

(such as a retail store) from the person who bears the ultimate economic burden of the tax

(such as the consumer). The intermediary later files a tax return and forwards the taxproceeds to government with the return. In this sense, the term indirect tax is contrasted with

a direct tax which is collected directly by government from the persons (legal or natural) on

which it is imposed. Some commentators have argued that "a direct tax is one that cannot be

shifted by the taxpayer to someone else, whereas an indirect tax can be."

An indirect tax may increase the price of a good so that consumers are actually paying the tax

by paying more for the products.Examples would be fuel, liquor, and cigarette taxes. An

excise duty on motor cars is paid in the first instance by the manufacturer of the cars;

ultimately the manufacturer transfers the burden of this duty to the buyer of the car in form of

a higher price. Thus, an indirect tax is such which can be shifted or passed on. The degree to

which the burden of a tax is shifted determines whether a tax is primarily direct or primarily

indirect. This is a function of the relative elasticity of the supply and demand of the goods or

services being taxed.
http://en.wikipedia.org/wiki/Sales_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Elasticity_%28economics%29http://en.wikipedia.org/wiki/Elasticity_%28economics%29http://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Value_added_taxhttp://en.wikipedia.org/wiki/Sales_tax


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Types of indirect tax

1. Value Added Tax / Sales Tax2. Service Tax3. Custom Excise4. Entry Tax

1.Value Added Tax / Sales TaxIndia does not have a classic Value Added Tax (VAT) structure. Instead, separate tax on sale

of goods and on rendering of services is imposed under different legislations. Sale and

purchase of goods is subjected to charge of sales tax. Sales tax is levied under Central and

State Sales Tax legislations depending upon the movement of goods in pursuance of a sale

transaction. If the transaction involves movement of goods from one state to another (inter-

state), the tax is levied under Central Sales Tax Act (CSTA), 1956.

This Act also covers transactions of import of goods into or export of goods out of India.

Sales tax is not imposed on import of goods into the country or export of goods out of the

country. The Central Sales Tax (CST) Act is administered by the state governments and the

tax is levied at the origination of transaction (origin based levy). The revenue collected under

Central Sales Tax Act is retained by the state governments. The rates of tax under Central

Sales Tax Act vary from state to state and product to product. The standard rate of CST is 4

per cent or the lower rate applicable in the state of seller if the purchaser is purchasing the

same for resale or for use in manufacture of goods for sale or for specified purposes and both


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the seller and buyer are registered dealers. Otherwise, the rate is higher of 10 per cent or the

rate applicable in the state of sale.

2.Service TaxIt is an indirect tax. Service tax is a tax on services provided .The provisions of service tax

are contained in chapter V of the Finance Act, 1994 and administered by the Central Excise

Department. The word Service is not defined in Finance Act, 1994.

Applicability of Service Tax:

The Act extends to whole of India except the state of Jammu and Kashmir. Service tax not applicable on Export of services, subject to Conditions given in Export of

service rules, 2005.

3.Custom ExciseCustoms duties are levied on import of goods into India at the rates specified in the Customs

Tariff Act, 1975. The effective rates of customs duties may vary pursuant to general and / or

specific exemption or concession notifications issued by the government in this regard.

Custom excise duty in India currently comprises the following:

Basic Customs Duty (BCD) - The rate varies for different items from 5% to 40%.

Countervailing Duty (CVD) - This duty is equivalent to central excise duty leviable on a

like product manufactured in India. Current rate applicable to majority of the industrial

products is 16 per cent plus 2 per cent education cess, taking the effective rate to 16.32 per

cent. This duty is calculated on the value of product + basic customs duty.

Additional Duty of Customs (ADC) - This duty is levied to countervail the sales tax, value-

added tax, local taxes and other charges leviable on the like goods on their sale or purchase

or transportation in India. Presently, this duty is levied at 4 per cent on certain items viz

items bound under the Information Technology (IT) Agreement and on specified inputs /


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raw materials for manufacture of electronic / IT goods. This duty is levied on value of

product +basic customs duty + countervailing duty.

Education Cess - This cess is levied at 2 per cent on the amount of BCD +CVD.

In addition, government also levies anti-dumping and safeguard duties on specified products

for specified periods. "Value" for the purpose of levy of customs duty is "transaction value"

in the course of international trade in arm's length unrelated party transaction.

Import-Export Policy

Import of goods into and export from India is regulated by the Foreign Trade Policy (the

Policy) issued from time to time by Government of India. The Policy remains in force for

five years and is amended from time to time. The Policy currently in force is for tax year

2009-014. Majority of goods are now freely importable.

4.Entry TaxStamp Duty

Stamp duty is imposed on execution of specified instruments. The levy is governed by the

Indian Stamp Act, 1899 or the State Stamp Acts. Some states have enacted separate

legislations, whereas some have adopted Indian Stamp Act with or without modifications.

The rates vary from state to state.

Research and Development Cess

A research and development cess is a special levy on all payment made for the purchase oftechnology from abroad, including royalty payments, payments for technicians, lump sum

payments, and payments for design and drawings.

Local Property Taxes

Property tax is payable as per local municipal laws on commercial and residential property


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LITERATURE REVIEW

Foreign Trade Policy (2009-2014)

Legal Framework

Summary of Foreign Trade Policy 2009-14

Enhanced insurance coverage and exposure for exports through ECGC (Export Credit

Guarantee Corporation) schemes has been ensured till March 31, 2014. It has also been

decided to continue with the interest subvention scheme for this purpose. The plan is to

encourage value addition in manufactured exports and towards this end, the government has

stipulated a minimum 15 per cent value addition on imported inputs under Advanced

Authorization Scheme.

The new policy has decided to give special focus to new emerging markets to make Indian

exports more competitive. Additional resources have been made available under the Market

Development Assistance Scheme and Market Access Initiative Scheme. Additionally,

incentive schemes are being rationalised to identify leading products which would catalyse

the next phase of export growth. The new policy also seeks to promote Brand India through

six or more `Made in India shows across the world every year.

The Foreign Trade Policy 2009-2014 (FTP), incorporating provisions relating to export and

import of goods and services, shall come into force with effect from 27 th August, 2009 and


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shall remain in force upto 31 st March, 2014 unless otherwise specified. All exports and

imports

Upto 26th August 2009 shall be accordingly governed by the FTP 2004-2009.

In case an export or import that is permitted freely under FTP is subsequently subjected to

any restriction or regulation, such export or import will ordinarily be permitted

notwithstanding such restriction or regulation, unless otherwise stipulated, provided that

shipment of export or import is made within original validity with respect to available

balance and time period of an irrevocable commercial letter of credit, established before date

of imposition of such restriction.

However for operationalizing such irrevocable commercial letter of credit the applicant shall

have to register the Letter of Credit and contract with the concerned RA within 15 days of the

issue of any such restriction or regulation.

The short term objective of FTP policy is to arrest and reverse the declining trend of exports

and to provide additional support especially to those sectors which have been hit badly by

recession in the developed world. Government likes to set a policy objective of achieving an

annual export growth of 15% with an annual export target of US$ 200 billion by March

2011. In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country

should be able to come back on the high export growth path of around 25% per annum.

By 2014, expect to double Indias exports of goods and services. The long term policy

objective for the Government is to double Indias share in global trade by 2020.


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LITERATURE REVIEW SOURCE

FTP (2009-14) Hand Book v1and v2 FTP(2004-09) BOOK ON FOREIGN TRADE POLICY By V S Datey (IOCL LIBRARY) Indirect taxation By SS Gupta IOCL internal circulars
http://www.infibeam.com/Books/search?author=V%20S%20Dateyhttp://www.infibeam.com/Books/search?author=V%20S%20Datey


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EXPORT AND TRADING HOUSES

Eligibility for Export and Trading Houses Status

Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units

(EOUs) and Unitslocated in Special Economic Zones (SEZs), Agri Export Zones (AEZs),

Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and

Bio-Technology Parks (BTPs) shall be eligible for status.

Status Category:

Applicant shall be categorized depending on his total FOB (FOR - for deemed exports)

export performance during current plus previous three years (taken together) upon exceeding

limit below. For Export House (EH) Status, export performance is necessary in at least two

out of four

Years (i.e., current plus previous three years).

Status Category Export Performance

FOB / FOR Value

(Rupees in Crores

Export House (EH) 20 20

Star Export House (SEH) 100


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Trading House (TH) 500

Star Trading House (STH) 2500

Premier Trading House (PTH) 7500

Privileges of Export and Trading House Status Holders

A Status Holder shall be eligible for privileges as under:

(i) Authorization and Customs Clearances for both imports and exports on self-declaration

basis;

(ii) Fixation of Input-Output norms on priority within 60days;

(iii) Exemption from compulsory negotiation of documents through banks. Remittance /

Receipts, however, would be received through banking channels;

(iv) 100% retention of foreign exchange in EEFC account;

(v) Exemption from furnishing of BG in Schemes under FTP;

(vi) SEHs and above shall be permitted to establish Export Warehouses, as per DoR

guidelines.

(vii) For status holders, a decision on conferring of ACP Status shall be communicated by

Customs within 30 days from receipt of application with Customs.

(viii)As an option, for Premier Trading House (PTH), the average level of exports under

EPCG Scheme shall be the arithmetic mean of export performance in last 5 years, instead of

3 years.


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RESEARCH TOPIC

DUTY EXEMPTION & REMISSION SCHEMES

Schemes

A. Duty Exemption SchemeThe Duty Exemption Scheme enables duty free import of inputs required for export

production. An Advance Authorization is issued under Duty Exemption Scheme.

Duty Exemption Scheme consists of

(a) Advance Authorization Scheme and

(b) Duty Free Import Authorization Scheme (DFIA).

B.Duty Remission SchemeA Duty Remission Scheme enables post export replenishment/ remission of

duty on inputs used

in the export product. Duty Remission scheme consist of

(a) DFRC (Duty Free Replenishment Certificate)

(b) DEPB (Duty Entitlement Pass Book Scheme) and

(c) DBK (Duty Drawback Scheme).


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Value Addition

A.Pre Export value addition calculationValue addition (VA) is calculated as:

A - B

VA = ----------- x 100, where

B

A = FOB value of export realised

B = CIF value of inputs covered by Authorization,

B.Pre import value addition calculationValue addition (VA) is calculated as:

A - B

VA = ----------- x 100, where

BA = FOR value of supply

received.

B = CIF value of inputs covered by Authorization,


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DUTY EXEMPTION SCHEMES

(a) Advance Authorization Scheme

Advance Authorization is issued to allow duty free import of inputs. It is a Pre Export Incentive. The facility available to Merchant Exporter, Manufacturer Exporter. The Scheme provides Exemption from Basic, Additional Duty.

Advance Authorization is issued to allow duty free import of inputs, which are

physically incorporated in the export product (making normal allowance for

wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed/utilised in

the course of their use to obtain the export product, may also be allowed under the

scheme.

Duty free import of mandatory spares upto 10% of the CIF value of the Authorization

which are required to be exported/ supplied with the resultant product may also be

allowed under Advance Authorization.


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Advance Authorizations are issued on the basis of the inputs and export items given

under SION. However, they can also be issued on the basis of Adhoc norms or self

declared norms. Advance Authorization can be issued either to a manufacturer

exporter or merchant exporter tied to supporting manufacturer(s):

i) For Physical exports (including exports to SEZ); and/ or

ii) For Intermediate supplies.

Advance Authorization can also be availed by the sub-contractor of the main

contractor to such project provided the name of the sub contractor(s) appears in the

main contract.

Such Authorization can also be issued for supplies made to United Nations

Organisations or under the Aid Programme of the United Nations or other

multilateral agencies and paid for in free foreign exchange.

Advance Authorization is issued for duty free import of inputs subject to actual user

condition. Such Authorizations are exempted from payment of basic customs duty,

additional customs duty, education cess, anti dumping duty and safeguard duty, if

any. Advance Authorization and/or materials imported there under shall not be

transferable even after completion of export obligation. However, the Authorizatione

will have the option to dispose off the product manufactured out of the duty free

inputs once the export obligation is completed.


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Advance Authorizations is issued only if with a positive value addition.

Advance Authorization shall be issued in accordance with the Policy and procedure

in force on the date of issue of Authorization.

The validity period of advance Authorization for export is 24 months from the date of

issue of advance Authorization.

The facility of Advance Authorization shall also be available where some or all of the

inputs are supplied free of cost to the exporter.

In such cases, for calculation of value addition, the notional value of free of cost

inputs along with value of other duty-free inputs shall be taken into consideration.

Export Obligation

The period for fulfilment of the export obligation under Advance Authorization is 24

moths from the date of issue of advance Authorization

Request for extension in EOP may be made in ANF 4E. RA shall grant one extension for

six months from expiry date with payment of composition fee of 2% of duty saved on all

unutilized imported items as per Authorization.

Request for a further extension of six months may be considered by RA with payment of

composition fee of 5% of duty based on all unutilized imported items as per

Authorization


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Provision for BIFR units

Any firm/company registered with BIFR or any firm/ company acquiring a unit,

which is under BIFR, shall be allowed EOP extension as per the rehabilitation

package prepared by the operating agency subject to subsequent approval of BIFR.

However, in cases where the rehabilitation package does not specify the EOP

extension period, a time period upto 5 years reckoned from the date of issue of

Authorization would be permitted on merits of the case for fulfillment of export

obligation.

Similarly, SSI units shall also be entitled for similar facility as per the rehabilitation

scheme of the concerned State government. However, in cases where the State

rehabilitation scheme does not specify the export obligation extension period, a time

period upto 5 years reckoned from the date of issue of Authorization would be

permitted on merits of the case for fulfillment of export obligation.

Export Obligation Period Extension, as mentioned above, shall be without the

payment of composition fee for cases where rehabilitation package has been

announced/approved.


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Advance Authorization for annual requirement

Advance Authorization can also be issued on the basis of annual requirement for

physical exports, intermediate supplies and / or deemed exports.

One to Five Star Export House shall be entitled for the Advance Authorization for

annual requirement. All other categories of exporters having past export performance

(in the preceding two years) shall also be entitled for the Advance Authorization for

annual requirement.

In addition, a merchant exporter shall also be issued the Advance Authorization for

Annual Requirement provided they agree to the endorsement of the name(s) of the

supporting manufacturer(s) on the relevant Authorization.

The entitlement in terms of CIF value of imports under this scheme shall be upto

300% of the FOB value of physical export and / or FOR value of deemed export in

the preceding licensing year or Rs 1 crore, whichever is higher. Such Authorization

shall have value addition.


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Advance Release Orders

An Advance Authorization holder, holder of advance Authorization for annual

requirement, holder of DFIA and holder of DFRC intending to source the inputs from

indigenous sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP/BTP units in

lieu of direct import has the option to source them against Advance Release Orders

denominated in free foreign exchange/ Indian rupees...

The transferee of a DFRC shall also be eligible for ARO facility. However, supplies

may be obtained against the Authorization from EOU/ EHTP/BTP/STP/SEZ units,

without conversion into ARO.

Back-to-Back Inland Letter of Credit

An Advance Authorization holder, holder of advanceAuthorization for annual

requirement, holder of DFIA, and holder of DFRC may, instead of applying for an

Advance Release Order, avail of the facility of Back-to-Back Inland Letter of Credit.


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Prohibited Items

Prohibited items of imports mentioned in ITC (HS) shall not be imported under the

Advance Authorization/DFIA/DFRC. Further the items reserved for imports by State

Trading Enterprises cannot be imported against advance Authorization/ DFIA/DFRC.

However those items can be procured from State Trading Enterprises against ARO or

Invalidation letter issued to the holder of advance Authorization/DFIA/DFRC. The

State Trading Enterprises are also allowed to sell the goods on High Sea Sale basis to

the holders of Advance Authorization/DFIA/DFRC.

In addition, the State Trading Enterprises are permitted to issue "No Objection

Certificate (NOC) if they so desire, for import by holder of advance Authorization.

DFIA holders would also be eligible to import such items based on No Objection

Certificate (NOC) from the STEs for only such products as notified by DGFT.

However, the Authorization Holder would be required to file Quarterly Returns of the

imports effected against such No Objection Certificate to the concerned State

Trading Enterprises (STEs) and the STEs, in turn, would submit Half-yearly import

figures of such imports to the concerned administrative Department for monitoring

with a copy endorsed to the Department of Commerce.

Similarly prohibited items of exports mentioned in the ITC (HS) shall not be

exported under the Authorization issued under the Advance


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Authorization/DFIA/DFRC scheme. Further, export of restricted items shall be

subject to all conditionalities or requirements of export Authorization or permission.

Duty Free Replenishment Certificate (DFRC)

DFRC is issued to a merchant exporter or manufacturer exporter for the import of

inputs used in the manufacture of goods without payment of basic customs duty.

However, such inputs shall be subject to the payment of additional customs duty

equal to the excise duty at the time of import.

DFRC shall be issued on minimum value addition of 25%.

DFRC may be issued for physical exports against freely convertible currency /

physical exports to SEZ.

DFRC may also be issued in respect of physical exports (other than supplies to SEZ)

for which payments are received in non-convertible currency. Such exports are,however, being subject to value addition.

DFRC shall be issued only in respect of products covered under the Standard Input

Output Norms as notified by DGFT.

However, in respect of Standard Input Output Norms which are subject to "actual

user" condition or where the export proceeds have not been realised at the time of

filing application or for import of fuel under the general norms, DFRC shall be issued

with actual user condition for these inputs.

However, for fuel, the import entitlement may be transferred only to the companies

which have been granted Authorization to market fuel by the Ministry of Petroleum

& Natural Gas.


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DFRC will not be issued against SION which prescribes a prior import condition for

inputs.

DFRC shall be issued for import of inputs as per SION as indicated in the shipping

bills. The validity of such Authorizations is 24 months. DFRC and or the material(s)

imported against it shall be freely transferable. However, DFRC with actual user

condition or the material(s) imported against it shall not be transferable.

The export products, which are eligible for modified VAT, shall be eligible for

CENVAT credit/ service tax credit.

However, non excisable, non dutiable or non CENVAT products shall be eligible for

drawback at the time of exports in lieu of additional customs duty to be paid at the

time of imports under the scheme.

The exporter shall be entitled for drawback benefits in respect of any of the duty paid

materials, whether imported or indigenous, used in the export product as per the

drawback rate fixed by Directorate of Drawback (Ministry of Finance). The

drawback shall however be restricted to the duty paid materials not covered underSION.


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Facility of Clubbing

Facility of clubbing shall be available only for redemption /regularisation of cases and no

further import or export shall be allowed.

RA, under whose jurisdiction Authorization is issued or NC in other cases, shall consider a

request in ANF 4D for clubbing all imports and exports of more than one Advance

Authorization provided imported inputs are properly accounted for as per norms.

Value addition of the Authorizations so clubbed shall be average of minimum value addition

prescribed in FTP and Procedure laid thereunder, imposed on individual Authorizations.

Facility is available only for Advance Authorization(s) where there is shortfall in fulfillment

of EO, and which is sought to be clubbed with an advance Authorization(s) which is valid for

imports.

For expired Authorization(s) with EO shortfall and which is sought to be clubbed with an

advance Authorization(s) which is valid for imports, applicant shall pay composition fee for

EO period extension


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(b) Duty Free Import Authorization Scheme (DFIA).

Scheme

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, and catalyst

Which are required for production of export product. DGFT, by means of Public Notice, may

exclude any product(s) from purview of DFIA. This scheme is in force from 1st May, 2006.

Entitlement

Under DFIA, Authorizations shall be issued only for products for which Standard Input and

Output Norms (SION) have been notified.

In case of post export DFIA, a merchant exporter shall be required to mention only

Name (s) and address(s) of manufacturer(s) of the export product(s). Applicant is required to

file application to concerned RA before effecting exports under DFIA. Pre-export

Authorization shall be issued with actual user condition and shall be exempted from

payment of basic customs duty, additional customs duty / Excise duty, education cess,

antidumping duty and safeguard duty, if any.

In case of actual user DFIA and where CENVAT credit facility on inputs have been

availed for the exported goods, even after completion of export obligation, the goods

imported against such DFIA shall be utilized in the manufacture of dutiable goods whether


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within the same factory or outside (by a supporting manufacturer).

Value Addition

A minimum 20% value addition shall be required for issuance of such authorization.

Items, for which higher value addition is prescribed under Advance Authorization Scheme,

shall be applicable.

Export Obligation

The period for fulfilment of the export obligation under Advance Authorization is 24

moths from the date of issue of the Authorization.

Request for extension in EOP may be made in ANF 4E. RA shall grant one extension for six

months from expiry date with payment of composition fee of 2% of duty saved on all

unutilized imported items as per Authorization.

Request for a further extension of six months may be considered by RA with payment of

composition fee of 5% of duty based on all unutilized imported items as per Authorization.

However, any extension beyond 36 months from the Authorization issue date shall not be

allowed.


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Transferability

Once export obligation has been fulfilled, request for transferability of Authorization

or inputs imported against it may be made before concerned RA. Once transferability is

endorsed, Authorization holder may transfer DFIA or duty free inputs, except fuel and any

other item(s) notified by DGFT. However, for fuel, import entitlement may be transferred

only to companies which have been granted Authorization to market fuel by Ministry of

Petroleum and Natural Gas. Once transferability is endorsed, imports / domestic

procurement against Authorization or transfer of imported inputs / domestically procured

inputs shall be subject to payment of applicable additional customs duty / excise duty. While

endorsing transferability, Authorization would bear a note as to liability of such additional

customs duty / excise duty. However, in case where CENVAT facility has not been availed,

exemption from additional customs duty / excise duty would be available even after

endorsement of transferability on DFIA. Wherever SIONs prescribe actual user condition

and in case of Acetic Anhydride, Ephedrine and Pseudo Ephedrine, DFIA shall be issued

with actual user condition for these inputs and no transferability shall be allowed for these

inputs even after fulfillment of export obligation


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CENVAT Facility

CENVAT credit facility shall be available for inputs either imported or procured

indigenously.

For Duty Free Import Authorization (DFIA) applications

1. Two copies of the application must be submitted unless otherwise mentioned.

2. Each individual page of the application has to be signed by the applicant.

3. a. Part 1 & Part 4 has to be filled in by all applicants. In case of applications submitted

electronically, no hard copies of Part 1 may be submitted. However in cases where

applications are submitted otherwise, hard copy of Part 1 has to be submitted.

b. Only relevant portions of Part 2 need to be filled in.

4. Application must be accompanied by documents as per details given below:

V. For Duty Free Import Authorization

1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of

application fee.


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2. In cases where import of fuel has been sought for the grant of Duty Free Import

Authorization:

a. Self certified copy of the permission issued to the manufacturer exporter by

the competent authority (concerned State Electricity Board or Power

Corporation or Regulatory Commission of the State) under Section 44 of theElectricity

(Supply) Act, 1948 for the installation of captive power plant based on the specified fuel

unless the permission is specifically waived by the State Electricity Board; and

b. Self certified copy of the letter intimating the date of commissioning of the captive power

plant from the concerned authority which issued the permission letter, is to be submitted.

5. Additional documents required in case of supplies under deemed export/intermediate

supplies under Duty Free Import Authorization :

Invalidation letter in case of supplies to

i. An EPCG Authorization holder;

ii. An Advance Authorization holder;

iii. A Duty Free Import Authorization


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DUTYREMISSION SCHEMES

DEPB (Duty Entitlement Pass Book Scheme)

The Duty Entitlement Passbook (DEPB) scheme is one of the Duty Neutralization

Scheme among exporters.

Notified on 1/4/1997, the DEPB Scheme consisted of

Post-export DEPB and Pre-export DEPB.

The pre-export DEPB scheme was abolished from 1/4/2000.

The credit earned by the exporter by exporting the goods under DEPB is given by DGFT in

the form of DEPB scrip against which the exporter can import any goods and in place of

payments of custom duty, the exporter can get DEPB scrip debited.

The DEPB allows import of any items except the items which are otherwise restricted for

imports. such as Gold Nibs, Gold Pen, Gold watches etc.

DEPB validity period is of 12 months from the date of credit.


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Under the DEPB, an exporter may apply for credit, as a specified percentage of FOB value

of exports, made in freely convertible currency.

Credit given under DEPB Schemes is utilized for payment of Indian customs duty including

capital goods, which are free to import.

This license as well as goods imported against it is freely transferable only after export

payment confirmation

The Director General of Foreign Trade notifies the rates of DEPB.

Caps fixed on certain items but there would be no verification of Present Market Value

(PMV) on such items.

Exports made under DEPB are not entitled for drawback.

The port from where goods are to be imported shall be stated on DEPB. The DEPB license

can be transferred only for the import from the same port as specified in the license.

Both merchant exporters and manufacturer exporters are eligible for this license


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Scheme

Objective of DEPB is to neutralise incidence of customs duty on import content of export

product. Component of customs duty on fuel (appearing as consumable in the

SION) shall also be factored in the DEPB rate. Component of Special Additional Duty shall

also be allowed under DEPB (as brand rate) in case of non-availment of CENVAT credit.

Neutralization shall be provided by way of grant of duty credit against export product.

An exporter may apply for credit, at specified percentage of FOB value of exports, made in

freely convertible currency.

Credit shall be available against such export products and at such rates as may be specified

by DGFT by way of public notice. Credit may be utilized for payment of Customs Duty on

freely importable items and/or restricted items. DEPB Scrips can also be utilized for payment

of duty against imports under EPCG Scheme.

DEPB holder shall have option to pay additional customs duty in cash as well.


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Validity

Validity period of DEPB for import/export is 24 months.

Transferability

DEPB and / or items imported against it are freely transferable. Transfer of DEPB shall

however be for import at specified port, which shall be the port from where exports have

been made. Imports from a port other than the port of export shall be allowed under TRA

facility as per terms and conditions of DoR notification.

Applicability of Drawback

Additional customs duty / Excise Duty and Special Additional Duty paid in cash or through

debit under DEPB may also be adjusted as CENVAT Credit or Duty Drawback as per DoR

rules.


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RESEARCH FINDINGS

Advance Authorization and IOCL

As crude oil is an input raw material for the manufacture of petroleum products and custome

duty is suffered on crude oil, it is eligible to be claimed under export benefit schemes.

IOCL has been availing benefit under advance authorization scheme for

1. ATF supplied to foreign going aircrafts.2. Fuel supplied to foreign going vessels.3. Actual export.

As per the scheme, the input required ie crude oil to manufacture export of petroleum

products can be imported without payment of customes duty under Advance Authorization.

Advance Authorization is valid for 24 months. Export obligation under advance authorization

Should be fulfilled within 36 months.

The import of raw material is on the basis of standard input- output norms (SION). The

SION is available for petroleum products. However there must be positive value addition.


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Application for the advance authorization should be made to licensing authority of DGFT.

Contains of Advance Authorization:

1. Name and description of items to be imported and exported .2. Aggregate CIF value of import.3. Quantity of export.4. Quantity of import.5. FOB/FOR value.


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Various doccument appended to the shipping bills

1. Invoice and AV-7 raised for such export.

2. GR forms as per RBI guideline.

3. Indent/Acceptance of the contract/LC.

4. Quality control certificate.5. Export declaration.

6. Copy of Advance Authorization licence or application for the same.

7. Any other relevant document like ARE-1, ADR/MDR ETC.


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Procedure in custome house

Following is the procedure followed in customs house under Advance Authorization

1. Shipping bills to be submitted to the Noting section of export branch atrespective Airport and Ports.

2. After noting the authorities will open a case file in running serial no. inrespect of every licence and forwarded it to the appraising officer for

assessment.

3. The appraising officers will verfy the shipping bills along with the AdvanceAuthorization and also ARE-1.

4. Then shipping bill is to be presented to the inspector of the customs for theexamination of the product to be exported.

5. ATF is supplied to the foreign going aircraft under supervision of inspector ofcustoms.

6. After refueling of aircraft, Aircraft Delivery Recepit (ADR) will beprepared on the basis of the flow meter reading in the presence of Aircraft

Maintenance engineer and officer of IOCL.

7. Before certifying ADR captain of the Aircraft has to sign on the ADR.8. After satisfying the details of export the superintendent in charge will allow

let export of the ATF


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9. The commercial invoice will contain only the approximate quantity which willbe different than the actual quantity exported. In such case a short shipment

advice or shut out notice are to be prepared.

Customs House Agent (CHA)

CHA (Customs House Agent) activities are governed by Customs House Agent

Licensing regulation, 2004. The Customs House Agent means a person licensed

under these regulation to act as an agent for the transaction of any business

relating to entry or departure of conveyances or the import or export of goods at

any customs station.

Major Documentation to be prepared by CHA for IOCL:

1. Preparation of pre-shipping doc. (weekly basis).2. Provide confirmation to IOCL regarding letsexport.3. Preparation of short shipment memos.4. Preparation of shipping bills.5. Preparation of ARE-1.6. Preparation of export declaration.7. Preparation of GR form.8. Matching of export doc. With export sales made at each location on daily

basis.

9. Any other doc. If required


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Activities carried out at iocl for: Advance Authorization

licence for ATF supplied to foreign going air craft

Sr.no Activity Task

1 For obtaining AAL assess the quantity

location

Wise refinery wise and advise well in

advance to Regional E&C Dept.

Regional Aviation- To

inform the requirment for

taking advance autho. At

least 3-weeks in advance.

2 To file application online, obtain the AA

application file no., online payment

Regional E&C

3 To appoint customs approved CHA Regional Aviation

4 To execute the export of ATF under AA Regional Aviation

5 Monitoring the supplies against AA Regional Aviation

6 Total set of doc. Under a particular AA to

be submitted to Regional Aviation

Location in-charge in

consultation with location

Finance officer in-charge.

7 To verify the correctness of abovementioned doc.

Regional Aviation

8 To reconcile the total payment by the

cusomer and invoice wise linking to the

payment

Concern PAD

locationincharge/ location

Finance incharge.

9 To obtain customer wise / location wise

BRC

Regional Aviation

10 To prepare a total set of doc. For AA Regional Aviation

11 To get redemption certificate/ EODC from

DGFT`

Regional E&C


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Activity carried out at iocl for: Advance Authorization

licence for Marine Supplies

Sr.no Activity Task

1 For obtaining AAL assess the quantity location

Wise refinery wise and advise well in advance to

Regional E&C Dept

Regional Marine

2 To file application online, obtain the AA

application file no., online payment

Regional E&C

3 To appoint customs approved CHA Regional Marine

4 To execute the supplies under AA and complet the

doc. Under AA with the help of CHA

Regional Marine and

Regional E&C

5 Monitoring the supplies against AA Regional Marine

6 Total set of doc. Under a particular AA to be

submitted to Regional Marine

Location in-charge in

consultation with location

Finance officer in-charge

7 To verify the correctness of above mentioned doc. Regional Marine

8 To reconcile the total payment by the cusomer and

invoice wise linking to the payment, knocking off

in SAP

Regional Marine

9 To obtain customer wise / location wise BRC Regional Marine


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DATA ANALYSIS & INTERPRETATION

Stament showing import and export carried out underAdvance Authorization for the fiscal year 2010-11 at IOCL.

Import-Export completed

Rgionno

Adv.License no

Export asPerAA(MT)

ActualExport(MT)

Items ofImport

Import asperAA(MT)

ActualImport(MT)

ActualDutyBenefit.INR/Crs

NR 0150278443 130000 129651 CRUDE

OIL

139360 123511 19.87

SR 510261839 75000 85766 CRUDEOIL

80400 79000 12.54

SR 510270527 100000 152431 CRUDEOIL

107200 103710 17.10

ER 5102624 15450 7058 CRUDEOIL

12669 10150 1.68

ER 510261840 10000 9981 CRUDEOIL

10720 9916 1.64

TOTAL 330450 384887 350349 326286 52.82

The above table shows that a total of 52.82crs. Rupees. Actual Duty Benefit. From the remaining of the data which gives the values of unclaimed and uncompleted

import-export under advance Authorization for 2010-11, the total duty benefit is

about 98.34crs rupees.

This shows that about 100crs rupees will be the total benefit from advanceAuthorization to IOCL.

Advance Authorization has been of great fortune for IOCL in availing the benefitunder duty exemption schemes.


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Flow chart wise description of various schemes

1.DUTY DRAWBACK

Duty Drawback

Is a Reimbursement of

Used in the Manufacture of

Export Products

Paid on Inputs

Excise DutyImport Duty


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2.ADVANCE AUTHORIZATION


RequiredUsed

To Import Inputs

Without Payment of Import Duty

Is a Facility

In the Manufacture of Export Product

Subject to 15% Value Addition


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3.DUTY FREE IMPORT AUTHORIZATION

Duty Free Import

Authorization

Is A Pre / Post ExportFacilit

To Import Inputs

Without Payment Of

Import Duty

Used In Manufacturer

of Ex ort roduct

Subject To 20%

Value Addition


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4.DUTY ENTITLEMENT PASSBOOKD.E.P.B

Is Notional Credit Given

For Any Product

By Customs

Against Payment Of

Import Duty

As % of F.O.B. Value Of

Exports

To Be Utilized


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RECOMMENDATION & SUGGESTIONS

FOR ADVANCE AUTHORIZATION

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

The quantity of inputs involved is substantial.

While deciding on Advance Autho., local purchase price must be compared with theprice of the imported product after the availing duty exemption on it.

At every stage transaction cost of operating under the scheme should be comparedwith other Export Incentive schemes.

At 15% value addition this scheme gives the lowest value addition limit hence morepreferable than othe

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